Reply to post: The Role played by Contractors in Delays and Cost over-runs

The Role played by Contractors in Delays and Cost over-runs

The share of blame attributed to people at the Ministry of Defence for delays and cost overruns has been documented extensively over the years. But what is the role played by MoD’s other half of the partnership, namely Defence Contractors, in this epic tale of failure?

This question is especially relevant given that 97% of contracts on the Defence Nuclear Enterprise are held by just four prime contractors.

The risk that new equipment procurement programmes will fall behind schedule is driven by three significant factors – all of them, entirely within the control of the Contractor:

(a) Work allowed to commence without the full complement of Task Performers being assigned to the project performance team, right from the start.

(b) Task Performers arbitrarily (and clandestinely) re-assigned to other priority work during the term of the Contract.

(c) Task Performers, who are typically on one month’s notice corresponding to pay in arrears, abandon their posts for a better paid job elsewhere.

The practice of switching the most capable and smartest people (the ‘A’ Team members) from existing project commitments, to working on other contracts running concurrently which have gone ‘critical’, or to producing bid phase deliverables for ITT responses, is very common within Defence Contractors’ organisations – because the need to continually bring-in money or win new business takes priority over everything else, a foremost characteristic of for-profit organisations.

Indeed, such is their obsession with future income (and Share Price) that, once they have got a new Contract in the bag, their attention immediately shifts onto chasing the next one – at the expense of compromising performance on the Contract they have just won!

This all too familiar scenario is further compounded by the fact that:

(a) Contractors at every tier of the Defence Industry have mandated enforcement of a minimalist staffing policy of being just ‘one man’ deep in many of their specialist core functions, with no slack or succession plan – which unfortunately, also denies defence workers the opportunity to associate with like-minded people in the work environment, severely impeding their professional development.

(b) In their desperation to quickly build-up their project performance teams to full strength following down-selection for the first Contract performance phase, Contractors have been less than honest with new employees (particularly those originating from the Public Sector) about their individual role in the project performance team, the job content and near-term prospects – because they are not bound by a ‘Code on Ethical Behaviour in Business’. Consequently, these newcomers have no choice but to align their personal and career goals with those of their new employer on the basis of what they are told. It is the disappointment of discovering a substantial gap between the reality on the ground and what they were led to believe at interview that causes these new starters to leave – creating yet more vacancies and disruption!

(c) Instead of looking upon people on their payroll as human beings with hopes, fears and insecurities, individuals are treated like ‘economic units’ by Contractors – to be bought and sold like commodities, at will, in the free market to serve their own narrow commercial interests.

(d) Recent years has seen the working relationship between Indirect and Direct labour types to be strained beyond breaking point on account of:

i. The latter (who are all Task Performers, adding value by producing deliverables which attract payment from MoD) being compelled by the former to partake in activities which are contrary to their professional, ethical and moral convictions. In turn, this has led to Direct labour types to accuse Indirect labour types of ‘living off their backs’ by charging MoD a ‘tax surcharge’ on their labour – creating even more bitterness and division.

ii. The duplicitous policy enforced by Indirect labour types of making bold pledges in Management Plans, and then promptly rescinding on these work commitments during the follow-on Contract performance phase has had the effect of disenfranchising Direct labour types, because they think this is thoroughly deceitful behaviour.

iii. The burden of responsibility for executing the resultant grossly under-scoped Programme of Work falling on Task Performers, instead of those people on overheads who made the false, exaggerated claims about the maturity of the proposed Technical Solution in the first place.

Even more disturbingly, in the interests of furthering their careers in today’s mobile labour market, many defence industry workers especially those possessing highly marketable skills (the crème de la crème) are now willing to extend their commitment and loyalty only, as far as the next pay packet – having adopted this tactic from observing, at first hand, the behaviour of their own employers who have, for many years demonstrated their willingness to provide a service to MoD which extends only as far as the next milestone payment! Worse still, whereas every Contractor has got a Staff Recruitment Policy, none has a Staff Retention Policy.

So, when a programme in the Contract performance phase suffers a loss in personnel on the project performance team (usually those most difficult to replace), work on producing deliverables to schedule comes to an abrupt stop – leading to delays and ultimately, cost overruns.

A risk and associated cost burden that has traditionally been borne by the Ministry of Defence!

So, it is not only defence procurement officials who are to blame for the malaise afflicting defence procurement – Defence Contractors are equally culpable in creating a procurement culture which has failed to deliver equipment to the Armed Forces that is fit for purpose, adequately sustained in-service and constitutes value for money through-life.

@JagPatel3