Defence think tank questions MoD’s plans to privatise procurement

Defence think tank The Royal United Services Institute (RUSI) has called the Ministry of Defence’s plans to privatise procurement into question, claiming that the UK is moving in the opposite direction to its closest ally, the United States.

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Defence think tank The Royal United Services Institute (RUSI) has called the Ministry of Defence’s plans to privatise procurement into question, claiming that the UK is moving in the opposite direction to its closest ally, the United States.

Last year the government revealed plans to partly privatise the MoD’s Defence, Equipment and Support (DE&S) organisation, which has an annual budget of £14 billion.

DE&S is responsible for the MoD’s buying of goods and services, and the department hopes that by transforming it into a ‘government-owned, contractor operated’ organisation will lead to reduced costs and improved scheduling.

However, RUSI suggested that most aspects of defence procurement and contracting for equipment and support are fundamental responsibilities that should not be passed on to others.

Its report argued that in the United States defence acquisition is seen as “core business for the government”, with significant restrictions placed on what can be entrusted to the private sector. RUSI said that procurement could be considered an ‘inherently government function’.

For example, the organisation outlines how the MoD may well be legally vulnerable to claims by department staff that they have been improperly or inadequately equipped, “which would suggest real limits to the risks and responsibilities that could be passed to a procurement contractor, and to the risks and responsibilities that any contractor would accept”.

The report also stated that the US’ past experience of placing procurement functions with the private sector has actually resulted in higher, rather than lower, costs, and it is currently committed to a long-term programme to expand the size of its acquisition (or procurement) workforce.

Moreover, RUSI highlighted that the MoD has given little insight into the costs associated with contracting and overseeing such a transformation.

“In the United Kingdom, the extensive privatisation of public bodies and outsourcing to the private sector of services funded by government has taken place with little explicit discussion of what responsibilities the government cannot pass across,” RUSI said.

“There is no intrinsic reason for the UK to follow an American definition of the concept of the inherently governmental, but there would seem to be a case for the British government to articulate its own thoughts in this domain.”

There are two private sector consortiums currently bidding for the DE&S contract. One headed up CH2M Hill, with WS Atkins and Serco involved, the other being led by Bechtel, supported by PwC and PA Consulting. 

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