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The Ministry of Defence can get better value from the private sector
In 1966, when I joined the British Army, the all-seasons sleeping kit was nothing more than a grey blanket and a groundsheet, readily recognisable to Wellington’s soldiers in the Peninsular War. Notions of comfort or warmth, it seemed, had not advanced since the early 1800s.

Soldiers, sailors and airmen remember these details, because their kit is their lifeblood. Good equipment saves lives, while failures in supply or specification can endanger or even cost them. Those on the front line do not care how it is procured, as long as they get the right equipment, in the right place, at the right time.

Yesterday’s announcement by Philip Hammond, the Defence Secretary, that private firms will be brought into the heart of the MoD’s procurement process – with the Defence Equipment and Supply organisation (DE&S) becoming, in the jargon, a government-owned, contractor-operated entity – has attracted criticism. But having been on both sides of the divide – as a commander at every level from platoon to division, and now the president of a global leader in the delivery of defence projects – I have no doubt that commercial-sector expertise could greatly enhance the way our Forces are equipped, and provide far better value for money for the taxpayer.

In a recent report on the £414 billion in major public projects that are under way, Lord Browne, the Government’s lead non-executive director, argued that by adopting best practice from the private sector, the country could save between 10 and 30 per cent of that total. This must start with the ethos. From the beginning to the end of the process, everyone must focus on that fundamental business concept: time is money.

Making defence procurement faster and more cost-efficient is not “privatising” or “taking over” the Civil Service. This is a model of equal partnership. It is about loosening the bureaucratic straitjacket to create the freedom for the thousands of excellent civil servants who work in the DE&S to do their job better.

How will this work? First, new skills. The existing staff are drawn from the Armed Forces, mostly with a background in operations, or the Civil Service, often with a background in policy. Their ability to run increasingly challenging acquisition programmes, on a £14 billion budget, can be enhanced by introducing individuals whose sole focus in their working life has been to extract the best deals from the supply chain and force it to deliver on time and to budget.

Recently, only a handful of managers have moved from industry to the MoD: instead, it has been pretty much one-way traffic in the other direction. This new partnership will level that playing field, and allow the ministry to cultivate, retain and recruit the best in the market.

The second great benefit will be private expertise in large-scale programme management. Lord Browne’s recommendations are again a good starting point. Projects must be held to a high level of scrutiny before the button is pushed, and no money should be committed without an experienced project manager and team in place.

No country has ever outsourced the way it equips its armed forces – but we are not in alien territory. More than 25 years ago, the MoD adopted a similar model with the Atomic Weapons Establishment and Devonport Dockyard. Both have been extremely successful.

This reform is on a far greater scale, but there are clear parallels with the world of oil and gas – a complex, risky environment with huge procurement programmes and extended supply chains. The £35 billion development of Australia’s Gorgon gas field, for instance, involved 2,300 contracts across 20 countries for £19 billion in materials and services. The skills needed to run such projects translate directly into what’s required at DE&S to deliver the best possible kit to our soldiers at the best possible price. That is why this new approach may well prove a model for the world.
The beauty of slot strategy, of course, is that you can multi-table.

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