MoD considers outsourcing defence procurement

18 November 2011

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18 November 2011 | Angeline Albert

A private sector organisation could run the UK’s defence procurement under proposals being considered by the Ministry of Defence (MoD).

The outsourcing of defence purchasing is being considered as a way of reforming the MoD’s Defence Equipment and Support (DE&S) organisation in a bid to prevent procurement delays and cost inefficiencies. A government-owned contractor-operated solution is one of three options put forward by the MoD’s chief of defence materiel Bernard Gray. The other two are:

• A trading fund be set up, similar to the Defence Science and Technology Laboratory. The trading fund will allow the organisation to make money to spend on its outgoings.  A spokeswoman for the MoD did not identify how the trading fund will make money. 

• The creation of a Non-Departmental Public Body, effectively a quango, similar to the Olympic Delivery Authority which is an NDPB of the Department for Culture, Media and Sport.

 A spokeswoman for the MoD confirmed that outsourcing was one of three proposals on the table for deliberation by the UK defence secretary Philip Hammond and the minister for defence equipment, support and technology Peter Luff.  “It is an option but no final decision has been made,” she said. “There will be further meetings and discussions to consider the most appropriate way forward. We as a department will take an in-house decision.”

DE&S acquires and supports equipment and services for the UK’s armed forces, including ships, aircraft, vehicles, weapons, IT systems and satellite communications. As well as supplying food, clothing, medical and temporary accommodation, it is also responsible for HM naval bases and the British Forces Post Office. It has a budget of £14 billion, and headquarters in Bristol and other sites across the UK and overseas.

Appointed in January, Gray is the author of Report on Acquisition prepared for the then secretary of state John Hutton in 2009, which recommended that the DE&S be made a government-owned contractor-operated organisation.  

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