Labour targets privatisation of defence body

Plans to commercialise procurement organisation DE&S risk conflicts of interest, says Opposition

Labour is planning to ambush a parliamentary Bill that threatens to semi-privatise the defence organisation Defence Equipment and Support. DE&S has an annual budget of £14bn with which it buys bombs and bullets for Britain's armed forces.

The party's spokesman on the armed forces, Kevan Jones, told The Independent on Sunday that it will make a series of tough amendments to the Defence Reform Bill which will focus on acute conflicts of interest and concerns over foreign control of DE&S.

The Defence Secretary, Philip Hammond, wants to transfer the organisation's 16,500 workforce to the private sector, transforming it into a GoCo (government-owned, contractor-operated concern). He argues that this would enable it to use commercial nous to buy everything from aircraft carriers to explosives more cheaply.

However, unions are concerned that this would lead to thousands of job cuts at the Bristol headquarters of DE&S, while industry insiders are amazed that the scandal-scarred Serco is still in the running for the contract. The FTSE 100 services company is being investigated by the Government for alleged fraud in relation to an electronic tagging contract and recently referred to police staff who it believes falsified prisoner transfer records. It is dependent on government contracts, ranging from Ofsted schools inspections to running London's "Boris bike" scheme.

Serco is not allowed to win any government contracts until executives can show that they have reformed its internal controls, but it can still bid for work. It is in a consortium with the US engineering giant CH2M Hill and the UK's WS Atkins for the defence contract, but there is mounting pressure to axe Serco from a competition that would decide who controls a major area of national security.

In a recent parliamentary answer that was designed to put pressure on the consortium, the defence minister Philip Dunne said: "It will be up to the consortium to decide whether it will be appropriate for the consortium to go forward in the competition with that company. So it needs to decide if the company remains in the consortium for this competition."

However, all of the companies involved in the two bid teams have potential conflicts of interest. For example, the accountants PricewaterhouseCoopers is part of the team led by the US group Bechtel, meaning that it could end up handing out contracts to defence firms that it audits.

Kevan Jones said: "We will be tabling a number of amendments around these [conflict] issues, as well as other questions that need to be answered about things like protecting intellectual property and foreign shareholdings."

Alison Seabeck, Labour's policy lead on the Bill, added that there are "problems with the way the contracts are let and supervised", which could be a "potential risk to the taxpayer". Last week, the mastermind of the GoCo experiment, chief of defence materiel Bernard Gray, was grilled by the defence select committee. Dunfermline and West Fife MP Thomas Docherty said that Mr Gray was "asking Parliament to take a big punt" since "no other nation has done this".

Defending his plan, Mr Gray said: "I am finding it a difficult argument to say that when something is done for the first time that is a bad thing. The analysis we did in 2009 … says that our current way of doing things effectively costs us somewhere between £1.2bn and £2bn a year."

Mr Gray admitted that the Ministry of Defence is a month behind what is an unusually tight timetable for the GoCo bid process.

Suggested Topics
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
Have you tried new the Independent Digital Edition apps?
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs General

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

Commercial Litigation Associate

Highly Attractive Package: Austen Lloyd: CITY - COMMERCIAL LITIGATION - GLOBAL...

Systems Manager - Dynamics AX

£65000 - £75000 per annum + Benefits: Progressive Recruitment: The client is a...

Service Delivery Manager (Software Development, Testing)

£40000 - £45000 per annum: Ashdown Group: A well-established software house ba...

Day In a Page

Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little