19 October 2006 | Paul Snell
The defence industry has "major issues" with the affordability of the Ministry of Defence's (MoD) 10-year buying plan, according to a new report.
The study of suppliers' responses to the Defence Industrial Strategy
(DIS), released by the military think-tank the Royal United Services Institute (RUSI) last month, highlighted concerns over the timescale and cost of the project. Suppliers also questioned the MoD's ability to implement the strategy.
The DIS, which was published by the MoD last December, is intended to overhaul the way the MoD works with suppliers and covers how and what it buys, including what can be sourced from abroad. The plan calls on suppliers to be more competitive and offer value for money.
While the study found industry widely sees DIS as a positive initiative to address the changing defence market, respondents questioned the MoD's ability to develop the necessary skills to make it work. They also said the MoD is not able to perform effectively as a customer and "lacks the necessary commercial expertise".
The report suggests the MoD needs to "be clearer in what it wants, understanding its own priorities and cost drivers".
The industry also believes there is a "clear discrepancy" between the MoD's ambition to achieve cost savings in the DIS and the reality of budgets. It questioned how internal changes necessary for the DIS would be paid for.
There was also concern that organisational changes, such as the merger between the Defence Logistics Organisation and the Defence Procurement Agency, would cause the MoD to lose focus on executing the DIS.
RUSI interviewed executives at a number of defence suppliers including BAE Systems, Lockheed Martin and Qinetiq.