Contracts for defence kit to be overhauled

The defence agency spends £14bn a year (EPA)

Ministry of Defence officials have again been forced to overhaul their plans to enlist commercial knowhow to the management of the £14bn-budget agency that buys military equipment.

Having failed to effectively privatise Bristol-based Defence Equipment & Support last year, officials have instead been looking at outsourcing swathes of its functions.

There were going to be three major contracts put out for bids, which included getting the private sector to run IT and human resources at hopefully a cheaper cost than could be achieved in-house.

However, the most important contract, programme delivery, which includes controlling costs when buying kit from guns to tanks, has now been separated into four along the lines of the three armed forces and combined command. No one company would be allowed to win more than two of these deals.

There is speculation that this is in response to industry fears that the US engineering conglomerate Bechtel was red-hot favourite to land the deal. The California-based group was the only contractor willing to go ahead with a bid for the earlier plan to semi-privatise DE&S, before the process fell apart in December due to that lack of competitive tension. The MoD denies Bechtel has an advantage.

Defence Minister Phillip Dunne said: “DE&S has an unprecedented opportunity to deliver equipment increasingly on time, and at the agreed price, making sure the taxpayer always gets value for money.”