MoD drafts in ex-defence equipment chief Bernard Gray to review procurement

Written by Matt Foster on 26 April 2016 in News
News

Former chief of defence materiel, who left the civil service at the end of 2015, to carry out progress review for the MoD on equipment buying

Sir Bernard Gray, the former Ministry of Defence equipment chief who left Whitehall less than six months ago, has been asked to take a fresh look at the department's progress in sharpening its buying practices.

Gray, a former journalist and defence special adviser, carried out a highly critical review of defence acquisition for the Labour government in 2009, which warned that the MoD was buying more equipment than it could pay for and repeatedly underestimating project costs.

He was appointed chief of defence materiel for the MoD in 2011, and asked to put his recommendations into practice by the coalition government.


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Although his plan to outsource the MoD's buying arm – Defence Equipment and Support – by turning it into "Government-Owned Contractor-Operated" company was ultimately shelved in favour of allowing it to be run as a central government trading entity with some pay freedoms, Gray's tenure saw cost overruns at the MoD fall from £4bn to just £50m.

Gray was succeeded by Tony Douglas at the end of November, but the Ministry of Defence has now confirmed that it has asked the former chief of defence materiel to carry out a progress update.

An MoD spokesperson said: "Sir Bernard Gray has been asked to undertake a technical review into the state of the procurement landscape. The review will look at the recommendations made in Sir Bernard’s 2009 Review of Defence Acquisition and Lord Levene’s 2011 report on Defence Reform. The report will examine the degree and success of the implementation of the recommendations of these reports in order to inform future strategy and direction."

Citing an MoD contract award document, the Defense News website reported that an organisation called Pole Star Strategy was awarded a £60,000 non-competitive deal to carry out the work. Companies House lists Gray as Pole Star's director and shows that the organisation was incorporated in December last year.

The MoD has not provided CSW with detail on the cost of the exercise, but confirmed that the review had not been the subject of a competitive process. The exercise is not expected to be a large piece of work akin to Gray's 2009 analysis or Lord Levene's 2011 report, with the MoD expecting it to be completed with a few months.

A spokesperson said Gray was "uniquely placed to undertake this work quickly and provide best value for money". 

Update: This article was updated on April 27 to include further detail on the scope and timeframe of the review

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Matt Foster
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Matt Foster is CSW's deputy editor. He tweets as @CSWDepEd. Spotted a story that we've missed? Contact matt.foster@dods.co.uk

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@JagPatel3

Submitted on 27 April, 2016 - 13:04
Despite the countless reviews undertaken over the last several decades to identify failings in the defence procurement process, there remain barriers which continue to hamper the achievement of acquisition goals. Some of these barriers are: (a) The instrument of competition has been rendered ineffective by Bidders who are quoting identical bottom-line Selling Prices against the same Requirement – thereby denying MoD Abbey Wood Team Leader the opportunity to select the preferred single Contractor on the basis of price competitiveness. (b) MoD’s Competition Policy is further undermined by the ‘revolving door’ which continues to allow procurement team members to take up appointments with Bidders whilst the competition is still under way. (c) The decision on which Bidders to down-select for the next phase is dependent upon warm soothing words, false promises and hollow statements of intent offered in Management Plans, instead of the much more sensible way of selecting Bidders on the basis of their performance measured during the previous phase. (d) The extended industrial Supply Chain remains infested by distortions and inefficiencies because lower-tier subcontractors are continuing to mark-up goods and services, without adding any value. In addition, competition is not being applied by ITT recipients to select first and lower-tier Contractors. Instead, they are chosen using the old boys’ network or during a gathering at the 19th Hole limited to the great-and-the-good from subsidiary companies wholly-owned by the ITT recipient, or some other favoured, old school-tie chums – which has, in itself, allowed the continuance of corrupt practices. (e) The widespread practice of digging out old ITTs from the archives, dusting them off, searching & replacing the project name and despatching them off to industry has resulted in the Principles of Natural Justice being routinely violated, because selection criteria essential to inform the decision on down-selection phase-by-phase is omitted – leaving Bidders in the dark as to what evaluation criteria they will be measured against. (f) The probability of the pre-programmed schedule being ‘eroded’ during performance of the Contract is 100 percent, on account of Contractors enforcing a minimalist staffing policy of being just ‘one-man’ deep, in many of their specialist core functions with no slack or succession plan. (g) The talent pool from which appointees for acquisition roles are drawn has only succeeded in supplying a steady stream of people who are ill-equipped to deal with the Private Sector – yet they are put in charge of spending public money! This situation has, in turn, led to dramatically reduced confidence in any new policy initiatives advanced by DE&S amongst wider MoD stakeholders and interested observers, such as Members of Parliament, National Audit Office and Treasury officials. (h) There is no evidence of MoD’s long-standing policy of securing input of Private Sector capital into defence programmes being applied, which means that projects continue to be funded exclusively by the taxpayer – yet, the Intellectual Property Rights for the resultant fully engineered equipment, which rightly belong to the MoD, is simply handed over to the single remaining Contractor for nothing in return. (i) Technical risks are allowed to accumulate towards the end of acquisition cycle where they suddenly morph into 'show stopping' risks and come to the fore immediately after the main investment decision has been taken (never before), forcing Team Leader to raise Contract Amendments and let short-term, renewable Post Design Services Contracts which, in turn, has led to MoD getting appallingly poor value for money these last several decades. @JagPatel3 on twitter

@UnionSteve (not verified)

Submitted on 28 April, 2016 - 18:37
Talk about marking your own homework... But an interesting exercise nevertheless. Not least because DE&S's much vaunted pay flexibilities have yet to materialise, so their effectiveness can hardly be evaluated!

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