Delivering effective defence procurement
The command paper on defence promises to refresh the government’s plans for the UK’s armed forces. Funding for the review, which was announced alongside the spring budget, committed the government to £5 billion of additional funding over two years.
This new money would be used for nuclear resilience and replenishing stockpiles following support provided to Ukraine. The Command Paper will set out future priorities against these revised objectives.
The delay in publication of the Command Paper has given rise to speculation about the contents of the review. Even with extra funding, the government’s existing plans look hard to deliver, creating concerns about where the axe may fall.
The vulnerabilities of the existing equipment plan were exposed by the most recent NAO report on defence acquisition. They found that several capabilities were excluded from the equipment plan because of rising costs or insufficient funding. Of particular concern is the government’s commitment to build the Type 32 frigate.
Currently this platform is at the concept phase with a final decision on the frigate dependent on the completion of the Type 31, in particular the integration of the weapon systems. The critical point will be reached in the next few months, because the construction of five Type 31 frigates at Rosyth nears completion in 2028.
To meet this deadline a decision on Type 32 needs to be made by 2025 at the latest to ensure that there is no break in frigate production if Babcock wins the contract.
This would be a cruel outcome for a yard that has delivered on the promise of building a frigate that can deliver in the competitive frigate market. The Type 31 design has been sold to the Polish and Indonesian Navies. Endorsing the Type 32 could potentially open up new markets by demonstrating the flexibility of the design.
It is the connections between the equipment plan and procurement decisions in securing our defence industrial base that Prospect highlight in its latest publication, Effective Defence Procurement. The UK has the most open defence markets in the world, where cost is a key driver in procurement decisions. As we show in the report, many countries adopt national preference rules that favour local production.
- France has adopted a new defence strategy that ensures French industry can support a war effort.
- Canadian shipbuilding orders have been brought ‘in-house’ under a national shipbuilding strategy; the plan has increased employment in the sector creating high-quality manufacturing jobs.
- India has an unambiguous strategy that prioritises home-based companies.
- Australia has streamlined defence procurement systems to reduce the time to reach a contract signature.
- In Spain, the government has taken steps to safeguard the domestic defence industry, which helped Navantia make a competitive bid for the £1.6 billion Fleet Solid Support contract.
Concerns about the procurement process were echoed recently by Paul Livingston, Chief Executive of Lockheed Martin UK, at a recent defence select committee meeting – suggesting that a lack of urgency on the part of government can lead to delays in programs.
A change in the rules could help. Our report suggests amending the Defence and Security Public Contracts Regulations 2011 (DSPCR) regulations so that the criteria include ‘the promotion and protection of sovereign capability in UK.’ This reflects best practice worldwide, which would safeguard national security by investing in the UK defence industry without debarring international partnerships, where appropriate.
To back this up, government needs to revive its role as an intelligent customer. A decade of austerity has stripped the Ministry of Defence of its ability to retain skilled procurement professionals.
Prior to the pandemic, the NAO identified 57 roles in 12 trades where the Ministry of Defence do not have the number of skilled staff they need, leading to inefficiencies.
Staff turnover at DE&S was 10.7% last year which will have deepened these problems. These headline figures hide the pressures on staff, 28% of all recorded absence was for anxiety, depression or stress, the largest cause of staff absence at DE&S. Delivering a workforce plan was part of the Integrated Review, the refresh cannot ignore these problems.
The late publication of the Command Paper will not have reassured anyone looking for clear direction from government though the detail looks slightly more positive than expected. Our report shows that an alternative route is possible for government that will deliver high-value skilled jobs – all it requires is the political will to change.
Sue Ferns is Senior Deputy General Secretary of Prospect
