The UK’s new Defence Procurement Minister may have a legal as opposed to military background but when it comes to procurement and the r4sponsibilities that he now carries, he has got rather a lot to learn.
I lost count of how many Defence Procurement Ministers (Min DP) I have either worked with, against or just simply known over the past thirty odd years but one conclusion that I can now draw because of how frequently they are changed it is far too many! Ministers come and go but in respect of areas such as defence before they can move a foot within the MOD they have to be trained in order to find out just what is there, what the equipment we have and need and that may be on order, what it is and does, the political complications in respect of defence equipment exporting, visits to military bases and industry establishments and just to begin to understand the many complication of procurement, manufacturing, export and of buying off the shelf when UK industry cannot supply.
My personal conclusion is that there have been far too many Minister of Defence Procurement over the years . Why? Because no one should be under any illusion that being appointed Secretary of State for Defence, Minister Defence Procurement or any of the other senior ministerial posts within the MOD, takes no account of whether the minister to be appointed has any knowledge or past experience of defence. Most certainly do not!
Until relatively recently the defence procurement minister might well have been formally titled as ‘Under Secretary of State for Defence’ although just as often, he or she could be appointed as a ‘Minister of State’. You may well be wondering what the difference is and my answer comes in the form of how a past MinDP put it to me some years ago – ‘if you are and Under Secretary of State you might be allowed to tick off expenditure to let us say £50,000 but if you are appointed Minister of State you can sign off amounts up to £50’. The figures I quote are not actual but I am sure you get the point.
Quite what determines why a PM should decide to appoint those to the so-called ‘junior’ ministerial ranks as either a Minister of State or the slightly more senior Under Secretary of State when they have little knowledge of the subject in question is open to discussion but I had long believed it was and should be based on a process of natural progression through the ranks related to the combinations of experience and/or merit – although I am not exactly sure whether, in this day and age and when one sees, for example, the senior hierarchy of the Royal Air Force ditching awards based on merit, knowledge and experience in favour of pushing self-made diversity and inclusion policies as being the pre-requisite for moving military personnel up the promotion ladders, whether merit is now even considered to be a basis for promotional decisions anymore!
So, what has all this got to do with poor old Alex Chalk who was given the poison chalice of being appointed as the UK’s Minister of State a few weeks ago and who will report to the Secretary of State for Defence Ben Wallace?
Simply that Mr Chalk delivered a speech to the Make UK Defence Summit in Birmingham last week, one that was I am told delivered very well and by one of those minsters who clearly has not only a smile on his face but also one who I am sure is both able and sincere. I say delivered because although personalised, I would guess that the speech was written for him by someone else within the MOD and in any case, would have been vetted before delivery was allowed. And by the way, just to avoid being asked as I usually am who on earth are Make UK, they are what used to be known as the Engineering Employers Federation.
This was a well written speech with lots of clichés about innovation, being open minded with a willingness to listen and learn from you, reminders of political correctness and the importance of saying how firms of all sizes – albeit in reality this being only at a push for SME’s rather than for the primes – are giving us [the UK] crucial defensive advantage, examples of ongoing defence procurement such as the Boxer Armoured vehicle and the Boeing E7- Wedgetail and that perchance of his visit to Birmingham, the first of three aircraft are currently undergoing conversion down the road at Birmingham International airport, There were other examples to buy hey…..not a single word about the Ajax Armoured Fighting Vehicle and on which billions may have been wasted and even if eventually signed off and proven to be fit for purpose is years behind its originally planned in-service date and worse, lacking the require confidence of those who will potentially be forced to use it.
Alex Chalk then went on to bring up other tired old clichés such as building and creating new supply chains and correspondingly, more resilience, a new supply chain strategy for a new era of global competition and a mandate to do things differently in order to maximise resources at our disposal. He talked about moving away from an exclusive focus on cost cutting and efficiency savings, a remark that would, had they read the speech, have made a few mandarins in the Treasury and Cabinet Office have a good laugh.
He then goes on to talk about the need to consider reliability, through life service and environment sustainability as part of the package and which on first reading his speech I feared the emergence of convulsions. Why? Please don’t get me wrong, I really do believe in environment action and the need to cut emissions, but will someone please tell this and other minsters that the priority in regard of buying defence equipment is first and foremost, what it does and how it serves those who will use it, rather than the miles it does to the gallon. Defence Minister should stop playing to the gallery in regard of environmentally based decision-making processes and remember that the optimum reason for buying what we do is what it can do in respect of defence as opposed to potential damage it might do the environment!
