Reply to post: Government strongly favours buying off-the-shelf equipment

Government strongly favours buying off-the-shelf equipment

The GEMS employee suggestion webpage form is not the only off-the-shelf purchase MoD has made – it extends to much bigger defence equipment acquisitions too.

The Government has recently revised its defence procurement policy to consider buying, as its first and foremost priority, new military equipment for the Armed Forces which automatically falls in the off-the-shelf category – specifically because an off-the-shelf equipment is a fully engineered and supported technical solution which satisfies the key user requirements at no additional cost or risk to the Exchequer, that is to say, it does not require any development work laden with risk, to be performed upon it.

The reason why the Government has moved away from its long-standing procurement policy of buying equipment designed to a tailored technical specification requirement set by the military customer (which it will not admit to in public) is because, it is no longer confident in the ability of its own people to identify, manage and control technical risks inherent in a starting-point for the technical solution that requires development work to be performed upon it – which has been the cause of persistent delays and cost overruns on equipment acquisition programmes, over the last several decades.

This is because it does not possess the capability in the form of intelligent and experienced procurement officials who have an adequate understanding of what it takes (in terms of skill types, funding, tools, processes, materials, scheduled work plan, inter-business contractual agreements etc.) to advance an immature technical solution from its existing condition, to a point where it will satisfy the technical specification requirement, within a Private Sector setting driven by the profit motive. The harsh reality is that they have no business acumen – on account of not having spent a single day of their lives in the Private Sector.

Nor is the existing defence procurement process (which has evolved over the years) conducive towards delivering equipment for the Armed Forces which is fit for purpose, adequately sustained in-service and constitutes value for money through-life, because it has been interfered with by Defence Contractors (most notably the Select Few) who have skewed it decisively in their favour, at every turn.

The Government’s considered assessment is that it is unlikely to accumulate an in-house capability of the desired quality and numbers anytime soon, certainly not in the foreseeable future. It has also been realistic and concluded that it is nigh on impossible to reconstitute the existing, flawed procurement process alongside the tough 2015 Spending Review commitments to be fulfilled in this Parliament, further complicated by the Brexit vote – hence its preference for the off-the-shelf option.

Ironically, one of the most spectacular benefits to be derived from buying off-the-shelf equipment is that the leadership at MoD will be freed from its burdensome responsibility of having to upskill its existing procurement staff to a level comparable with that exhibited by counterparts in industry, because this type of acquisition is relatively straightforward and can even be undertaken by mediocre post holders – not least, because it is devoid of hidden financial, technical or schedule risks.

If anyone has any doubt about the determination of this Government to press ahead with considering the off-the-shelf solution as its first option, then they should look no further than its decision to buy the standard Boeing P-8A Poseidon maritime patrol aircraft to plug the capability gap left behind by the cancellation of Nimrod MRA4. Settling on the choice of the P-8A Poseidon means that these aircraft cannot be refuelled in-flight by the RAF’s Voyager tanker planes to extend their range and endurance on-station, because the former are fitted with the flying-boom receptacle whereas the latter are equipped with the probe-and-drogue system – making them entirely incompatible. The Government has taken a lot of flak from informed commentators and endured negative publicity in the press and media for this serious operational deficiency – nevertheless, it has decided to go ahead with the purchase.

So what impact does this policy shift have on Defence Contractors’ business prospects?

UK-based military equipment manufacturers who do not possess off-the-shelf equipment and are in the business of developing & building weapons platforms are most likely to be adversely affected by this adjustment in defence procurement policy. To counter haemorrhaging their domestic market share to similarly positioned players from the US and elsewhere, UK-based Defence Contractors have little choice but to increase their competitiveness significantly, by first selling their products in the international marketplace – on price, superior technical performance & timely delivery – and then re-entering the domestic market with fully developed products rebranded as off-the-shelf offerings, to satisfy UK Government needs, just as the Americans have done.

It is believed that some 20 percent of the equipment procurement budget is currently being spent on buying off-the-shelf equipment. This slice is only set to increase, as more and more projects which involve significant development work are side-lined in favour of off-the-shelf purchases.

@JagPatel3 on twitter