02 May 03. Sir Robert Walmsley, outgoing UK procurement supremo continued his policy of ‘making big business sweat’ right until the end with a characteristic parting shot at BAE SYSTEMS. He warned companies to tighten up the supervision of big defence contracts or face possible exclusion from future competitions.
The parting shot from Sir Robert Walmsley, who stepped down on after seven years as chief of defence procurement, comes in the wake of the debacle earlier this year over the Nimrod maritime patrol aircraft and Astute attack submarine programmes. The government was forced to renegotiate the terms of both contracts after BAE SYSTEMS admitted to serious cost-overruns and further delays on both projects.
He told the FT, “We may not as a nation have a character which enjoys the execution of a contract as much as we do winning the next one. In defence I am now convinced that is the road to ruin. We should insist that our defence contractor put their best people on contract execution and that they don’t move them around to suit
wider company expediencies. And we should be very careful indeed before we award any further contracts to any company that doesn’t work in that sort of way,” he
said.
Two weeks ago, Sir Robert wrote a letter to the chief executives of 16 of the largest defence contractors, including BAE, Boeing, Rolls-Royce and Thales, spelling out the need to establish minimum standards in project management processes.
Sir Robert said the framework would involve closer monitoring of programmes by the Ministry of Defence than before but was not designed to be unnecessarily intrusive.
“It will be a very light touch but where we want something we will insist on it. Nimrod and Astute have burned themselves into my experience. We have to learn from those.”
The letter, which was endorsed by ministers, focuses on three main areas: control of the programme through the setting of clear milestones agreed with the MoD in advance, a system to verify the integrity of the controls, and an outline of the financial incentive arrangements put in place for project managers. BAE Systems said it was “comfortable” with the proposals. “We will actively support the initiative of the MoD.”
Comment: It is usual for a parting executive to leave on a conciliatory note, but Sir Robert decided to keep twisting the knife. To what end? Industry is already reeling from lack of overseas orders; the Times reported that BAE had not received a substantial export order since 1999. It may have been more constructive for Sir Robert to leave on a note acknowledging as the United sates has, that there have been shortcomings in the procurement process, and that that the Mod and industry would work together to improve things. Whatever the shortcomings of BAE might be, the Uk needs a national champion, particularly in time of war, as was recently demonstrated in the Iraq conflict.