Important though the need for the MOD to collaborate with SME’s certainly is, how many times over the years have I read this before? Despite being told of attitudinal change with the MOD and its approach to procuring more from SME’s, the reality is that such is the system of defence base procurement, the vast amounts of bureaucracy and other obstacles to progress that are constantly placed in the way, that very little has or will change. I could have sad this ten-years ago and maybe again if I am around, in ten more years from now, but MOD breaking down barriers to entry for SME’s will likely always be an ambition and spoken desire as opposed to becoming a reality of change.
There are other issues within this politically correct speech and mission statement that I could take issue with but I will do just one more. Mr. Chalk rather unfortunately suggested that the UK’s DSE Export Faculty is working with the Department for International Trade Export Academy to provide SME’s with advice and support and this presumably being based on so-called ambition, resilience and collaboration. He talks about there being a unique network of military officers, industry secondees and over 5,000 trade specialists. Oh, dear me – at this stage it all became too much and I could not bring myself to read any further.
5,000 so called trade specialist but how many of them trained and with knowledge and experience of directly working on government to government defence contract work? I’ll give you the possibility of maybe 50 for starters? When will modern day governments learn that when it comes to foreign governments buying of defence equipment from the UK those from the potential buying government wish only to deal with the most senior UK government minster – the Prime Minister together with Secretary of State for Defence?
Back in the day and when Mr. Chalk who by the way is the MP for Cheltenham Spa, was still at school or University there was an absolutely brilliant government department called the Defence Export Services Organisation and of which, on the fiftieth anniversary of its founding by the former then Secretary of State for Defence Denis Healey in 2016 I wrote:
Some years ago, I said that agreeing to the formation of DESO was the best thing that Denis Healey ever did and I meant every word of it.
The Defence Export Sales Organisation (DESO) was set up in 1966 as part of a wider re-organisation from the newly created Ministry of Defence (MoD).
Specifically, it was felt by industry and government that UK companies were losing out to better supported foreign competition and that this would have negative effects on UK employment and the ‘Defence Industrial Base’. Early concern on this issue had begun to emerge in the Plowden Report of 1964/5 and it was already clear by then that export sales of UK made military equipment was declining as competition increased. It wasn’t just defence exports either as the UK share of the world aircraft market had fallen from 32% in 1959 to just 14% by 1964.
Industry had been raising the issue that more government support was required particularly as most if not all large defence sales are in effect government to government arrangement. Following Plowden Minister of Defence, Denis Healey was concerned enough in 1965 to commission Sir Donald Stokes who was a former Chairman of British Leyland to look at the issue and produce a report.
The result of this formed an excellent basis for modernising the way in which government would support UK companies engaged in defence export sales. At its heart the Stokes Report recommended the creation of ‘a small yet very high-powered central defence export sales support organisation within the MoD’.
Whilst very much smaller today than it was back in the 1990’s the Department of Trade Defence and Security Organisation is today headed by Stephen Phipson. As the 12th in a long line of DSO ‘Heads’ to have either been seconded or directly employed from industry Phipson has his work cut out to increase UK defence and security exports. Over the years the approach to managing DSO has changed and it would be wrong to ignore that ‘decision’ by Gordon Brown to moving the organisation away from direct MOD responsibility in 2008 caused more than a degree of angst. Nevertheless, since the Coalition Government formed the Defence Growth Partnership and which, working alongside industry and DSO, is already proving beneficial, noticeable progress in the UK’s approach to defence and security sales is being made.
DESO was, in respect of our international competitors, held up as the envy of the world and countries such as the US, Australia and France could not understand why, as Prime Minister in 2009, Gordon Brown, no doubt under instructions from Baroness Shriti Vadera, effectively closed it by moving it from MOD responsibility to that of the then Department for Trade and Industry. By the way, Make UK CEO Stephen Phipson who I mention above is himself a former Head of DESO. Thus, at the very least being now within Make UK he is, by holding the defence event at which MinDP spoke last week, attempting to keep UK defence exports high on the agenda. That said, over the past fifteen years the UK Government has allowed political correctness to have its head and is now seen by many potential international government defence market customers as an ‘also’ ran in part because of the ongoing reluctance to embrace government to government requirements that are often sought by potential customers.
