Let’s Get A Tighter Grip On Defence Spending

Britain’s performance on defence procurement is poor – it’s time to make those responsible face the consequences.














Equipped to do the job: British armoured forces in action in Afghanistan.

The history of defence procurement is not a happy one. Ensuring that our Armed Forces get the best possible equipment they need, when they need it, is easier said than done. Today, Labour will publish the findings of a comprehensive 10-month study into defence acquisition policy that will inform a wholesale review of party policy launched by Ed Miliband last year. There are few benefits of being in opposition, but being able to take a step back and reflect is one.

Labour can be proud of the fact that we increased the defence budget by 10 per cent in real terms during our years in power. Defence procurement was reformed and equipment, from drones to personal kit, was transformed – so much so that, by 2009, the last chief of the defence staff, Air Chief Marshal Sir Jock Stirrup, remarked that our troops had never been so well equipped. The welfare of our forces, and crucially that of their families, was also improved.

But defence procurement is a complex and challenging activity. The lead times are enormous and technology changes So what is to be done? It is often said that there is a “conspiracy of optimism” in defence procurement. At best, there is a tendency to muddle through in the hope that both the customer and supplier “get there in the end”. At worst, defence procurement has been based on unrealistic assumptions and over-ambitious plans that balloon beyond all recognition, along with the costs. This conspiracy of optimism has to be replaced by a culture of consequences.

This must apply to the defence industry. In the past, the taxpayer has been left carrying the can for some of its lamentable failings, with some suppliers seeing the UK government as little more than a cash cow. Too many times, once a company or consortia has been awarded a contract, the price begins to ramp up.

First, we need firmer and fairer contracts that incentivise good performance, with industry asked to provide higher warranties for performance. There should be far greater penalties for those that fail to deliver on time and on cost, and the MoD should not be afraid of taking companies back to the initial approval stage, or indeed calling time on contracts that are simply not working. Experience should triumph over hope.

Second, in the case of de facto and actual monopoly suppliers to the MoD, there should be what is known as “open book” contracting once a contract is let. This means far greater transparency of costs and profits in a long-term partnering approach. Within such an approach, there should be not just an agreed price but an agreed target level of profit, too. If the MoD’s requirements change due to operational imperatives – where, say, our Armed Forces need something extra on top of the original specifications – industry must not be allowed to cash in and make super-normal profits on the change in price.

And third, we need shorter, less complex projects with streamlined processes and decision-making. In defence procurement, time is money.

But we also need that same culture of consequences inside the MoD. In the commercial world, promotion and bonuses are based on performance. But in the MoD, there is little sense that poorer performing individuals in very senior roles are ever held accountable. The people leading Integrated Project Teams (IPTs), who manage major procurement programmes, should have the authority, accountability and responsibility for project execution. Currently, they are given as little as four or five days’ training and tend to come from either the Civil Service or from the military – this does not always make them best able to manage hugely challenging commercial contracts.

These problems are compounded by the frequent changes in project managers. The norm in the MoD is to move jobs every two years. This leads to constant changes of strategy and emphasis, which are not helpful and avoid the need for managers to live with the consequences of their actions.

This autumn, the Government will publish its White Paper on the defence industry, but all the signs are that it will have little to say except – as is the case with the Bombardier contract for new trains – that we should give up at home and simply “buy off the shelf” from abroad. Today, Labour will present a host of ideas to reform defence procurement. But in beginning to shape policy for the future, all parties need to be honest about the past and learn from their mistakes.

Michael Dugher MP is shadow minister for defence equipment rapidly, as do our requirements, with the enemy having a say in all of this. And despite all the investment and improvements, we made mistakes. The problems of defence procurement have plagued all governments, but the huge delays and massive cost overruns continued on our watch.

That is why Labour in government commissioned the Gray Report in 2009 to identify the serious failures in acquisition. The current Government liked the report so much that it hired the author, Bernard Gray, to head up defence equipment and support at the Ministry of Defence.

The fact is Britain’s record is poor. Over the period for which there is consistent data (2003-2010), major projects costing the taxpayer in excess of £200 million, and those that were planned to take four to five years between “Main Gate” decision and entry into service, exceeded their most likely out-turn estimate of costs by more than 10 per cent on average – with extremes of up to 40 per cent. These programmes also slipped by 40-50 per cent – some by as much as 250 per cent – from their expected schedule.

So what is to be done? It is often said that there is a “conspiracy of optimism” in defence procurement. At best, there is a tendency to muddle through in the hope that both the customer and supplier “get there in the end”. At worst, defence procurement has been based on unrealistic assumptions and over-ambitious plans that balloon beyond all recognition, along with the costs. This conspiracy of optimism has to be replaced by a culture of consequences.

