Public military procurement lacks agility and is "broken"

Revamping defence procurement: Urgent reforms needed to enhance agility, responsiveness and value for money in MOD - a lesson for global public procurement

Public procurement - by which governments acquire goods, services, and works from the private sector - is a complex and challenging process, as governments try to balance competing interests, such as value for money, transparency, and accountability.

On a global scale, public procurement is a significant economic activity. In 2020, the value of global public procurement was estimated to be US$1tn.

The military is a major driver of public procurement, accounting for a significant portion of government spending, but the relationship between public procurement and the military is far from straightforward.

On the one hand, public procurement can help to improve the efficiency and effectiveness of the military. By acquiring goods and services from the private sector, governments can access new technologies and capabilities that can help to improve the military's ability to deter and respond to threats.

On the other hand, public procurement can also be a source of potential corruption and inefficiency. In some cases, governments may award contracts to companies that are not the most qualified or that do not offer the best value for money. This can lead to waste and abuse, and undermine the military's ability to perform its mission.

Recent Criticism of the UK’s MOD: A lesson for global governance?

The Ministry of Defence's (MoD) ability to procure equipment has been sharply criticised by the Public Accounts Committee.

The committee expressed "serious doubts" about the agility and responsiveness of the MoD's 10-year procurement plan in light of the current international security situation.

It further described the entire procurement system overseen by Defence Equipment and Support as "broken."

The MoD has disputed the committee's assessment, referring to it as "unsubstantiated." However, the committee raised concerns about an "optimism bias" in the £242.3bn (US$300.75) equipment budget for 2022-2032, taking into account rising inflation and unfavourable exchange rates.

Notably, a significant portion of the UK's military gear is sourced from the United States.

The report also highlighted the challenge of achieving efficiency savings worth £13.8bn (US$17.12bn) over the next decade, while the MoD has yet to outline how it will attain £5bn (US$6.2bn) of that total.

Global supply chain fragilities, security and Tech

Failure to address the fragility of the supply chain, replenish stocks, and modernise capabilities could jeopardise the UK's vital contribution to NATO, according to Sir Geoffrey Clifton-Brown, the deputy chair of the committee. He emphasised the need for fundamental reform of defence procurement to break the cycle of costly delays and failures.

The impact of inflation has also affected the government's ability to retain defence staff, particularly in technology-related fields, where public-sector salaries have been eroded. This has made private sector careers more attractive.

Drawing on an assessment by the National Audit Office and evidence from senior officials within defence, the committee concluded that the MoD's approach to its equipment plan has failed to adapt to the volatility of the current global landscape. The committee expressed concern that the department lacks the necessary urgency to promptly develop and deliver enhanced capabilities required by the armed forces.

The UK-Ukraine supply connection

The report highlighted the need for rapid procurement of ammunition and weapons to replenish stockpiles provided by the UK to the Ukrainian armed forces and to enhance the UK's own stockpiles.

The committee focused on capability gaps in the army, including delays in delivering new armoured vehicles and critical communications gear that is meant to be fitted across the board. These challenges affect the UK's ability to deploy force, particularly in support of NATO allies.

Earlier this year, it was revealed that a senior US general privately conveyed to the UK's defence secretary that the British Army is no longer considered a top-tier fighting force.

The lack of a war-fighting division for many years has been acknowledged by the current defence secretary, Ben Wallace, impacting the UK's ability to contribute to NATO's collective defence and security in times of crisis.

The Public Accounts Committee emphasised that the MoD's current equipment plan is already outdated in light of the ongoing war in Ukraine.

The MPs expressed disappointment in the regular occurrence of equipment arriving years behind schedule and significantly over budget. They called for meaningful change and a fundamental reform of defence procurement to better serve taxpayers and the armed forces.

The call for enhanced agility, responsiveness, and efficiency

In response to the report, a Ministry of Defence spokesperson challenged the assessment that the equipment plan fails to align with the lessons learned from the Ukraine conflict, considering it unsubstantiated.

The spokesperson stated that the lessons derived from the Ukraine conflict largely affirmed the MoD's 2019 warfighting analysis, which formed the basis for subsequent investment decisions. According to the MoD, significant reform of the equipment pipeline has not been necessary.

The spokesperson also contested the depiction of a broken procurement system presented in the report. The MoD asserted that it routinely assesses time, cost, and risk factors for all projects, delivering the majority on schedule and within budget.

Furthermore, the MoD acknowledged implementing numerous changes to improve procurement practices whenever projects fell short. However, they acknowledged that some projects, which span decades, require time to yield results.

The findings of the Public Accounts Committee's report underscore the pressing need for the Ministry of Defence to address the shortcomings in its procurement system.

The MoD must prioritise enhancing agility, responsiveness, and efficiency to adapt to an increasingly volatile international environment. Reforms should focus on streamlining processes, ensuring timely delivery of equipment, and fostering a resilient supply chain.

Efforts to modernise capabilities and address capability gaps, particularly in critical areas such as armoured vehicles and communication systems, are crucial for the UK's national security and its ability to fulfil its NATO commitments. Moreover, strategic partnerships and collaboration with reliable suppliers and allies will be instrumental in strengthening the procurement landscape.

The MoD must seize the opportunity to initiate a comprehensive, root-and-branch reform of defence procurement, prioritising transparency, accountability, and value for money.

By implementing meaningful changes and learning from past challenges, the MoD can regain public trust, enhance the effectiveness of its procurement practices, and ensure the UK's armed forces are well-equipped to meet evolving threats in an unpredictable world.

Despite these challenges, public procurement has the potential to be a valuable tool for global governments to improve the efficiency and effectiveness of their militaries.

By managing public procurement effectively, governments can ensure that their militaries have the resources they need to deter and respond to threats.

How public procurement should be handled on a global scale

Governments should approach public procurement in the military with a focus on value for money, transparency, and accountability.

This means ensuring that they are getting the best possible deal for their taxpayers, that they are using public procurement in a way that is fair and open to all suppliers, and that they are taking steps to protect sensitive information and ensure that contracts are awarded to companies that have the necessary security clearances.

Governments must ensure that public procurement is compliant with all applicable laws and regulations, to help to ensure that public procurement is conducted in a fair and transparent manner, and that it achieves its primary objective: Enhancement of the public good.

Here are some specific recommendations for how governments can improve their public procurement processes:

  • Develop clear procurement policies and procedures that are based on the principles of value for money, transparency, and accountability.
  • Establish a procurement unit or office that is responsible for overseeing the procurement process and ensuring that it is conducted in accordance with the government's policies and procedures.
  • Use competitive bidding processes to ensure that the government is getting the best possible deal for its taxpayers.
  • Require suppliers to meet certain standards, such as security clearance, financial stability, and experience.
  • Establish a procurement appeals process that allows suppliers to challenge decisions made by the government.
  • Conduct regular audits of the procurement process to identify and address any problems or weaknesses.
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