What now follows is the full speech as delivered by MinDP Alex Chalk in Birmingham on Wednesday last week:
It’s a pleasure to be here in Birmingham today for this Make UK Defence summit.
Before continuing I should formally introduce myself – I’ve been the Minister for Defence Procurement for around a month now.
As was just touched upon, unlike my ministerial colleagues in the department, I have a legal rather than a military background.
Which means I bring two things, I hope, to Defence.
First, an understanding of – and deep respect for – the rule of law. When we see the atrocities being committed in Ukraine, as unlawful as they are heinous, we are reminded how important it is to protect the rules-based international order, but also to do so with hard edged military assistance if required.
Second, I bring an open mind and a willingness to listen and learn from you. I’m not coming in with any preconceptions, other than this, I believe very passionately in small business and I believe it is in your interest and the nations interest that you get a fair shot when it comes to defence procurement.
That is particularly so in an era that is described by some as “a Golden Age of innovation”. That is digital innovation but other innovation, new ways of management, how to manage data.
And let me say this too as an overarching way of principle. I come to this job very conscious of the advantages that come with speed of procurement and the risk that come with delay.
Perfect is the enemy of the good and 80% capability today is very often preferable to 100% capability tomorrow if tomorrow never comes.
There are so many examples of firms of all sizes giving us a crucial defensive advantage in this part of the world alone.
There’s the team at Birmingham Airport who are converting Boeing 737s into E-7 airborne early warning aircraft.
There’s the work being undertaken in Telford to manufacture Boxer armoured vehicles.
And all the exciting small businesses in this region who we will be championing next weekend on Small Business Saturday.
Take for example the Coventry-based SME Hygiene Pro Clean who – with help from our Defence and Security Accelerator which provides access to over £250 million in excess funding – won a contract with the Welsh Ambulance Trust to roll out their rapid cleaning system to speed up the decontamination of ambulances during the COVID-19 Pandemic.
So, it’s no surprise our current defence spend in the West Midlands is about £120 for every person living here.
But the important work of the SME work stretches beyond the boundaries of Birmingham and the Black Country.
As we battled the pandemic, we saw the entire Defence supply chain step up to produce ventilators, build Nightingale hospitals and move millions of pieces of equipment around the country.
More recently, it’s been fantastic to see firms pulling together nationwide to get vital defensive weaponry into the hands of Ukrainians as quickly as possible.
And that takes me onto the third thing I want to do this morning and that is to set out my priorities for this role.
But before I do that, it’s worth reminding ourselves of the context in which Defence is currently operating.
First, the threats we face as a nation are proliferating and intensifying.
Whether it’s state-on-state aggression like we are seeing in Ukraine.
Or so-called sub-threshold dangers, including disinformation campaigns, cyber warfare and the sabotage of undersea cables.
Meanwhile, the global pandemic, the energy crisis and ongoing impact of climate change have not just increased the demands on our forces, but imposed additional demands on our resources.
Which means – as the Chancellor made clear in his financial statement last week – we need to deliver the maximum value for money, we need to deliver the maximum punch for our pound so to speak.
As a result, your role as suppliers to our armed forces is more important than ever.
Not just in keeping our forces equipped with everything they need, not just providing that innovation, technology, and cutting-edge capability which keeps us ahead of our adversaries, but through your achievements strengthening the entire sector so that no matter what happens, when the call comes, our nation is ready to respond.
Let me also say by way of context, that where there are challenges there are also great opportunities for firms like yours to expand into new markets.
Nations across the world are reawakening to the value of Defence.
France, Australia, the United States and Germany, of course, are among the countries to have increased their Defence spending in the last year.
That means we are now looking at a Defence export market potentially worth many billions of pounds more over the next decade.
So, how are we going to grip this moment and seize this opportunity?
Well, the good news is that we aren’t starting from scratch – this is the third bit of context.
Most of you will be well acquainted with the Defence and Security Industrial Strategy – better known as DSIS.
Launched under one of my predecessors Jeremy Quin, DSIS marked a step-change in our approach to industry.
It means we now think about defence industry as a national strategic capability in its own right.
