MPs question Bernard Gray over new procurement trading entity

Gurjit Degun
17 February 2014

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17 February 2014 | Gurjit Degun

The new trading entity to handle defence procurement will be a "non-departmental bespoke agency" to allow for “significant freedoms” not available to the mainstream civil service.

Giving evidence to the Defence Select Committee last week, chief of defence materiel Bernard Gray said that such freedoms would include the ability to vary pay within the organisation.

Gray explained that he has been having problems recruiting into certain disciplines for nearly two years. He appointed PwC nine months ago but it is also finding it difficult. “They are struggling in that market place because we not paying enough money," said Gray. "We have had a variety of exchanges with central HR to pay more money, we’ve been unable to get that freedom agreed.”

In December last year, defence secretary Philip Hammond told the House that the new trading entity, DE&S plus, will replace plans to outsource procurement to a semi-private organisation or government-owned contractor-operated body, known as a GoCo.

Jon Thompson, permanent under secretary at the Ministry of Defence (MoD) said that there are also plans for a council to review the progress of DE&S plus. He explained that a board, which will consist mainly of non-executives, will focus on how the organisation is run internally.

“There are two fundamental issues that we need to agree about the relationship between MoD and DE&S,” added Thompson. “One is the agreement to set out our roles and responsibilities, and the second a corporate plan that sets out the performance of the entity.

“We are also working on how the governance of the new organisation works internally and in relation with the council.”

However, one MP said that the concept of the council is “incredibly byzantine, completely incomprehensible”.

In terms of private sector contracts, Gray explained that he is looking at three different sectors. “The first type is a programme management organisation which would give us greater skills in formatting and managing the complex programmes on our way through,” he said. “The second is an IT systems firm which would implement some changes to the management information system. And the third type is a HR type support organisation.”

Gray added that the organisation will run competitions over the first half of this year and is currently in consultation about the exact form of the packages.

Gray also refuted claims by another MP who said that the aborted GoCo process could lead to private companies charging more for future work to account for risk and uncertainty.

“The process that we’re going through now of examining what we put to market is specifically designed to make sure that we are able to run effective competition where people are interested in participating," Gray told the committee. "I am going through what their interests and concerns are and what our issues are to provide a centre of gravity so that when we launch the competition we have something that everyone has confidence in.”

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