Is UK Defence Procurement Broken? No, it is not.

 

If you believe the latest reports from the House of Commons Defence Select Committee (HCDC) Defence procurement is broken and in urgent need of fixing. Is this a fair analysis or has Parliament not given a fair hearing to the MOD?

One of the most timeless topics in defence coverage is that of defence procurement delays and cock ups resulting in useless equipment being delivered far too late to be of any use. A few weeks ago, while visiting the lovely town of Berwick Upon Tweed with fellow blogger ‘Fighting Sailor’, both of us were struck by the signs around the town walls. Berwick used to be a critical settlement on the border between England and Scotland and was fought over for many centuries. As part of a programme of defence improvements in the Tudor era, walls were built around most of the town, but the project was late, over budget and failed to deliver as expected – meaning not all the walls were built. A timeless story of Government failing to project manage defence procurement properly?

Looking at Defence procurement objectively it is worth taking stock of just how complex and vast an operation it is. In the UK, the Minister for Defence Procurement (MinDP) is responsible for the delivery of a portfolio of programmes covering land, sea, air, cyber, space, communications and logistics, to support the global operation of 200,000 regular and reservist military personnel across every continent on earth. This ranges from providing rifle bullets and small arms, through to fighter jets, aircraft carriers, communication satellites and nuclear submarines. The MOD equipment plan is one of the most ambitious and complex on the planet, matched only a small number of other states with equal aspirations. The report notes that the multiyear programme MinDP oversees is worth approximately a quarter of a trillion pounds.

Why then does Defence seem to do so badly at buying kit in the eyes of the HCDC? Frankly Humphrey isn’t sure that this is a fair view at all because much of the report focuses on a small number of programmes that have had challenges, often for reasons outside the control of the teams purchasing the equipment. For example, we forget that these projects take a really long time to design, develop, deliver and deploy. Look at the Type 26 frigate, which had its gestation as a design in the early 1990s, and owes its current iteration to a design contract placed in 2010. It has had to live through four general elections,  and five Prime Ministers and associated ministers, all of whom will have had different views on the importance of the project to Defence. This length of time for procurement matters because priorities change over time and funding problems change. What seemed an essential ‘fund now’ capability some years ago may quickly become a source of ‘fat’ to trim spending from years later to reduce pressures on the budget. What was a well managed and on time project may quickly become beset by problems to help solve wider turbulence in the programme. When a project may last 10-20 years from inception to delivery, let alone actual service, it is easy to see how these problems can help delay projects that may otherwise be on track to deliver.

Allied to this is that over time technology changes and what was previously thought impossible to deliver may, in just a few short years, become the norm. Ask anyone in the year 2000 for a handheld device capable of accessing work emails, making secure calls and having built in internet browsing capability and you’d have been laughed at. By 2010 it was seen as utterly routine to have a smart phone in your pocket. The same issues apply equally to wider defence projects – as science evolves and capability changes, does it make sense to change the design and add new requirements to reflect changing operational circumstances? Planners face a wicked problem – faced with new technology that may materially change how equipment could be used, but with the project underway, do they press on as planned, or instead pause, redesign and amend the user requirements and change it? The former is far more likely to deliver equipment as planned, but its long-term sustainability and survivability may be far less than if it had been updated while under construction – and retrofitting it later may cost far more than bringing it in at the outset, even if this delays delivery. There is no right answer to these challenges – it is about managing risk and assessing what is in the long-term interest of Defence and is also affordable in the short and longer term.

The question for senior decision makers is where do you draw the line? Is the public better served by pressing on as planned or spending more in the short term, increasing pressure on the budget or pausing it for longer term pain? Defence is arguably uniquely exposed to these problems, suffering from the combination of long procurement lead times and also a need to retain cutting edge access to technology to retain ‘mission advantage’ when it comes to being able to operate with allies against likely threats. The wider civilian procurement industry does not have the same level of problems, with companies dealing with either more tightly bound requirements (e.g build a school, bridge or hospital) or more limited technological innovation (it is rare for most areas to see technology change incrementally and rapidly in such short time spans). Trying to compare the unique world of military procurement to the rest of the procurement sector and expecting it to make sense is, arguably, a fools errand.

There is also a danger when looking at procurement of assuming that ‘if we treat everything like an Urgent Capability Requirement (UCR) then it will all be bought rapidly’. This is a key theme of the report, but which neglects to understand the difference between UCR and mainstream procurement. The reason it is easy to buy equipment in a hurry for a campaign like Ukraine or Afghanistan is that the user requirement is clearly defined, you are buying it in a hurry for a short term operationally specific requirement and its highly unlikely to become an enduring item in the inventory, meaning you don’t need long term support contracts or meaningful integration trials in place.

UCRs (UORs in old money) are brilliant for some specific areas and it is right to acknowledge that they have a key role to play. But the report fails to acknowledge or understand that they also provide very specific ‘one trick pony’ solutions to very specific problems. They do not provide equipment that can be used across the totality of missions the MOD is likely to do. They are not properly integrated with all the equipment used by the MOD, meaning there is no guarantee they’ll work as planned and there is no long-term support solution in place that will keep them working for the long haul. A UCR is essentially buying a disposable piece of kit for ‘the war’, not a long-term piece of kit for ‘a war’. They’re great, but only if specific areas.

