No doubt as others are this week, I am once again disappointed that the subject of defence is missing as a subject for debate within the main arena of the Conservative Party Conference in Manchester. Yes, there may well be or have already been a fringe event that has touched on defence and, when I have previously attended Tory party conferences, I have spoken at such events. But while I perfectly well understand that there are other politically more significant priorities to discuss at this time, such as those related to Brexit and the need of the party to make itself more relevant to younger voters, I do dislike the lack of proper debate on defence at Tory Party conferences and the now almost consistent denial that defence should be the number one priority of government.
Naturally, I am forced to realise that because the cost of defence is out of quilter with the current defence budget, due in part to over commitment and over ambition that was writ large within SDSR15 and that, combined with the inability of defence to produce the £11 billion of savings that had been required as part of that review process if promised procurement was to be achieved, there has been an understated currency impact related to Brexit that has devalued the value of sterling, it comes as little surprise to any of us that once again defence is facing strategic affordability challenges.
With a ‘refresh’ review looking at all aspects of how we do defence and security currently underway and that, later this year, will no doubt decide revised defence and security priorities, the Government could argue that that to have been seen to discuss defence matters on a public forum such as the party conference in Manchester risked a potential for embarrassment.
Defence and Security Refresh
I am reasonably comfortable that the ‘refresh’ review process that is currently underway will see ‘need’ take precedence over ‘cost’. Brave words and they contain more than a degree of hope. We will see but what we should be assured about is that all aspects of defence and security requirement will be covered by the review process and policies such as border protection that some would consider to be lacking in coherence in respect of national security need will now be properly addressed.
The above Cabinet Office led refresh ‘review’ process will no doubt be looking at all the various strands of defence and security policy of which of course, military aspects are by far the largest. Strategic vulnerability is writ large across all aspects of UK defence and security and there can be little doubt that much has changed since SDSR 2015 was published two years ago.
Without doubt the geo-political scene today looks to be in a far worse than two years ago and the increased level and ever changing type of threat that we face requires that we have a better understanding of our own strategic vulnerabilities. These concerns will I hope now be properly addressed in the ‘refresh’ review process.
With separate strategy, policy and capability teams involved and having looked at all the various strands of defence and security requirement including that of National Defence, Counter Terrorism, Cyber, Intelligence, NATO together with hopefully providing realism in respect of ambition, the Secretary of State for Defence will no doubt be presented with a range of options and maybe alternatives.
The point should be that whatever outcomes emerge and however critical the need for further cost savings and greater efficiency in defence what emerges in early December will have been well thought through and properly argued. There will clearly be painful decisions attached to all this and I am not ignoring the potential for pushing back of defence procurement programmes and other negative factors that will emerge.
As to the serious and fast growing gap in the defence budget realism suggests that while further cost and efficiency measures are inevitable and necessary, given that the requirement for strong defence is greater now than it was when SDSR 2015 was published it seems to me that the underlying issue is how much the Government will need to raise spending on defence above the additional £500 million planned in each of the years from now to 2021.
Mr. Tony Douglas
The announcement by the Ministry of Defence last week that Tony Douglas would, at the end of this year, be leaving his job as Chief Executive of the Abbey Wood, Bristol based Defence Equipment and Support (DE&S) organisation in order to take up the position as CEO of Abu Dhabi based Etihad Aviation Group has, apart from surprise, been received with mixed feelings rather than absolute disappointment due to his only having been in the job for two years.
My personal view for what it is worth is that the sudden departure of Tony Douglas as CEO of DE&S is very poor form. Loyalty matters to me and I believe that if you take on a mission such as DE&S, one that he had clearly long wanted to do, then, unless for some reason you find yourself getting kicked out by your employer, you are supposed to stay the full course.
Tony Douglas may well be a very highly paid civil servant rather than being a member of Her Majesty’s armed forces but as far as I am concerned when it comes to matters related to defence, whether you are in uniform or not, the same rules should apply – you see the job all the way through to the end. The corollary with military may be unfair, but when did you last see a senior member of the armed forces putting in their papers whilst being deployed out in theatre?
