As outgoing Chief of Defence Materiel Sir Bernard Gray hands over to successor Tony Douglas (DE&S Chief Executive designate) this afternoon I wonder what will be going through his mind? First and foremost it will of course be to wish his successor at the Abbey Wood based Defence Equipment & Support (DE&S) operation well, to proffer continued support and to thank the team that he himself put in place and who since they arrived have worked hard to change and adapt the broken DE&S model to one of success.
Gone now is the £38bn black hole in defence and gone too are the obscurity of procurement costs caused by lack of accountability. Gone also are programme delays, inefficiency of the procurement model and the poor value that the taxpayer sometimes received for what he paid for defence.
In the process of what has been five years of change in both practice and principle Sir Bernard Gray can be very proud of what he has achieved. Not only did this opponent of poor value turn defence procurement inside out and upside down he shook the procurement operation tree of malaise. In the process he challenged industry to do even better by incentivising them to achieve.
The second thought running through my mind this morning in regard to CDM’s achievement over the past five years is to wonder whether he himself feels that he could have done even better than he actually did. Tough, highly intelligent, quick to challenge and suffering fools badly I suspect that given the extreme nature of the cultural and financial challenge that he took on in 2010 I doubt that he could. One so easily ignores the fact that inbuilt cultures are resistant to change. But it is the culture of DE&S that Gray has succeeded in changing and that alone means this tough-guy workaholic will be a hard act to follow.
So my view is that Gray should leave the organisation today extremely proud of what he and his team have achieved. Of course there is always more that could have been done if the environment had been different meaning had he been allowed to get on with all that he proposed as being the way forward on the 2009 Gray Report. The time for that will undoubtedly come but for Gray the bottom line for me is that he has achieved far more than any of us who knew DE&S five years ago could possibly have imagined possible back then.
So, absolutely no doubts from me or from many others in industry and the military that Bernard Gray has significantly changed how defence procurement in the UK is done for the better. He may have had enemies and may have been somewhat stubborn at times but the point is that what he leaves behind is a lasting legacy of very positive change in how procurement is done. In the process he has saved the taxpayer potentially billions of pounds.
Of course I accept that Bernard Gray is not popular with everyone and indeed, I readily expect to receive a handful of quite opposite views and responses to this commentary from those who might wish to take a different view perhaps because of specific experiences. For my part I consider myself fortunate in having known Bernard Gray quite well in more recent years and since we first met during his period on the Financial Times and mine, during the 28 years that spent in the ‘City’. My respect for his wide experience, his abilities which included being an advisor to two Secretaries of State for Defence and for his deep knowledge of the whole defence arena has never wavered.
So how would I sum up the achievements of this brilliant yet sometimes stubborn man and who as far as I know rarely takes prisoners? As far as DE&S is concerned, particularly since the advent of DE&S2 in November 2013, is that what he has done is to make the procurement organisation not only efficient, affordable and fit for purpose but importantly, what Gray has done is to put necessary discipline and structure back into UK defence procurement.
Following acceptance of his own damming report on defence procurement operation, Gray had originally preferred that defence procurement operation should move forward on the basis of Government Owned, Contractor Operated (GoCo) organisation. But after near three years of discussion and debate the Coalition Government decided against any form of privatised structure for DE&S. Much operational and structural change had already occurred including significant cuts in staff numbers had already occurred by the time DE&S2 was confirmed and it is fair to say that staff morale in the organisation at that time was very low.
However, once the decision on moving forward with DE&S2 was taken Gray sped through a process of changing the structure of DE&S, in making the organisation more accountable and in bringing skilled private sector individuals into the organisation. A proper Board structure mirroring that of large private sector organisation was put in place and efforts began to find the experienced managed service providers (companies) that would be required in order to make the whole operation more efficient. Having fought for change and won over government support in how he could remunerate and incentivise staff DE&S is today to be regarded as a highly motivated structure and one that, as far as I can see, morale is a problem that is far less visible.
Bernard Gray’s critics might prefer to argue that perhaps he should not have wasted so much time on the part privatisation GoCo plan and that the relationship with industry should have been better than it perhaps was. The latter may well be part true but by the same token there are plenty within industry ready to support the alternative view that what Gray has achieved in DE&S has been positive for all concerned.
I guess that Sir Bernard would be the first to admit that the process of change at DE&S is not yet complete and that more work needs to be done. For instance, more highly skilled professionals need to be found and there is an acceptance that you cannot change the culture of an organisation like DE&S in just two or three years. There remains an internal view in DE&S that more work needs to be done in Defence Support which accounts for around £7bn of the defence budget. No doubt there are other gaps in procurement capability that also still need to be addressed even if these are now in the minority compared to where we were just a few years ago.
It takes time to find the right people and to put them in place. Even so, in the space of just two years since GoCo was abandoned in favour of DE&S2 Bernard Gray and DE&S Board members, now under Chairman Paul Skinner, who include not only senior individuals from the private sector but also high ranking military personnel members such as Air Marshal Sir Stephen Hillier, whose work to make the MOD a more intelligent customer is widely respected, Air Marshal Simon Bollom, Chief of Material (Air) and Vice Admiral Simon Lister, Chief of Material (Fleet) have achieved a great deal of progress much in what is, of necessity, still very complex organisation. And in doing so they have I believe met most of the £300m operating cost savings required of them by government.
It is no easy task to manage what is a £164bn, ten year equipment and support plan and to succeed in achieving all the objectives set within budgeted costs. But already the new DE&S has shown that it is not only fit for purpose but is ready to meet the new challenges set by the Government for defence in SDSR 2015. Indeed, evidence that the new DE&S structure is succeeding is marked by the most recent National Audit Office ‘Major Projects Report’ that in terms of procurement found very little to complain.
To change an organisation of this size and to bring it kicking and shouting into the 21st century has not been without severe pain. A great many people have found themselves displaced in the process mainly because they had insufficient skills and experience to do what the job required. Neither has it been easy to find and secure the services of those from industry that are perceived to have the necessary skills and experience required and that, due to a unique structure put in place at the time of DE&S2, can be paid market rates as opposed to those demanded within the existing rigid civil service pay structure.
Importantly, Bernard Gray leaves DE&S today with most if not all of the major infrastructure work complete. DE&S is unarguably now fit for purpose as an organisational structure even if not all the gaps in skills and personnel capability have yet been filled. Contrast DE&S today with what Gray found during the process if conducting the review of defence procurement requested by then Labour Prime Minister, Gordon Brown the result of which turned out to be a very damming condemnation of the whole procurement process when published in 2009 and I would say that it is unrecognisable of how it was when Gray was asked to change it.
I have already met with Tony Douglas and my hope is that he will carry on just where Bernard Gray leaves off. We will see. As to what happens next for Sir Bernard Gray? At a mere 55 years of age there is plenty of energy and enthusiasm left but sadly I have no clue of what the next chapter in the professional life of this extremely interesting, sometimes provocative fellow and one who as I know to my own cost has a very short fuse holds.
Of course, if you were to ask me what I might like it to be – well that would be to take on the Defence Infrastructure Organisation, to split it up and then to tear it apart limb by limb in the hope that one day it might be as fit for purpose as I believe DE&S is, because of the work done by Sir Bernard Gray and his team over the past five years, is today. I live in hope rather than expectation!
(As pre-warned last week, due to commitments, Commentary will be spasmodic in appearance during this week – normal service resumes next week!)
CHW (Birmingham – 30th November 2015)
Howard Wheeldon FRAeS