Reform of defence procurement is one of the major challenges facing UK defence – Jim Murphy

Jim Murphy MP, Labour’s Shadow Defence Secretary, responding to the Government’s Statement on Defence Acquisition in the House of Commons, today said:

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“Reform of defence procurement is one of the major challenges facing UK defence. All sides of this House will want to see reforms which deal with overspends and over-runs and ensure world class equipment is delivered when and where our Forces need it.

“For too long good intentions of successive administrations haven’t delivered sufficient reform in defence procurement. However, just as some of the responsibility can be shared, our resolve to learn the right lessons and deliver far-reaching reform must also be collective.

“We therefore welcome much of today’s statement.

“Mr Speaker, future procurement systems must provide value for money within financial constraints. Better performance will come from greater professional project management, faster decision-making, fuller accountability for outcomes and a more considered use of military expertise.

“Labour supports reform. The Bernard Gray report on which today’s White Paper is based was commissioned by the last Government. We have proposed a new budgetary discipline whereby deferred decisions that increase cost are accounted for within a rolling ten year cycle and increased certainty for industry over sovereign and off-the-shelf capabilities.

“We on this side are open-minded about how this is achieved, but I wish to be clear that welcoming this process isn’t the same thing as supporting a GoCo. There needs to be rigorous examination of all the possible options and a robust comparison between the two options of a GoCo model and ‘DE&S+’.

“This comparison should rest on the principles of ensuring value for money within programmes; industry adhering to new targets on time and cost; maintaining Parliamentary accountability; enhancing a culture of consequence for decision-makers; and military involvement based on tri-service working, not single service rivalry.

“Reform must extend across the MoD. Too often scope creep has led to systems exceeding identified need and major decisions have been pushed to the right to save in the short term at the expense of a longer term budgetary bow wave. Today’s challenge for Ministers is not just to determine a management model but to demonstrate that decades-long entrenched behaviours are being corrected.

“Turning to the specifics of today’s announcement, Mr Speaker.

“On the Assessment Phase, could the Secretary of State pledge to publish the findings of the two value for money studies and allow for consideration by this House prior to a final decision being made? It is essential that Parliament, industry and our Armed Forces have full confidence that strategic affordability is the determining factor in this process.

“On costs, could the Secretary of State say whether the new management team of either model would re-cost the baseline of the Core Equipment Programme or would the figures as published earlier this year remain? Further, in light of NAO criticising the MoD’s assessment of risk as ‘not statistically viable’, would new management be able to reform the current method of risk assessment?

“On staffing, the MoD has said that current reductions will not affect outputs. Would either management model be able to make decisions over staffing independently from the Secretary of State? And could he confirm that trade unions will be consulted throughout the Assessment Phase?

“Mr Speaker, it is essential to maximise military expertise, so could the Secretary of State say whether he considers it preferable to change the current ratio of military to civilian numbers in procurement?

“Specifically on the GoCo, could the Secretary of State pledge that senior officials currently working on defence procurement within the MoD will be unable to work for the GoCo consortium without a prolonged period of purdah?

“Many in the country will be concerned about the extent of a private entity’s potential reach over public policy. Under these plans would a GoCo model cover the whole Equipment Programme, including the nuclear deterrent? And what is the timescale for the implementation of a GoCo, as this will enable us to judge when efficiencies may begin to accrue?

“Finally, one of the biggest uncertainties surrounding a GoCo is on the ownership of risk and whether the GoCo could generate private profit while financial risk remains in public hands. As an example, can he say whether the liability for the £468 million cost over-run which was noted in the NAO 2012 Major Project Report would have rested with the taxpayer or the GoCo had it then been established?

“On the Single Source Regulations Office, we welcome the proposal in principle and will examine this closely. It is essential to drive down costs where possible in single sourcing. Could he say who will appoint its members and whether its new regulations will be subject to the ‘one-in-one-out’ rule, and if so what will be removed?

“Mr Speaker, it is essential that we get this right.

“We will support what we hope is a genuine competition. We will scrutinise this process carefully because efficient and effective defence procurement is essential not just for the MoD bottom line, but for the remarkable men and women of our Armed Forces who we place in harm’s way to serve on the frontline.”

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