Why do the armed forces let the MoD mess up procurement?
Of the 12 “enabling organisations” that its annual report claims constitute the MoD, procurement is responsible for the largest part of the headcount (30 percent): Defence Equipment and Support (12,136 staff), Submarine Delivery Agency (1,915 staff), Defence Electronics and Components Agency (416 staff), Single Source Regulations Office (Annex F: 38 staff), and Defence Digital (2,400 staff), i.e. 16,902 staff in total.
Over the years, there have been delays, financial overruns and equipment failures, notably the unusable Ajax tanks discussed in the MoD’s last annual report. The Commons Public Accounts Committee reported in November 2021: “despite numerous reviews of defence procurement over the past 35 years” it “continually fails to learn from its mistakes”. Billions have been wasted. Reforming procurement procedures has proved a waste of time: procurement should be removed from the MoD altogether. In almost any other category, the supplier has to decide what the end user will want, after close discussion, and then provide it at a price the customer is prepared to pay. The intervention of the third party, in this case the MoD, especially one that keeps changing its mind, is guaranteed to create delays and unnecessary costs.
Some equipment has to be bespoke either because it provides advantage over likely opponents or because purchasing by British armed forces opens the door to international sales or supply. We cannot be held to ransom by a foreign supplier at a critical time. About 40% of MoD purchases are bespoke, i.e. non-competitive, and that is where the problems lie. The 60% open market purchases can be left to the armed forces.
The British defence industry, which is the world’s second largest arms exporter, should undertake the work and cost of meeting their customer’s needs, just as any other commercial supplier does. Some fine tuning might be needed: some believe the British defence industry has been feather-bedded by the MoD and could well afford to do their own R&D. Others may think that taking over, in effect, the MoD’s procurement would be too burdensome. Where that proves to be the case, the defence industry can pitch for R&D grants just like anyone else.
The MoD should also get out of the property business and oil storage businesses. According to its latest annual report, “Defence agreed to contribute land and buildings with housing unit potential for 55,000 homes.” It delivered 11,580 housing units. All land which is not used, and not likely immediately to be used, should be turned over to Homes England. The extensive Defence Infrastructure Organisation, which looks after the MoD estate, and the Oil and Pipelines Agency should be privatised.
Defence Business Services largely deals with payrolls and pensions and should be part of the Director General Finance’s department which would, if the MoD stepped away, come under the command of the Chief of Defence Staff (CDS). The Hydrographic Office should return to its old home, namely the Royal Navy. In addition to the enabling organisations, Annex F of the annual report shows eight additional arm’s length bodies employing 2,947 staff. Three are museums which should join the others under the Department of Culture, Media and Sport and the remainder should become independent charities.
Taking these two blogs together, it seems most likely that the armed forces would be better equipped without the MoD as a whole, not just procurement. About half the staffing of the MoD is not explained. The Atomic Weapons Establishments (AWE) are only mentioned in a note to the accounts even though they must be significant employers and have been deemed unsafe for the last seven years without the necessary corrective action taking place. The central HQ is also a significant employer. It is not just procurement that needs to justify its existence and place in the chain of command. The AWE, for example, needs to come under the CDS who might actually sort them out.