Defence Acquisition: the wisdom of elders

Fresh some several years of hyper-active reforms, and a lot of intensely reflective thinking, the MoD would have been disappointed to read the Defence Select Committee’s mauling of its industrial strategy, or to be more accurate, lack of strategy.

This is a little unfair. The MoD has a strategy and it’s a clear response to several factors that come from Whitehall (internal debates around institutional design, the place of the UK in the world, stance etc) and external sources (mainly the economy), but the problem is in its radicalism. In a recent article for World Defence Systems, that I think is imminent, I said the government’s defence reforms had been typified with a radicalism born of conservatism – they’re spinning ever more rapidly to achieve a very stable set of end-goals that can be tracked over time. SDSR (and its foundational NSS document) could be seen as a radical reining in of the UK’s overseas role, but then Libya happens and it looks like salami-slicing and strategic disjuncture etc etc. And the evidence that Mark Phythian and I provided to the Select Committee began its intellectual origin at this point: that SDSR reoriented the UK into less interventionist activity, and – more importantly – a sticking plaster pathway to get through to 2015. So, in our Defence Studies piece (behind the publisher’s wall until April) we noted that Libya effectively buried the SDSR because of this critical disjuncture in aims, whilst in our Political Quarterly (which is free to access) piece we noted that the follow-on activities after SDSR might change the nature of bureaucratic governance in the UK. The Defence Select Committee’s report also raised questions about how effectively the government would keep control of procurement under a GoCo arrangement (where the company is owned by the government but run by a contractor, or a consortium of contractors).

The classic arguments used to justify a GoCo arrangement locate themselves around private industry being able to drive down costs, and drive up efficiencies. Fine. But there’s very little evidence of this happening across the full spectrum of government activities. The comprehensive work of the NAO to look into the financial models the government uses highlights the problems of needing incredibly precise contracts to nail down a financial arrangement and the punitive costs of deviating an inch from it, which seems to happen with monotonous regularity. After all, it’s a complex world with complex needs. So, the wisdom of going down an internally outsourced route, which is what the GoCo amounts too, relies on a truth to the maxims that private is cheaper and industry knows better. Smart procurement felt a more comfortable concept, in all honesty. Why are our public institutions immune from more efficient rationales? There are no inherent reasons… but strangely it persists.

The second major criticism levelled by the committee was about a lack of strategic direction – that equipment savings, job protection, and protecting the British research base could be better secured if the MoD knew what equipment was critical to national security. If the MoD knew this, they would have a better idea about what they were going to ring-fence and protect. The committee went on:

“We believe the absence of a strategy which supports appropriate national sovereignty puts the UK at a disadvantage against competitor countries. Furthermore we do not understand how we can have confidence in a national security strategy which does not show a clear grasp of what is needed for the defence of the United Kingdom and how this can be ensured.”

So, the idea of buying-off-the-shelf was effectively scotched as a panacea option. Which is a bit of a blow to the National Security Through Technology white paper released in February 2012, which broke the historic link between the UK defence industrial base and UK security.

So, where to go now? The SDSR was unusual as a defence review in as much as its review point was established from the outset (2015) and thus one could reasonably assume that it would be reviewed in, er, 2015. But two years on, it is still receiving a monthly drubbing in the press, and by Parliamentarians and by humble academic scribblers. It seems unconscionable that it won’t be revisited before 2015.. but how can it be? For instance, the sort of inter-service row that was had in the run up to the SDSR will look like Aunt Sally’s quiet picnic on Ditchling Beacon compared to a middle-of-the-cuts version now. And Tory MPs who are feeling cross about bleating middle Englanders like me moaning on about reforms to universal benefits and married tax allowances etc,  disappointed with the angst in Parliament over gay marriage, Europe, triple-dips etc are unlikely to want to see their government robbed of the ‘friend of the military tag’ so soon after nabbing it back from Labour.  The Prime Minister is one of the government’s biggest assets, but he’s collecting problems for fun at the moment.

We normally talk of salami-slicing vs radical surgery in defence reform. The problem is that the radical surgery keeps coming in slices. And the sensible retreat from overseas commitments was rapidly replaced with renewed interventionism (which intellectually I’m not opposed to). Whether the current suite of policies are underpinned by good sense or not, defence policy looks like a badly thought out mess. Most of the stakeholders involved in it seem as pleased as Porsche owner being given a moulding Mini-Metro as a courtesy car.

Intellectual and practical incoherence, stakeholder disaffection and continual bad-press from all quarters need to be thought about clearly and perhaps in the following blank-paper terms:

 

  • Who owns strategy?
  • Are these people in the best institutional or workload place to be doing it (all sorts of factors mitigate for and against strategic thinking. From my own perspective it requires time to reflect and play with ideas, and it requires the right sort of information at the right quality to be put in front of people. Is this happening?)
  • Who is responsible for managing and including stakeholders?
  • Is there a clear 5, 10, and 30 year vision?
  • Do we know how to get to each of these markers?
  • What kind of head-room is defence operating with, and what issues does that pose? (and let’s be clear, we know that the budget is under serious pressure despite the promise of increases in equipment monies. So, can we guarantee if we cut something that we can keep the saving to make something else better? If not, then the government needs to think about how it is incentivising reformists.

 

There are plenty of answers to these questions already out there in various literatures. But many of them (most of them) sit within the ‘yes, but’ mould of thinking. Defence policy doesn’t need ‘yes, but’, it needs ‘here are the expected, anticipated or known-unknown threats and now here are the capabilities that we think best match these threats exist, with the money we’ve got or can reasonably ring out of the Treasury’.

Select Committees are getting good at holding government to account. It’s time for government to match them with good answers.

 

Ps- the wisdom of elders title is a little random. It refers to an expert witness cited next to Phythian and I, who is both very wise and of distinguished service and years.

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6 thoughts on “Defence Acquisition: the wisdom of elders

  1. The Defence Select Committee report does indeed challenge some of the principles underpinning the National Security Through Technology white paper. But whilst the MoD may have a strategy, does it (together with other Government departments operating in the national security sector) possess an ‘industrial strategy’? Ideas around how such a strategy should be designed and implemented have changed in recent years, and rightly so, but HMG has been keen to ensure that the White Paper should not be seen as an ‘industrial strategy’ (even if it contains elements of one, such as on exports and S&T funding for example). The Defence Select Committee raises important questions because other countries are seen to be more active in this area. As you say, interested parties should look forward to the Government’s response – we might expect it to make several references to the recently-launched ‘Defence Growth Partnership’ as it seeks to answer its critics.

    • Rob Dover says:

      Hugo, many thanks for this. Could I ask that we chat offline – if you would like to, could you email me at my university address please? Link off to the right under contributors.Many thanks,
      Rob

  2. The Faceless Bureaucrat says:

    Thanks, Rob. On the issue of “salvation from the private sector” I would share this anecdote (helmets on, chaps, I feel a ‘war story’ coming on)…

    In a former life, I worked for a consultancy (yes, yes) called in to ‘sort out’ the spares and repairs division of a major defence firm in the UK (hint: it starts with a B). At the time (and for years without end up until that point) there existed no incentives to drive down costs: each order from the RAF (and other users of the Firm’s proprietary kit and clobber) was simply produced on a ‘cost + fixed margin’ basis. All sorts of inefficiencies were ‘built into the model’ (ranging from unnecessary van fleets roaming the country on fixed delivery rounds to unnecessary wan fleets of tea-ladies roaming the country on fixed delivery rounds, etc. etc.) When we were called in to ‘drive down costs’ our first hurdle was trying to figure out how the ‘sausages were made’, so to speak. No one in the company at the time seemed to know. The answer to the more probing question, “Why in God’s name do you do that?” was “well, we’ve always just done it that way”, which echoed in the corridors, and my ears, for many months. Other than a slew of Marriott Reward points from picturesque Preston, I didn’t get a lot positive out of the experience.

    It took a directive from MOD to cut 5% within a year and to transfer those cuts directly to the industrial supply base for any change/improvement/efficiency to take place. All of sudden, out went the ‘fixed margins’ and some real soul searching had to occur.

    The private sector, with its Bottom Line and Invisible Hand, is not so perfect after all…at least not in the real world of near -monopolies, erst-while monopsonies, regional benefits, and the like. Looking to it (in its real world form) to solve the defence crisis is folly, strategy or no strategy.

  3. Ed says:

    Lovely post, as always.

    This comment is to let the site (and readers) know that e-mails looking like follow-up comments, might be malware. I have had two already, refering to posts on KoW many months ago.

    • David Betz says:

      Ed, thank you for telling us. We’ll look into what’s going on. The internet’s filthy with this stuff. What a pain.

    • T Rid says:

      Hi Ed — Can you forward one of those emails to me? That would help us pin down the problem. Thanks, Thomas

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