Independence day

Denis Tunnicliffe explains our amendment on procurement regulation ahead of today’s Defence Reform Bill vote

The Defence Reform Bill has its first day of Lords Report today, including a key debate on how the independence and quality of the soon to be created Single Source Regulations Office (SSRO) can most effectively be assured. It is vitally important that our defence frontline is properly equipped, that taxpayer money is not squandered on ill-conceived and poorly executed defence contracts, and that a fair price is by the Ministry of Defence to its suppliers.  

Failures in defence procurement are widely recognised. But we should not lose sight of the fact that MoD procurement faces constant challenges due to the changing world of technology and the changing nature of national security threats. The creation of the SSRO in Clause 13 of the Bill, which Labour supports, provides a good opportunity to hopefully drastically improve single source procurement. This is a much needed reform. 

Considering the vast sums of taxpayer money spent on defence contracts from a single source (i.e. contracts awarded without any competition), it is imperative that the SSRO performs to an exemplary standard. 

Until now, such contracts had to adhere to the Yellow Book of regulations, drawn up in 1968. It is widely accepted that these regulations are out of date and of little value. The new SSRO is designed, in theory at least, to be an arm’s length body, which will keep the new framework under review, monitor adherence and provide expert determination between the MoD and suppliers. 

If the SSRO is given sufficient capacity and independence to ensure that a fairer bargaining relationship becomes a reality, a properly equipped front line and a balance between value for money and reasonable profits would be the resounding success. As the Bill stands however, it is questionable whether there will be genuine independence for the SSRO. 

Although the SRRO will be a non-departmental public body, the Defence Secretary appoints the Chair from candidates put forward by a panel, as well as appointing the other non-executive members of the board (with sole discretion over reappointing them), and approving the appointment of executive members. In addition, the same individual approves the pay of the non-executives, influences the pay of executive members and their senior staff, and directly controls the budget of the SSRO. This does not bode well for alleged independence, and placing these responsibilities into another government department, for example BIS, is surely more appropriate and wise. 

So, an amendment, which Labour Lords will press to a vote this afternoon, would place the SSRO within the remit of the Business Secretary. Surely this is an essential safeguard considering the immense sums of public money spent on defence contracts, which are not subject to the usual market forces of competition or transparent tendering processes. 

Lord Denis Tunnicliffe is a Shadow Defence Minister in the House of Lords

Published 24th March 2014