U.K. DEFENCE SECRETARY LIAM FOX TIGHTENS THE COST WASTE NOOSE
By Howard Wheeldon, Senior Strategist at BGC Partners
16 Dec 10. Two very distinct interesting views are published this morning in The Times. One is written by the Secretary of State for Defence, Dr. Liam Fox and the other, by the well respected Lord Hutton who had held the same office through 2008/9 before he resigned. Both make for interesting reading. In his piece Dr. Fox effectively confirmed that the noose on the top twenty current procurement programmes is about to be severely tightened meaning that those responsible for each programme will need to account for progress or otherwise on a quarterly basis to a new review board process [Major Products Revue Board] that will be chaired by Dr. Fox. Accountability and hopefully, improved transparency of defence programme cost at last. No more easy excuses for delays we hope. This new and long overdue new no-holds barred accountability process will be welcomed by all those of sound mind fed up with seeing the MoD blame everyone else for delays and programme overruns. With a £38bn overspend gap to somehow fill Dr. Fox is clearly determined to put an end to chances of programme budget overruns such as those of Nimrod and Astute occurring again. The new process of accountability demanded by the new Main Building regime not the first and you may rest assured that neither will it be the last!
Last August former Chief of Defence Procurement Lord Levine of Portsoken was also given the hugely important job of developing a completely new road map for future defence procurement – what Dr. Fox calls “unprecedented reform” that will in his and my view “offer the opportunity for a fundamental rethink in the way we do business”. If you don’t happen to understand the language or nuances of what the Defence Reform Group has been designed to achieve this let me interpret it for you. Firstly we may see this as leading to root and branch change at MoD’s Abbey Wood based Defence Equipment and Support (DE&S) organisation, to a full and complete re-examination of all defence procurement strategy and need, to look at each and every operation, status and structure of the armed forces manage themselves right through to the needs and requirements of all those serving in the armed forces from equipment to housing and how all these are managed. I cannot possibly say what the result of the Levine reform group will achieve except to emphasise that very big changes in how the defence budget is managed and spent in terms of both procurement and operation are in the air with the caveat that nothing will be done that might weaken the resolve within the current Afghanistan mission.
The Fox mission may be described in part as attempting to slim down the vast MoD infrastructure and cost of operation; to lay proper foundations for managing not only future procurement but also the decision making process required and that will lead to better procurement; to in term of future procurement requirement examine how we should plan forward at what the future mission will be as opposed to basing requirement on the current mission; to remove waste and bureaurocracy and thus provide better value for taxpayer money; to plan for an armed force structure based on 21st as opposed to 20th century needs. So far so good and whilst there are decisions that have already been made in relation to the SDSR that we may yet live to regret we may see the ongoing process of radical change in the MoD structure as both very welcome and necessary.
In his Times article today Dr. Fox rightly stresses the mess of Labour defence strategy again and that led to so many project and programme overruns and the gaping £38bn hole in the defence procurement budget. All this is true enough of course although I was to be fair it would be to say earlier governments were not exactly blameless in the process of procurement failures either – witness the fl