This must apply to the defence industry. In the past, the taxpayer has been left carrying the can for some of its lamentable failings, with some suppliers seeing the UK government as little more than a cash cow. Too many times, once a company or consortia has been awarded a contract, the price begins to ramp up.

First, we need firmer and fairer contracts that incentivise good performance, with industry asked to provide higher warranties for performance. There should be far greater penalties for those that fail to deliver on time and on cost, and the MoD should not be afraid of taking companies back to the initial approval stage, or indeed calling time on contracts that are simply not working. Experience should triumph over hope.

Second, in the case of de facto and actual monopoly suppliers to the MoD, there should be what is known as “open book” contracting once a contract is let. This means far greater transparency of costs and profits in a long-term partnering approach. Within such an approach, there should be not just an agreed price but an agreed target level of profit, too. If the MoD’s requirements change due to operational imperatives – where, say, our Armed Forces need something extra on top of the original specifications – industry must not be allowed to cash in and make super-normal profits on the change in price.

And third, we need shorter, less complex projects with streamlined processes and decision-making. In defence procurement, time is money.

But we also need that same culture of consequences inside the MoD. In the commercial world, promotion and bonuses are based on performance. But in the MoD, there is little sense that poorer performing individuals in very senior roles are ever held accountable. The people leading Integrated Project Teams (IPTs), who manage major procurement programmes, should have the authority, accountability and responsibility for project execution. Currently, they are given as little as four or five days’ training and tend to come from either the Civil Service or from the military – this does not always make them best able to manage hugely challenging commercial contracts.

These problems are compounded by the frequent changes in project managers. The norm in the MoD is to move jobs every two years. This leads to constant changes of strategy and emphasis, which are not helpful and avoid the need for managers to live with the consequences of their actions.

This autumn, the Government will publish its White Paper on the defence industry, but all the signs are that it will have little to say except – as is the case with the Bombardier contract for new trains – that we should give up at home and simply “buy off the shelf” from abroad. Today, Labour will present a host of ideas to reform defence procurement. But in beginning to shape policy for the future, all parties need to be honest about the past and learn from their mistakes.

Michael Dugher MP is shadow minister for defence equipment.

Could This Be The End Of The RAF? Military Chief Refuses To Rule Out Merger With Navy As Cuts Loom

The future of the RAF and Royal Navy were thrown into doubt last night after the head of the Armed Forces said their merger should be 'debated'.


















Cash-strapped: Air Chief Marshal Sir Jock Stirrup has not ruled out an amalgamation of the RAF and the Navy.

Sir Jock Stirrup caused consternation when he failed to rule out the amalgamation of two of the three cash-strapped military services.

The Chief of the Defence Staff said it was only 'plausible' that they would all exist separately in ten years' time.

The drastic cuts needed and the growing cooperation between forces in Afghanistan raised the controversial possibility that the air and sea service could unite.

Sir Jock made his comments at the unveiling of the Government's Green Paper on military reform, which lays the groundwork for a full-scale strategic defence review after the General Election.

The document, published by Defence Secretary-Bob Ainsworth, revealed no spending figures nor any indication of how the Armed Forces would look after the long-awaited shake-up. But it was revealed that:

* Defence chiefs will be forced to compromise on purchasing costly state-of-the-art equipment as ministers battle to reduce the nation's £178billion deficit;
* Britain can expect higher casualty rates as we are dragged into guerilla wars with increasingly sophisticated enemies;
* Despite the nation's battered finances, ministers will press ahead with the £20billion update of the Trident nuclear deterrent;
* The Armed Forces will have to work more closely with the French and other allies as spending cuts bite.

Mr Ainsworth also announced that the war in Afghanistan - which has claimed the lives of 253 UK service personnel - remained the top defence priority. Funding for troops and equipment will rise from £3.5billion to £5billion next year.






















And despite the urgent need for the MoD to cut costs in the face of a £ 36billion shortfall, he said that two new aircraft carriers costing £5billion each would 'most likely' go ahead.

The Green Paper warned: 'We cannot proceed with all the activities and programmes we currently aspire to, while simultaneously supporting our current operations and investing in the new capabilities that we need.'

The total number of British service personnel - 188,440 - is dwarfed by that of China and the U.S. and even trails that of France.

The Defence Secretary refused to say where cuts - expected to be significant - would be made in the defence budget.

But Sir Jock admitted that it was 'plausible' that one of the three services could be cut in future.














Top of the list: Afghanistan will remain the priority, with funding set to rise.

He warned against 'duplications, overlap and inefficiencies' in the Army, Royal Navy and RAF, while insisting the three could work seamlessly together. However, he said: 'There are interesting issues to be debated here.'

Experts suggested that the RAF - formed in 1918 - could be most vulnerable to the axe. Its fast jets, transport planes and helicopters could be split between the Army and Navy.


















