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MoD in Procurement Snafu
by Kerry Hallard, CEO, National Outsourcing Association
Thursday, December 12, 2013

So the MoD has bombed in its attempt to outsource its procurement arm, Defence Equipment and Support. They were looking for one provider to come in and seal up the holes in the sinking ship - and one provider did.

Yes, that’s right. In the entire outsourcing industry, only one provider fancied their chances of taking on a £15bn budget, 15000 and making a better job of it than the incumbent civil servant leadership. You’d think there’d be money to be made there - and hopefully, provide Our Brave Boys with some decent, warzone-worthy equipment to do their frightfully difficult job with….but only one provider tables a bid. Can’t say I’m surprised really.

The worst part is how it cost the MoD £7.4 million to conduct this stark unpopularity contest. Now, £7.4million might not seem a lot of money when your annual spend is £15billion, but to most people it is. From families struggling to put presents under Christmas trees, to virtually every CFO of every company in the world, £7.4million is a huge amount of cash to get absolutely nothing in return for.

And you can bet that if the MoD had to spend £7.4million pulling the bid together, any interested bidders would have had to spend millions at their end.

Herein lies one of the biggest problems facing public sector procurement - Competitive Tender has priced all of the competition out of the market. Supply-side has shrunk down to a handful of major players who can afford take the hit, of millions at a time, to go through a process where they might not even get any business at the end of it. Smaller players - no matter how efficient, innovative and market-savvy they may be - are effectively barred from entering the fray. 

With the average procurement running at 18 months, public procurement protocol is too long, unnecessarily complex and widely misconstrued throughout the civil service - leading to a belief that Competitive Tender is the only right and proper way to engage suppliers. 

Informal pre-contract negotiations do not contravene EU Law. They are, in fact, possibly the most valuable tool at a prospective buyer’s disposal. Such talks can save the taxpayer millions of pounds over a cup of coffee. The MoD way would be to fill in hundreds of forms over the next two years, engage legions of consultants, endless meetings…and £7.4millionof taxpayer cash. It’s got to stop.

Bernard Gray, the Chief of Defence Materiel, has got an unenviable job on his hands, now that the proposed government company will become a multi-sourcing arrangement, with him in the crow’s nest. His journey is an interesting one - he spent 10 years as a journo with the Financial Times and two years as a Director of UBM, a huge publishing and events company. Now, after being involved in reviewing defence policy for the Labour government, he’s ended up in charge of military procurement. Well, it is often said that outsourcing is the accidental profession!

If he needs any help - and I’m sure he needs all the help he can get - there’s a place at an NOA Public Sector Skills Academy with his name on it.

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