It means we are considering the much broader impacts of our commercial decisions, such as how we can boost regional economies, how we can develop new skills bases, and how we can develop national industrial capability.
But publishing any strategy is of course only the beginning, it is delivery that really counts.
We’ve been working alongside industry to deliver on over 50 commitments during the last year and a half.
Driving innovation, improving efficiency, and strengthening the entire sector.
Now, we need to build on that success and create Defence supply chains which are truly fit for this new, more competitive and unstable era.
So, turning to those priorities, they are only threefold:
First, we want to see a more resilient supply chain.
In this new era of global competition, we must make ourselves agile and resilient by design.
That’s why last week we launched our new Supply Chain Strategy, the first in over a decade. You will be hearing from Major General Simon Hutchings who will cover in more detail our approach to that strategy.
But in a nutshell, this is a clear mandate to do things differently to maximise the resources at our disposal.
That means moving away from an exclusive focus on cost-cutting and efficiency savings.
And instead considering reliability, through-life service and environmental sustainability as part of the package too.
We’re also going to prioritise in ensuring supply chains are flexible enough to cope with sudden disruption.
And we want to work closer than ever with you, our industrial partners, to build genuinely collaborative relationships.
Including by having better visibility of firms – the SME and mid-tier companies – in that critical supply chain.
And doing so by sharing more information because that allows us to make better decisions.
And that brings me onto my second objective; greater collaboration with SMEs.
Now, perhaps more than ever we need SMEs to play their proper part in this national mission and I am personally committed to that goal.
So where have we got to?
Last year 23% of our procurement budget went to SMEs – that’s a procurement budget of over £20 billion a year – that’s up from 13% in 2016/17.
But we want to go further and we are targeting 25% for next year. That’s a bold but important ambition.
Now I recognise, even after a few short weeks in this post, that smaller suppliers face unique challenges like ‘barriers to entry’ as economists sometimes refer to them.
And that is why we are determined to make the barriers to working with us as low and as navigable as possible.
At the heart of that determination is our SME Action Plan, published in January.
Setting out how we’re maximising SMEs’ opportunities to do business with us.
Take for example our £16 million Defence Technology Exploitation Programme – it’s offering grants up to £500,000 to help SMEs develop new technologies and processes.
Meanwhile our new Procurement Reform Bill is helping SMEs by slashing the number of complex regulations which govern public procurement.
But we have also created a new single supplier registration system, which means bidding companies will only have to submit their core credentials once, making it cheaper and easier for you to work with us too.
Another key part of the Action Plan is our new SME Working Group within the Defence Suppliers Forum – which works closely with Make UK.
It brings together SMEs from across the country, to sit alongside primes and MOD representatives. It is already beginning to bear fruit.
During its first year, it’s addressed the use of Framework contracts on Defence and how to measure our impact on the SME community.
So, to my third priority; boosting exports.
That’s because partnerships are not just crucial on our own shores.
If we are going to capitalise on the massive potential export market that I eluded to earlier, we need to strengthen industrial ties with our global partners.
That’s because that in turn enables greater information sharing, greater interoperability with our allies as I saw myself in the Mojave Desert a couple of weeks ago with our Australian and American allies, and it also enables greater strategic planning.
So, I want to drive better use of our strong and unique network of military officers, industry secondees and over 5,000 trade specialists.
Based across the UK and within 120 countries, they can help promote innovation, opportunity and partnership around the world.
We are also creating a more efficient system for managing any government-to-government relations in support of your exports.
Meanwhile the UK DSE Export Faculty is working with the wider Department for International Trade Export Academy to provide SMEs with advice and support.
So that’s an overview of what we’re doing and where we want to go.
There’s a lot of different strategies and policies in there but the three most important words are ambition, resilience, and collaboration.
And that collaboration really matters because if we are to really succeed, if we are to grasp these opportunities of this era to make you thrive and to make us safe, we are going to need your support too.
So, let us know what support you need to innovate and expand. Constructive engagement is welcome.
Let us grasp those opportunities on offer to turn your cutting-edge ideas into cutting-edge capabilities.
Let us seize the moment presented by excellent events like this, to meet new people and new business partners to strike up new business relationships.
Your success is our country’s success and government will be willing you on.
Thank you.
CHW (London – 28th November 2022)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785
Skype: chwheeldon
@AirSeaRescue