The other forgotten problem with shifting to a ‘UCR mentality’ is the impact this has on wider project support. During OP HERRICK the MOD shifted significant resources to ensuring the right level of staff support was available for delivering UORs. This led to widespread staff shortages on less time critical projects and had a negative impact on their delivery – good staff were snapped up for urgent projects, while other ones were either gapped or got the ‘dregs’. The danger of UCRs is they create a ‘feast or famine’ mentality whereby staff want to help and will do all they can to help, but they are leaving other projects behind to do this. The longer term impact is it can heavily disrupt proper procurement plans.

There is a wider point here that the report touches on which is that its really hard to get staff to stay in the government project management business. The Civil Service is a rewarding and good career to those who want to stay in it, but at a time of poor salaries and high inflation, it is simply not competitive to people struggling to pay mortgages or support a family. You get the talent you’re prepared to pay for and at the moment many Civil Servants feel undervalued and underpaid and know that there are plenty of defence contractors who will pay far better money for their skills and experience. Trying to offer a reward package that keeps people in will be crucial, and also ensures that there is long term career opportunity. The decision to freeze MOD Civil Service recruitment to pay for the Armed Forces payrise may be popular, but will only make matters worse for the MOD trying to retain talented staff who are now unable to secure promotions or more money internally – the impact is likely to further deepen the corporate reliance on contractors and consultants to do jobs at far more cost than paying a civil servant to do it for them.

Another point made in the report is that the military need to have an acquisition career stream. This does already exist, but there is little glamour to many in becoming a procurement expert. When combined with a centralised career management system that prioritises moving people over keeping experience where it needs to be, its little wonder that there are challenges getting good military staff to support procurement. The armed forces must be one of the last bastions where you can take someone who has spent 15 - 20 years doing one set of roles and then decree that for the next 2 years they’ll be playing a critical part in defence procurement, usually without any prior experience or training to support this. While there may be good reasons for this, the risk is that the generalist approach to career management is, in the main, not a good way to generate people who are long term procurement experts. The real danger is that with a hollowed out civil service to support this activity, defence procurement may suffer from a lack of deep experts.

The final point of concern about the report is the way that it contrasts the UK to France, Israel, Japan and the USA based on a couple of trips to meet people out there. The report coyly notes that Israel only has 300 people in their version of DE&S and that support is done by contractors. This is a dangerously disingenuous approach to take. The Israeli military situation is utterly different to the UKs, with a far smaller and more defined military threat. It also relies exceptionally heavily on the US ‘Foreign Military Sales’ (FMS) approach to provide new equipment – which essentially transfers the procurement risk onto the US to deliver pre-designed equipment that meets Israeli requirements. The report doesn’t note how many people are involved in the defence industry to support this work either, which is likely to be not inconsiderable. Trying to compare the UK to Israel is meaningless as both nations have completely different approaches to Defence procurement. Similarly comparing the UK to Japan makes little sense as Japan too is heavily reliant on the FMS system and there are plenty of accounts out there of issues with Japanese defence procurement. There is a sense in this report of people trying to kick the MOD when its down, presumably because its easy to be seduced by pretty PowerPoints given on publicly funded jollies abroad rather than be genuinely objective in their approach.

The fact is that the UK has a unique set of challenges when it comes to defence procurement in that it has to balance off a hugely diverse set of needs, support a very complex industrial ecosystem and do so in a way that supports the taxpayers interests short and long term. This leads to compromises that may not always be great, but which make sense at the time for the circumstances in which they were taken. The report fails to recognise this – were the UK to go to down a similar route to Israel of mostly relying on FMS, then while procurement would be sped up, it would be at huge and probably terminal cost to the UK defence industry – much to the disgust of the same committee.

It is telling that the report focuses largely on covering three sensational projects, Type 26, Wedgetail and Ajax – all of which have had issues that are not directly linked to procurement to fix (e.g. the decision to only buy 3, not 5 Wedgetail which is a policy savings measure not a procurement choice).  What they don’t focus on is what the MOD gets right day in, day out, and this is that for every one or two high profile projects experiencing challenges, hundreds are delivered with minimal drama. The MOD excels at getting complicated challenging and cutting edge technology into service quickly and efficiently and doing so in a way that supports the military. Many of these projects get no media interest or Parliamentary scrutiny, but they do deliver what is expected of them.

Perhaps this is the better answer to the question of ‘is UK defence procurement broken?’ Does the MOD manage to purchase and support a globally focused force capable of operating around the world in a variety of warfighting operations in a timely and efficient manner? Does it get equipment into service by and large on time, as intended and with a minimum of hassle or loss? Is the procurement process fair and free of malign influence? Can it meet the rapidly evolving needs of the Armed Forces and can it produce equipment that will be fit for purpose for decades to come? To all these questions the answer is surely an emphatic ‘yes’, which in turn means that despite the odd public blip, UK defence procurement is definitely not broken.