Uproar as MoD brings in American giants to manage military procurement

Exclusive

Associate Business editor

Unions and industry insiders are up in arms because two US engineering companies have been asked to oversee the way in which the Ministry of Defence runs the £14bn arm that buys military kit.

The Independent can reveal that San Francisco-based Bechtel and Denver’s CH2M Hill have bagged the programme management contracts for the Bristol-based Defence Equipment and Support (DE&S). This agency buys and looks after everything from forklift trucks to Astute class submarines, but is being overhauled by the Government so as to get better value for the taxpayer.

The companies were told earlier this week that they had won the contracts to transform the way in which these crucial items are bought, in what are known as managed service provider (MSP) roles.

Bechtel will look after the navy and RAF, while CH2M Hill will work with DE&S on army and joint-command projects. Detailed negotiations start next week and these talks will be important as the roles are widely considered to be vaguely defined.

CH2M Hill, which worked on the 2012 Olympics, and Bechtel, which has overseen the construction of a 21-kilometre tunnel for London’s Crossrail, have few suitable British employees to fill these contracts. Industry insiders estimate that they will need 150 to 200 staff.

Sources said around half of these experts will be flown in from the US. This would cost around £5m more than just using British staff, with the remuneration including food and accommodation expenses.  An industry insider said: “Two US firms running this is not the ideal option – that’s what worries me the most. They don’t have the indigenous capability.”

The source added that the MoD had failed to pay enough attention to an area of such sensitive national security being awarded to overseas companies. However, MoD sources that “a fair and open competition” has been run.

A spokesman for the Public and Commercial Services Union said: “We are very concerned indeed that there isn’t the skills base in the UK to make this happen. We’ve asked again and again for a guaranteed skills transfer to the existing workforce.”

Separately, the reforms also involve the private sector taking over DE&S’s human resources department. It is understood that all of the Big  Four accountancy firms bid for this role and that PwC has landed the contract.

The MoD is highly sensitive about the reforms of DE&S. Last year, ministers tried to semi-privatise the agency in what was known as a “Go-Co” – government-owned, contractor operated – model.

This plan collapsed over lack of competition after CH2M Hill decided against bidding for the contract at the last moment, leaving Bechtel as the only bidder.

It was thought that CH2M Hill would struggle to win any further significant work in the more limited reforms that are known as “DE&S-Plus”. One industry source said he was “staggered” that it had won the two contracts.

An MoD spokesperson said: “Negotiations to bring in managed service providers are still under way in order to secure the best value for the taxpayer. It would be inappropriate to comment further at this point. We plan to award contracts next month.”

Start your day with The Independent, sign up for daily news emails
News
Courtney Love has admitted using heroin while pregnant with Frances Bean Cobain, her daughter with Kurt Cobain
people
Sport
Murray celebrates reaching the final
tennis
Arts and Entertainment
'The Archers' has an audience of about five million
radioA growing number of listeners are voicing their discontent; so loudly that even the BBC's director-general seems worried
Life and Style
tech
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Extras
indybest
News
Joel Grey, now 82, won several awards for his role in Cabaret
people
Arts and Entertainment
tv
Arts and Entertainment
Henry VIII played by Damien Lewis
tvReview: Scheming queens-in-waiting, tangled lines of succession and men of lowly birth rising to power – sound familiar?
Sport
Harry Kane celebrates scoring the opening goal for Spurs
footballLive: All the latest transfer news as deadline day looms
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

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Day In a Page

Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee
World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

Max Brooks honours Harlem Hellfighters

The author talks about race, legacy and his Will Smith film option to Tim Walker
Why the league system no longer measures up

League system no longer measures up

Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
Valentine's Day cards: 5 best online card shops

Don't leave it to the petrol station: The best online card shops for Valentine's Day

Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

Devil in blue Costa is a reminder of what Liverpool have lost

The Reds are desperately missing Luis Suarez, says Ian Herbert
Ashley Giles: 'I'll watch England – but not as a fan'

Ashley Giles: 'I'll watch England – but not as a fan'

Former one-day coach says he will ‘observe’ their World Cup games – but ‘won’t be jumping up and down’
Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness