Defence: Better Defence Acquisition

Lord Rosser Excerpts

Monday 10th June 2013 Lords Chamber

[Lord Rosser]

My Lords, the Minister has had the sombre duty of paying tribute to five members of our Armed Forces who have lost their lives while serving our country, and expressing condolences to their families and friends. We associate ourselves fully with the Minister’s words. Recent events have reminded us that it is not just when they are in action overseas that the lives of members of our Armed Forces can be at risk.

I thank the Minister for repeating the Statement made in the other place. On these Benches we support defence procurement reform. We are open-minded about how this is achieved and we welcome a full and thorough examination of all possible options and a genuine comparison between the two options of the GOCO model and DE&S-plus. It is important that we should be able to move forward on this issue on a bipartisan basis. I have a number of questions and points to raise to which I would be grateful for a response either today or later.

Some argue that the GOCO principle is not entirely new, as the Atomic Weapons Establishment functions under this arrangement. Will the assessment of the GOCO model and DE&S-plus include an evaluation of the performance of the Atomic Weapons Establishment and the extent to which it has or has not performed better under the current structure?

The Government’s case for the GOCO appears in considerable part to be based on the view that the existing organisational structure of DE&S within the Civil Service acts as a deterrent to attracting some of the kind of people and expertise required because of the need to keep within Civil Service pay structures and cultures. There is, in the Government’s view, a need for behavioural change, and bringing in a few people from outside is insufficient. If that is the case, are the Government saying that it would not be possible to create the pay and incentive arrangements felt to be needed in respect of the DE&S without going down the path of a GOCO as envisaged in the Statement today?

If the issue is behavioural change then, in more specific terms, what is the change or changes that the Government wish to see, and how quickly do the Government believe that such changes could be achieved, since the staff working in the GOCO will come almost exclusively from staff transferred from the present DE&S with their existing conditions? Will the organisation running the GOCO be able to make decisions on staffing levels and other resources independently of the Secretary of State?

Obviously, the Government will have been sounding out outside organisations which might be interested in taking over the procurement operation. It may well be that no one company will have all the necessary skills or expertise to take over the procurement function and we may end up with a single consortium of companies. If that is the case, the Government will need to satisfy themselves that any consortium will not, in effect, become a monopoly provider of the service due to alternative individual companies or consortia with the same levels of knowledge and expertise not being available when the contract comes up again for tender. How do the Government intend to ensure that when the contract comes up for renewal, there will be competition? Can the Minister say how long it is envisaged that a contract to run the GOCO will last, and give the criteria for judging whether the contract has been successful?

There is a potential danger of the current expertise and knowledge within the military and civilian personnel of the Ministry of Defence on equipment issues, including cutting-edge equipment and technology, being diminished if a GOCO is established to take over the procurement function, with that knowledge resting more and more within the private sector. Would this mean that HMG’s sovereign ability to ensure the provision of battle-winning equipment could be diminished?

Will military personnel be seconded to work for a period in the GOCO, and will the current arrangements under which some Ministry of Defence staff work alongside private defence contractors, particularly on cutting-edge projects, continue under a GOCO? If a GOCO is established on the basis set out in the Statement and the White Paper, it does not look as though any meaningful risk will transfer away from the Ministry of Defence and thus the taxpayer. If I have misunderstood what is being proposed under the GOCO arrangement, perhaps the Minister could give some examples of the kind of risks that would be transferred from the public sector to the private sector.

What is anticipated would be the basis of a contract to take over the running of the GOCO? Would it be fixed-fee or performance-based? If the Government do not think too much of the performance or culture of the existing DE&S organisation and feel that there is a need for change, who is there in the Ministry of Defence who would be deemed competent to negotiate and supervise a contract with potential bidders that was in the taxpayer’s interests? Who will share the benefits of any improved efficiency in defence procurement as a result of the GOCO? Under the proposed GOCO, would Ministers have any powers to intervene in a contract negotiation or specific procurement decision?

Will the organisation running the GOCO have full knowledge of the UK’s defence equipment capability? If so, will this not be a potential security risk, and have any concerns on this issue been raised by the US and other allies? Would a GOCO model cover the whole of the equipment programme, including the nuclear deterrent? Would there be any requirement on a private company or consortium running a GOCO to ensure that defence manufacturers and suppliers in this country are given the sort of priority needed to ensure that a sovereign capability supporting a UK defence industrial strategy is retained?

Can the Minister give any assurances that a GOCO as envisaged in the Statement and the White Paper would not lead to a run-down in defence jobs in this country? Can he also give assurances that any changes made to the present DE&S organisation will be the subject of full and proper consultation with the staff and their trade union representatives, and that the rights of all existing staff will be protected? One would have thought that the staff and their representatives would also have a valuable input to make on the assessment of the options being considered.

I also ask the Minister for an assurance that the chosen model of procurement management will not lead to any diminution in accountability to Parliament for decision-making and that oversight and scrutiny of multibillion-pound contracts will not be hampered but enhanced. Can he also give an assurance that, at the very least, the same amount of information that is currently in the public domain in relation to the activities and working of DE&S will remain so under any different model of procurement management? We do not want to find that less information is in the public domain on grounds of commercial confidentiality.

We recognise the need for reform of defence procurement. We expect the Government to be open about the findings of the assessments that they will be undertaking on the chosen model for the future and that the two value-for-money assessments will be published and open to full scrutiny, including in this House, before a final decision is made. That is not only important for the need to ensure value for money but, equally significantly, is crucial to ensure that we get right the arrangements for supporting and equipping our Armed Forces who are serving, or ready to serve, on the front line on our behalf.