Defence: Better Defence Acquisition

Lord Reid of Cardowan Excerpts

Monday 10th June 2013 Lords Chamber

[Lord Astor of Hever]

My Lords, my noble friend and I have had a number of discussions about GOCO and I am well aware of his concerns. I look forward to continuing discussions in the future and to hearing any positive suggestions that he has. I agree that something has to change. We cannot carry on with the existing situation.

The noble Lord asked me about national security protection, a point also made by the noble Lord, Lord Rosser, which I should have answered. Our national security interests are a primary responsibility of the Government. The better delivery of our acquisition support needs will be of real benefit. We will ensure that DE&S will be suitably constructed to ensure the protection of UK national interests. In order to safeguard UK national security, the contracting entity and the operating company must be UK registered and the overwhelming majority of the contract shall be performed in the United Kingdom. In addition, there will be restrictions on passing information to parent companies. Potential contracting entities will need to satisfy the Ministry of Defence that they can meet the national security restrictions, which will include a number of areas where only UK nationals can have access to the information.

I hope that reassures my noble friend. I have several other pages of information on this issue. I do not want to labour the House with it but I am quite happy to discuss it with my noble friend in private.

[Lord Reid of Cardowan]

My Lords, I join in the tributes paid and the condolences offered to the servicemen and servicewomen who have made the ultimate sacrifice for this country.

I welcome the publication of the White Paper, not least because it addresses in an open and discussive fashion a problem which, let us be honest, has bedevilled Government after Government of both political persuasions, although I suppose we must say now “all” political persuasions. I have one specific question only. It is not about the structure of the GOCO proposals, on which I am open minded, but about the underlying analysis. In doing so, I declare my interests, as registered, in the parliamentary, private and academic spheres.

The question is this: to what extent was the Government’s motivation based on the recognition that one of the key problems in procurement, giving rise to over-costs and over-runs in time, is the rapidity of cyclical innovation in cyber-related equipment? Put simply, 50 years ago, when we were dealing with the purchase of a platform, whether an armoured vehicle, an aeroplane or a battleship, the cycle of innovation of transformative and new products was 10, 15, 20 or 30 years. Now we are more concerned with what is on those platforms, not only the kinetics but the communication and the real-time analysis of situational awareness, and the cycle of innovation in that cyber-related procurement is something like 14 months. In other words, there is a cycle which occurs three times during the period of the normal procurement process. That on its own will not be solved by structural, managerial or contractual reformation. It would be interesting to know to what extent that was considered in the background thinking to the Government’s proposals.

[Lord Astor of Hever]

My Lords, I cannot answer that question relating to cyber, although I am sure that it was a contributory factor.

We have set out clearly in the White Paper the reasons for how we got here. The noble Lord and his colleagues who have had responsibility for procurement in the past are well aware of the problems. He makes a good point about cyber and the complexities and cost of it now. It is very relevant to the subject.

--- Later in debate ---

[Lord Astor of Hever]

My Lords, we are talking about two things. We are talking about the GOCO but also a single-source regulation situation. We feel that the disciplines that we would place on the GOCO would ensure that there is not a monopoly.

[Lord Reid of Cardowan]

My Lords, could I add to my previous contribution lest noble Lords were confused by it? The innovation cycle of 14 months for digitally related equipment over a contract that may last, in the case of aircraft carriers, up to 14 years, means the constant demand for respecification of the initial contract to keep up with the latest and best. That, in my view, has contributed more than anything else to overruns and overcosts because they are a natural product of continual respecification.

[Lord Astor of Hever]

My Lords, the noble Lord makes a very good point. This is an area that the GOCO will have to struggle with—or if it is not GOCO, Civil Service-plus. I take on board everything the noble Lord said.