Let MoD pay buyers more

12 October 2011

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12 October 2011 | Adam Leach

Civil service pay scales are restricting the ability of the Ministry of Defence (MoD) to get staff with the skills required to deliver value for money.

Review of Single Source Pricing Regulations, published Monday, called for the formation of a new body within the MoD to oversee the overall efficiency and value for money of single-source procurement. It argued that in order for the body, provisionally called the Single Source Regulations Office (SSRO), to be successful and provide the required strategic procurement advice to MoD staff, civil service pay restraints must be released.

Lord Currie of Marylebone chaired the review of single-source procurement used by the MoD, which is currently subject to ‘Yellow Book’ rules – where only one defence supplier is invited to tender. This practice currently accounts for 40 per cent (or £8.7 billion) of total MoD procurement. Currie’s report revealedthe MoD is missing out on savings running into hundreds of millions. 

Commissioned by the government to conduct the review, Currie made a number of proposals to increase value for money delivered through single sourcing. One focused on boosting skills. “The restriction of civil service pay scales, under which the MoD operates, limits [its] ability to compete with industry on an equal footing… we recommend the SSRO has the freedom to pay appropriately competitive rates for these skills,” he said.

Following the publication of the report, Peter Luff, minister for defence equipment, support and technology, said: “Current arrangements for single-source procurement have been in place for more than 40 years and it’s clear they are no longer fit for purpose.”

A consultation period to discuss the findings of the report is now under way.

The report also called for:

 ·       Better data sharing between the MoD and private sector, including supplier costs to help the department benchmark prices.

·       Stronger incentives for the defence industry to be more efficient and tackle the cost base.

·       A reduction on the data-reporting demands for small and medium-sized enterprises (SMEs) to open access to more deals.

A requirement for large contractors to report on their efforts to involve SMEs in the supply chain.

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