Defence Reform Bill

Lord Levene of Portsoken Excerpts

Monday 3rd February 2014 Grand Committee

[Lord Palmer of Childs Hill]

My Lords, I will add a few points. At Second Reading, I said that I understood the weaknesses in Part 1 but wanted it to remain part of this legislation. I have not changed my mind on that. I thought the words of the noble Lord, Lord Robertson, about the scandal of defence procurement summed that up. Coming into this much more recently, it was clear to me with my experience of procurement that it was not fit for purpose. I am not blaming anyone for that: many people tried to change it, including some noble Lords in this Room, but were not able to.

The noble Lord, Lord Rosser, made the point about this being a stalking horse. In fact, the word used was “baseline”. The question raised by many noble Lords in previous debates was why two of the three bidders for the GOCO came out of the bidding. In my view, they must have realised that they could not work out the baseline—that is, the actual cost of running the department. Numerous sorts of contracts—even contracts with the same companies and contractors—are done under different agreements and bases. Therefore, two of the bidders left probably because they did not feel they could see where the profit was with any degree of certainty. Left with only one bidder, the Secretary of State was clearly right to say that one could not go forward with a GOCO at that stage. However, as my noble friend Lord Roper said, a great achievement was reached by some of us who spoke with my noble friend the Minister and the Secretary of State about having a sunrise clause—that is, Clause 24. That means that it has to come back to both Houses before you proceed with a GOCO. Whichever Government are in power when that happens, that will give them a big control.

The noble Lord, Lord Robertson, spoke very warmly about Mr Gray, the Chief of Defence Materiel. I have only come to this more recently and probably never saw all the good things that the gentleman did. We are in a new ball game now. DE&S+ will come into force only in April and will probably get going properly only by the autumn. Mr Gray’s contract ends on 31 December 2014. He might well apply for the new chief executive post thereafter—that is of course everybody’s right, and the employer has every right to decide who it should be. However, this is purely a run in, using Mr Gray’s experience in the coming months to help set up DE&S+, and it is obviously in the future as to who that person or persons will be.

A very good question was raised by the noble Lord, Lord Rosser, about the freedoms agreed with the Treasury. I hope my noble friend the Minister when he replies can give some assurances on what levels of payment the Treasury will allow to be made to senior employees of the MoD. Also, why does he believe that the super-affirmative Motion is not needed with Amendment 24—in other words, why should we go with Amendment 24 and not Amendment 25? I look forward to my noble friend’s reply.

[Lord Levene of Portsoken (CB)]

My Lords, I can claim to have spent quite a lot of time working on this particular issue, having held the post of Chief of Defence Procurement for six years. The noble Lord, Lord Robertson, was kind enough to pay tribute to some of the work I did but said that I did not stay around long enough to finish it off. I was actually there for six years. If anybody could look through the results of the Procurement Executive, as it was called at the time, they would see that at the end of those six years as compared with the beginning we had actually resolved most of the problems. I say that without fear of contradiction because if anyone consulted the report prepared by the National Audit Office at that point they would find that for the first time the outturn of the budget matched what we expected it to be and that contracts were being delivered on time.