Mr Ainsworth said he did not foresee 'major structural change' but warned: 'Not allowing single service interests to stand in the way of efficient delivery of security to the nation is something we have to look at.'

He added that the UK must prioritise its defence capabilities because it could not afford to 'insure against every risk'.

He made clear Labour would not scrap the Navy's new aircraft carriers despite criticism they were unaffordable and unsuited to modern conflict.

However, he refused to be drawn on the 140 Joint Strike Fighters intended to fly from the warship. The price of each jet has soared from £37million to more than £62million in four years.

He paved the way for greater military co-operation with France in a 21st century 'Entente Cordiale' while insisting the U.S. would remain Britain's most important ally.

'Our Armed Forces must be prepared if called upon to protect our interests, often in distant places, and most likely as part of a coalition of international forces,' he said.

Mr Ainsworth also promised legislation to force future governments to carry out a strategic defence review every four years. The last was in 1997 soon after Labour entered power.

Tory defence spokesman Liam Fox said: 'That our nation's security should be compromised by Labour's historic economic incompetence is truly a national tragedy.'

Wootton Bassett Timeline: How The Repatriation Ceremony Came About

From 2007's first spontaneous gesture of respect to 2011 when the flag was lowered for the last time in Wiltshire town.












Crowds gather for the repatriation procession of three soldiers killed in Afghanistan – Captain Daniel Read, Corporal Lee Brownson and Rifleman Luke Farmer – through Wootton Bassett in January 2010.

Spring 2007

The bodies of fallen service personnel are to be repatriated through RAF Lyneham in Wiltshire rather than Brize Norton in Oxfordshire. This means funeral corteges will pass through Wootton Bassett en route to hospital in Oxford.

April 2007

The first repatriation takes place through Wootton. Mayor Percy Miles is told and decides to wear his mayoral robes to watch the cortege pass. The first soldiers to be honoured are Aaron Lincoln, 18, and Danny Wilson, 28.

2007 and 2008

The number of people lining the streets gradually grows. The local branch of the Royal British Legion begins to alert townspeople and veterans' groups when a repatriation is to take place. Hundreds, then thousands, many travelling from far afield, begin to turn out.

July 2009

The bodies of eight soldiers are repatriated. Three were killed as they rushed to rescue comrades injured in an earlier blast. For the first time relatives applaud and throw flowers.

Summer 2009

There is growing unease in the town over the attention focused on Wootton Bassett. Residents complain that the media is intruding and turning repatriations into a circus. Concern too at the outward shows of emotion by some family members.

November 2009

The body of bomb disposal expert Olaf Schmid is repatriated. His dignified widow, Christina Schmid, grabs headlines as she applauds the hearse carrying her husband's body.

November 2009

A particularly charged repatriation when the bodies of five soldiers killed by a rogue Afghan policeman are brought home. The BNP leader Nick Griffin appears in the crowd.

December 2009

Anger when the BBC films Question Time from Wootton Bassett. Residents have tried to keep politics out. Afghanistan dominates the show's agenda.

January 2010

The radical Islamist group Islam4UK causes outrage by announcing it wishes to stage an anti-war protest in the town. The idea is abandoned.

June 2010

The bodies of seven servicemen, killed in four separate incidents in Afghanistan, are repatriated. Two were killed in firefights, one by an explosion. Four died when their vehicle rolled into a canal.

March 2011

David Cameron announces Wootton Bassett is to become the first English town for more than a century to be granted the title "royal" to mark the way it has honoured fallen personnel.

August 2011

The final repatriation – the 167th takes place. In all 345 men and women have been repatriated through the town.

Another Minister Snapped In No 10 Document Trap

Papers make explicit the delight of government at the impending departure of Afghan President Hamid Karzai.












They should really have learned their lesson by now. Andrew Mitchell yesterday became the latest senior figure to be photographed leaving Downing Street clutching sensitive Government documents in clear view of the waiting photographers.

Following in the footsteps of Caroline Flint, Danny Alexander and Metropolitan Police commander Bob Quick, Mr Mitchell was undone by the oldest trick of the modern digital camera: the ability to capture even the smallest print from yards away.

The International Development Secretary was shown leaving a National Security Council meeting yesterday morning with briefing notes on Afghanistan marked "protected".

The document made explicit the Government's delight at the impending departure of Afghan President Hamid Karzai and described British attitudes to criticism of the country's banking system by the IMF.

Confirming that the Government is pleased Mr Karzai is intending to stand down after two terms in office in 2014, the document reads: "This is very important. It improves Afghanistan's political prospects very significantly. We should welcome Karzai's announcement in public and in private."

The document also details Government concern, highlighted repeatedly by various international organisations in recent months, that foreign aid given to Afghanistan is sent to a finance ministry and banking sector that is notoriously corrupt. Some international funds to Afghanistan have been suspended, but the document suggests that this may destabilise transitional arrangements for handing over more power to the Afghan authorities.

