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WHAT’S GONE WRONG WITH SMART ACQUISITION?

WHAT’S GONE WRONG WITH SMART ACQUISITION?
By Alex Weiss

Background

The Smart Acquisition Handbook Edition 5 January 2004 defines the aim of Smart Acquisition as: ‘To acquire Defence capability faster, cheaper, better and more effectively integrated.’ The last point is new since the previous January 2002 edition and the point is made that integration carries equivalent weight to performance, cost and time considerations and emphasises through life effectiveness and efficiency.

Bruce George, Chairman of the Defence Select Committee has recently stated that its sixth report ‘has highlighted some quite staggering problems in the way the procurement of vital defence equipment has been handled.’ The report identifies endemic and systematic problems in the UK Defence Procurement Agency (DPA) despite the Smart Acquisition process introduced by the Ministry of Defence nearly seven years ago. Smart Acquisition’s original objectives were to procure equipment faster, cheaper, better. The committee found that on almost all counts, DPA has failed to deliver and for many ongoing projects, such the Astute submarines, the Future Rapid Effects System armoured vehicles and Eurofighter Typhoon aircraft, these problems are expected to continue.

The principles of Smart Acquisition

The Chief of Defence Procurement (CDP) in evidence to the select committee highlighted the need to reinvigorate the improvements that Smart Acquisition should bring. He also stated that only one of the seven principles of Smart Acquisition has been implemented in full; the fund holding central military customer is working exceptionally well. Not one of the remaining six principles has been totally put into practice and in some cases virtually no progress has been made. So what are these seven principles of Smart Acquisition?

A whole-life approach, typified by applying through life costing techniques – It is never easy to assess through-life costs of any complex weapon system and any resulting figures are unlikely to be very accurate, particularly when trying to take into account future variations in inflation and exchange rates over several decades. With capability statements aiming to avoid solutioneering, a wide variation in industry offerings may make effective life cycle cost forecasting meaningful, but where very similar solutions are offered, variations in the estimates of the whole-life costs of different offering are unlikely to be meaningful.

Integrated Project Teams (IPTs) with clearly identified customers – Approaching two hundred IPTs have been formed within DPA and DLO (Defence Logistics Organisation), the two organisations responsible for military acquisitions, while the Equipment Capability Customer (ECC) has been established as Customer
1. At least in this area, a principle of Smart Acquisition has largely been implemented.

A better, more open relationship with industry – By publishing a Defence Industrial Policy, MoD has taken a major step forward in strategic communication with the defence industry, but it is likely to be difficult to define a far-reaching and comprehensive Defence Industrial Strategy that can remain unchanged over a lengthy period and provide a degree of stability for industry. This is, however, a positive step at a time when the defence industries in all the industrialised nations have been experiencing a period of major re-orientation with both mergers and changes of ownership, often to a foreign company, in the drive to increase market share both in home and export markets.

It can be difficult to judge the quality of the relationship between MoD and the UK defence industry. If the press is to be believed, the situation between the top levels in MoD and BAE Systems leaves much to be desired. Certainly, historically, an antagonistic approach was preferred by MoD and inevitably often provoked industry into a matching response. A major step forward has been the inclusion of industrial represent

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