Broken military procurement practices at the UK Ministry of Defence have repeatedly resulted in billions of pounds of taxpayer money being wasted. That is the essential conclusion for the House of Commons Public Accounts Committee (PAC) in a report entitled ‘Improving the performance of major defence contract’ published this morning,
While not exactly telling us anything new, the PAC report makes grim reading concluding as it does, that the MoD continually fails to learn from past mistakes despite having overseen so many in the past. However, as I have myself pointed out on many past occasions, the PAC report highlights a view that at times the MOD “lacks the skilled personnel to effectively manage” procurement and recommends that the Departments broken system requires and urgent rethink, led by HM Treasury and the Cabinet Office – with experienced external input.
The latter suggestion fills me with horror, particularly the thought that more millions of pounds might yet be wasted by using external consultants. True, lack of knowledge, loss of important skillsets and the whole system of design and development failures seemingly very apparent within the Ajax procurement programme underline why PAC is right to bring the MOD to task. The pity is though that PAC failed to examine why the MOD lacks sufficient skills in any detail, the process of operation and mix of military and civil servants within the MOD, how they are chosen and the promotion system that demands that by the time they have just got into a specific procurement development programme they are moved on.
I also find it worrying that as the Committee chose to name and shame Ajax as being an example of MOD procurement failure why did they not choose to grill the current Chief of Defence Staff and Chief of General Staff on whose respective watches Ajax are and indeed, why did they not think about asking the former Chief of Defence Material, Sir Bernard Gray on whose watch in 2014 the Ajax contract was signed to give evidence?
It is, of course, easy for those who question MOD procurement performance to criticise. But objective criticism is always to be welcomed and the point made in relation to the Department improving transparency around performance is correct and timely. But procurement of complex defence equipment is no easy process and I am underwhelmed by the simplicity of this PAC report, particularly so when one is reminded that so much of what we acquire for defence is today manufactured overseas not to mention being subject to vagaries of currency momentum, political induced delays, departmental cash flow requirements, affordability constraints that require rescheduling and sometimes, internal indecision.
Nevertheless, the MOD should really take heed of the Committee’s criticism that it lacks sufficient skills and experience. Equally, the Committee should take heed of the fact that if you want to employ and retain the skills you need through any programme you must reward them sufficiently. This issue was supposed to have been fixed years ago but clearly has not.
I note that PAC talks in the report about an additional £16.5bn in funding being made available to defence over the next four years but although it mentions that an estimated £7bn of this will be used to fill the current equipment budget shortfall it chooses to all but ignore other facets of expenditure now lumped into defence such as pensions, the national flagship being another example not to mention increased spending on R&D, space, cyber, AI and other requirements.
The PAC ignores that Governments of every colour have treated sovereign UK industry with contempt preferring, as they so often do outside of naval ships and submarines and which the UK is so very well served by its superb sovereign manufacturing facilities, to buy what theoretically looks cheap from elsewhere and often turning a blind eye to the potential of rising through-life costs and obsolescence. There is a price to pay for choosing to ignore the needs of maintaining sovereign capability across many aspects of defence and this is part of the reason the problem highlighted by PAC today exists.
None of the justified criticism by PAC is helped by the MOD often changing specifications midstream and then reducing numbers of what industry had been led to believe would be the requirement. Cutting ‘numbers’ half way through a programme almost always backfires just as cancellation of projects such as the Warrior Capability Sustainment Programme after the vast amount of development work had been completed is frustrating for both UK supplier and ultimate user.
Back on the specific Ajax programme the PAC said “The department’s refusal to explain the magnitude of its financial exposure in the event of a contract termination demonstrates a disregard for parliament and taxpayers.” adding that witnesses had [presumably because a review is being conducted] failed to reassure them they [MOD] would “not simply throw good money after bad”. To that I would say that if they had spent a little more time attempting to understand the complexity of issues in regard of Ajax and what is currently being done to resolve the problem that may have been able to make a more informed and intelligent judgement.
I note that the Committee suggests that the MOD had thought it required more P-8A Poseidon Maritime patrol aircraft than it actually ordered. This is a clear mistake – it was in my recollection always to be nine aircraft and still is. I may be wrong but I suggest that what they meant to say was the E-7 Wedgetail and which, in its infinite stupidity, the MOD decided within IR to cut from 5 to 3 aircraft. Apart from reminding the PAC that significant praise is due to the many companies and organisations engaged with the MOD in defence procurement that continue to get it right – Enough said!
CHW (London – 3rd November 2021)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785