Mr Mitchell's briefing document reads: "The World Bank have told us that the suspension of UK and other donor funds to the Afghan government will soon begin to destabilise activities essential for transition." The document adds that in the autumn the IMF will send a new inspection team to assess whether the situation has improved.

It continues: "We are hopeful that the government will have demonstrated sufficient progress towards credible reforms of the financial sector, and actions to address the Kabul bank fraud so that a new programme can be agreed over the autumn." Mr Mitchell apparently realised he had mistakenly displayed the confidential briefing papers but told an aide: "It is nothing top secret."

The Department for International Development later said the papers were "of a routine nature". A spokesman said: "They would have had a national security level marking of 'restricted' or 'confidential' if they contained anything of significant sensitivity."

Mr Mitchell could at least console himself that he is far from the first to be caught out like this. Former housing minister Ms Flint was snapped in 2008 carrying papers warning of a property crisis which could see house prices fall by 10 per cent, while last November Mr Alexander was pictured with a copy of the Government's spending review document, revealing a potential 490,000 public sector job losses.

The only person to lose their job was Met Assistant Commissioner Bob Quick, who was snapped with a briefing of an ongoing counter-terrorism operation. Some raids had to be brought forward as a result and Mr Quick resigned.

Cameron Still Lacks A Foreign Policy Vision

What kind of a power do we want to be? How do we achieve that ambition? Cameron is unsure.












David Cameron greets troops after making a speech to British and American troops at Camp Leatherneck military base on July 4, 2011 in Helmand Province, Afghanistan.

Nato's mission in Libya looks like a foreign policy success for David Cameron, but that is not the same thing as having a successful foreign policy.

First, the obvious caveats: it is early days; the battle is not over, let alone the war. There are easily enough military and diplomatic traps ahead for the Libyan intervention to become a failure. The prime minister, the deputy prime minister, the foreign secretary and the defence secretary have all said as much. But for now, the politics of the situation are favouring Cameron. He took a big decision under considerable pressure and, after some nerve-wracking months, it appears to have paid off. "He definitely leapt before he looked," was how one senior Ministry of Defence official put it too me early on in the campaign. (The same source also said of the anti-Gaddafi rebels "the only good fighters among them are the al-Qaeda ones", a slightly wild allegation which should nonetheless be reason enough to put blind optimism for the future on hold.)

Libyans will decide whether they are better off in the long run for the UK's military partisanship in their insurrection-cum-civil war. The point is that, in the eyes of the British public, Cameron has effectively led a short war. There are usually political dividends to be drawn from that position.

But I suspect they will be limited in this case because, as with so much of Cameron's leadership, the good news story doesn't slot into a wider strategic narrative. It is worth remembering that the Conservatives came into power signalling reluctance to reshape the world - a la Blair - by military excursion. The new doctrine, as spelled out by William Hague in a series of speeches in July 2010, was a kind of bilateral mercantilism. The UK would continue to promote freedom and democracy around the globe, the foreign secretary said, but the main tool would be aggressive pursuit of trade interests. Overseas embassies would be reconfigured as pushy chambers of commerce.

Barely weeks before taking action in Libya, Cameron declared: "I am not a naive neocon who thinks you can drop democracy out of an aeroplane at 40,000ft." The fact that Cameron then decided to use British military assets against Gaddafi doesn't signal some visionary conversion to fanatical interventionism. Libya might be a one-off; Gaddafi might just have been low-hanging despotic fruit.

To get the maximum political advantage from the intervention, Cameron has to frame the episode in terms of his vision of Britain's role in the world - and it isn't clear that he has one. The project of expanding our national influence by trade is looking trickier as the global economy falters. As an ambition it is of a pair with George Osborne's hope of rebalancing the economy and driving growth through exports - which relies on a level of overseas demand for UK goods that has not yet materialised.

A big gap in Cameron's world view (at least the publicly known portion of it) is his sense of how Britain's position in the European Union will evolve as the single currency lurches ever onward in financial and institutional crisis. As I mentioned in my column this week, this omission is stirring dissent in the party. A lot of Tories see the eurozone crisis as an opportunity to start a wholesale renegotiation of Britain's EU deal, but there isn't much appetite for that at the top of the party. (This is partly because the leadership's view of all matters EU is coloured by their "modernising" crusade in opposition, so there is an association between public expressions of fierce euroscepticism and unelectability. Then, of course, there is the problem of the stubbornly Europhile Lib Dems.)

The Arab Spring; global economic turbulence; structural crisis at the heart of the European Union - three giant themes that raise profound questions about Britain's position in the world. What kind of a power do we want to be? How do we achieve that ambition? I don't get the impression that Cameron is any closer to having persuasive answers to those questions than he was when he moved into Downing Street last year.