The shortened version of the Tony Douglas career is that following departure of Bernard Gray after six years in the position as Chief of Defence Materiel (CDM) in September 2015, Mr. Douglas assumed the role as CEO (the CDM title having now been dropped) of the Defence Equipment & Support (DE&S) organisation.
A former CEO of Abu Dhabi Ports and later, of Abu Dhabi Airports, Tony Douglas had I believe first challenged for the role of Chief of Defence Materiel back in 2010 but lost out to Bernard Gray. No doubt the decision by the Coalition Government to give the CDM role to Bernard Gray was based in part on the decision of then Secretary of State for Defence, Dr. Liam Fox, to fully implement recommendations made by Gray in his independent report entitled ‘Review of Acquisition for the Secretary of State for Defence’. This report had originally been produced at the behest of the Gordon Brown Labour Government back in 2008/9.
The Gray report had severely criticised the culture and manner in which the MOD through DE&S conducted defence procurement and I well remember descriptive terms such as ‘lethal weakness’ that were used in the report to describe the authors view of the ‘mess’ that defence procurement was in his view then in.
Bernard Gray had a manner and management style that did not fit well with everyone but he started what would be a long process of change in DE&S that was long overdue. He achieved much and whilst making himself unpopular in the process, in effect he turned the MOD procurement system inside out and upside down. The bottom line was a quest to make the procurement system more operable, efficient, accountable and affordable. In the process, thousands of jobs at DE&S would be lost and for a time motivation amongst those that remained was left sadly wanting.
The Gray report identified three specific actions that he believed were required to resolve the issue of defence procurement overspending and make the whole process more efficient. The first was to bring what was known as the ‘Defence Equipment Plan’ into line with future available resources; the second was to streamline relations between Defence Equipment and Support (DE&S), MOD Head Office and the various capability staffs involved in order to make them more business-like; and the third, to provide DE&S with better tools (including a pay-scale that was outside of MOD restrictions) in order to attract and retain the right number of specialist people to deliver the Equipment Plan more effectively.
In 2011 the subsequent ‘Materiel Strategy programme’ looked at further options to improve defence procurement – these including a radically transformed DE&S that remained in the public sector (DE&S+) and/or a Government-Owned, Contractor-Operated (GoCo) organisation structure. With lack of appetite for risk, the GoCo idea was eventually turned down by the Coalition Government in 2013 although personally, I have long believed that this remains an option that will be revisited in due course.
Bernard Gray was never allowed to finish the job that he had begun and his replacement by Tony Douglas was not entirely unexpected. With a different style and approach, Douglas picked up from where Gray left off. During his short tenure further positive inroads in relation to scale, operation, running and achievement by DE&S do appear to have been made. Well, that’s the theory but in respect of gaining an audience with the ‘great man’ I have to say that this was rather like asking to see the Prime Minister.
I have no idea whether DE&S has improved over the past two years under Tony Douglas or not although the organisation has been less confrontational to work with. Where I will defend Mr. Douglas is from ridiculous press suggestions that in ‘jumping ship’ he ‘leaves the MOD in chaos’! The innuendo behind such a statement is simply not true and while I appreciate that there is massive and still growing black hole in the defence budget that has nothing to do with Mr. Douglas. Indeed, whatever anyone might think about DE&S allow me to say that compared to the DE&S of 2010 the organisation today is replete with structure, systems and strong line management.
One thing that Tony Douglas did not seemingly do was to clash with his political masters and it is also true to say that those in industry who managed to meet and work with him would, for the most part, say that they got on with him well. They by whom I mean those at the industry end of the perspective, were usually more than prepared to meet Douglas half way albeit that they were dealing with someone whose glass was only half full. Sadly the process of defence procurement has more rather than less complicated. Restrictions imposed on single source suppliers by the Single Source Regulations Office (SSRO) has damaged relations and industry morale.
Given the offer to run a large Gulf based airline related business in a country that he knows very well, loves and has previously worked, I can hardly be that surprised that Tony Douglas has chosen to leave DE&S at a time when there may be more trouble ahead for defence procurement. However, given the amount of investment made in him by the MOD, after just 24 months in the job I am bound to be disappointed by the lack of loyalty demonstrated. Somehow, I rather doubt that a knighthood will follow!
CHW (London – 3rd October 2017)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785