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
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Reach Volunteering: Trustees with Finance, Fundraising and IT skills

Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent