Strange arrangements

Rosser4x3.jpgRichard Rosser on the government’s peculiar behaviour over defence procurement

The Defence Equipment and Support (DE&S) organisation within the Ministry of Defence is responsible for the acquisition, support and supply of equipment and the provision of logistics to our armed forces. 

There is general agreement that some reform of DE&S is needed to improve its effectiveness. The Coalition’s preferred option is to create a Government-Owned, Contractor- Operated (GoCo) entity with which the Defence Secretary would contract for the delivery of defence procurement services, and into which DE&S staff would transfer. This would require primary legislation, hence one reason for the Defence Reform Bill which begins its Lords Committee stage today.

Unfortunately for the government, its preferred wish on the operation of the GoCo has run into a major snag – the lack of interest from the private sector, with only one bid received. As a result, DE&S will now be set up as a bespoke central government trading entity; at arm’s length from the rest of the MoD with a separate governance and oversight structure. Ministers now plan to bring in an element of private sector support and the new organisation is likely to have significant freedoms and flexibilities around how it recruits, rewards, retains and manages staff.

Even so, the ‘government’ intends to retest the private sector’s willingness to enter into a GoCo arrangement, albeit not before the next General Election. In the light of this, you would have thought Part 1 of the Bill should have been withdrawn – yet it hasn’t, on the grounds that the legislation would enable a Go Co to be set up quickly in future. The only further check proposed is a requirement for affirmative orders to be passed by both Houses of Parliament before Part 1 could be brought into effect. 

So the government’s stance involves putting in place the legislative provision to proceed with a GoCo at some undefined time – but with the added advantage for the next or a subsequent government of being able to make the change with the minimum of further scrutiny and challenge.

We are talking here about an organisation with a multi-billion pound annual budget. A major change in the arrangements for spending such a large amount of taxpayers money, in an area of cutting edge technology crucial to the nation’s security, should be the subject of the fullest parliamentary scrutiny. And it should be the proposals of the government introducing the change that are open to challenge. 

That is why Labour wants Part 1 of the Bill dropped. Failing that, there should be a super affirmative procedure for any related Order, to lay down conditions which must first be fulfilled by the Secretary of State. For example, evidence based impact assessments to be put before Parliament, and a Select Committee report on the comparative advantages of different defence procurement arrangements.

Any major change made by a future government must be open to proper scrutiny, and preferably through another bill. But it certainly should not be allowed to proceed with the help of legislation passed by those who themselves decide not to go down the same road.

Lord Richard Rosser is Shadow Defence Minister in the House of Lords

Published 3rd February 2014 

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