Critics take aim at latest scheme to outsource MoD procurement

Reforms to try to control costs may force suppliers to deal with up to four project clients

Government contractors are dismayed at the latest mess that officials and ministers have made of reforming Defence Equipment & Support, the £14bn-budget agency that buys and looks after military kit.

After failing to semi-privatise DE&S last year, the MoD is now bringing in more limited reforms which will see commercial companies run parts of the agency, such as IT and human resources.

The most important deal, though, is programme delivery, which includes controlling costs, and this has been carved up into four along the lines of the three armed forces and combined command.

Huge US project management conglomerates such as Bechtel, British engineering groups like WS Atkins, accountants and management consultants are all believed to be in the running for the programme delivery roles. However, no one company would be allowed to win more than two of those contracts, meaning major suppliers across the military would, in effect, be dealing with between two and four clients.

This confusing structure is made worse as the programme delivery companies might also work for those huge suppliers in other areas of work, potentially provoking accusations of conflicts of interest.

An industry insider said that “you can’t have four different groups managing the likes of BAE”, while a source close to the defence giant confirmed that this was an area of concern. There are fears that there will be lack of communication between the two-to-four “managed service providers” on projects that cut across the armed forces, potentially causing budget overruns.

 Vernon Coaker, the shadow Defence Secretary, told The Independent: “The Government’s botched procurement plans have caused confusion and demoralisation at DE&S.

“The complaints from industry about unclear lines of communication and poor management of major projects can’t go unheard. The Defence Secretary needs to listen and act.”

A MoD spokesman said: “We are reforming DE&S to ensure that it can provide our armed forces the best possible equipment and support at the best price for the taxpayer. To do this we need to bring in essential private-sector skills to help deliver complex, multimillion-pound projects effectively. This is about preventing the waste we saw in the past.”

The need for reform was highlighted by a report by the Public Accounts Committee this month that revealed ministers could not explain whether a £1.2bn underspend on military equipment last year was because the MoD is becoming more efficient, or because project delays mean the bills have yet to come in.

The Defence Secretary, Philip Hammond, and the top civil servant Bernard Gray failed in widely criticised efforts to semi-privatise DE&S last year, which would have seen the Bristol-based organisation run by a private-sector consortium. They thought this would introduce the commercial nous necessary in negotiations to buy the best tanks, helicopters and weapons at reasonable prices for the taxpayer.

However, unions, DE&S staff, and even officials at the Pentagon were concerned about the state handing over such a sensitive area of national security, leading this huge outsourcing deal to collapse. 

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Recruitment Genius: Administrator - IFA Based

£22000 - £24000 per annum: Recruitment Genius: This is an opportunity to join ...

Day In a Page

Major medical journal Lancet under attack for 'extremist hate propaganda' over its coverage of the Israeli-Palestinian conflict

Lancet accused of 'anti-Israel hate propaganda' over coverage of Gaza conflict

Threat to free speech as publishers of renowned medical journal are accused of inciting hatred and violence
General Election 2015: Tories and Lib Dems throw their star names west to grab votes

All noisy on the Lib Dems' western front

The party has deployed its big guns in Cornwall to save its seats there. Simon Usborne heads to the heart of the battle
How Etsy became a crafty little earner: The online market has been floated for £1.2bn, but can craft and capitalism coexist?

How Etsy became a crafty little earner

The online market has been floated for £1.2bn, but can craft and capitalism coexist?
Guy Ritchie is the latest filmmaker to tackle King Arthur - one of our most versatile heroes

King Arthur is inspiring Guy Ritchie

Raluca Radulescu explains why his many permutations - from folk hero to chick-lit hunk - never cease to fascinate
Apple Watch: Will it live up to expectations for the man or woman on the street?

Apple Watch: Will it live up to expectations?

The Apple Watch has apparently sold millions even before its launch tomorrow
Don't fear the artichoke: it's a good cook's staple, with more choice than you'd think

Don't fear the artichoke

Artichokes are scary - they've got spikes and hairy bits, and British cooks tend to give them a wide berth. But they're an essential and delicious part of Italian cuisine
11 best men's socks

11 best men's socks

Make a statement with your accessories, starting from the bottom up
Paul Scholes column: Eden Hazard would be my Player of the Year – but I wonder if he has that appetite for goals of Messi or Ronaldo

Paul Scholes column

Hazard would be my Player of the Year – but I wonder if he has that appetite for goals of Messi or Ronaldo
Frank Warren: Tyson Fury will be closely watching Wladimir Klitschko... when he wins it'll be time to do a deal

Frank Warren's Ringside

Tyson Fury will be closely watching Wladimir Klitschko... when he wins it'll be time to do a deal
London Marathon 2015: Kenya's brothers in arms Wilson Kipsang and Dennis Kimetto ready to take on world

Kenya's brothers in arms take on world

Last year Wilson Kipsang had his marathon record taken off him by training partner and friend Dennis Kimetto. They talk about facing off in the London Marathon
Natalie Bennett interview: I've lost track of the last time I saw my Dad but it's not because I refuse to fly

Natalie Bennett interview: I've lost track of the last time I saw my Dad

Green leader prefers to stay clear of her 'painful' family memories but is more open about 'utterly unreasonable' personal attacks
Syria conflict: Khorasan return with a fresh influx of fighters awaiting the order to start 'shooting the birds'

Khorasan is back in Syria

America said these al-Qaeda militants were bombed out of the country last year - but Kim Sengupta hears a different story
General Election 2015: Is William Cash the man to woo Warwickshire North for Ukip?

On the campaign trail with Ukip

Is William Cash the man to woo Warwickshire North?
Four rival Robin Hood movies get Hollywood go-head - and Friar Tuck will become a superhero

Expect a rush on men's tights

Studios line up four Robin Hoods productions
Peter Kay's Car Share: BBC show is the comedian's first TV sitcom in a decade

In the driving seat: Peter Kay

Car Share is the comedian's first TV sitcom in a decade. The programme's co-creator Paul Coleman reveals the challenges of getting the show on the road