APPENDIX 2
Memorandum from the Public and Commercial
Services Union (23 November 2001)
The Public and Commercial Services Union (PCS)
represents over 274,000 members working in the civil and public
service and in the private sector, mainly in companies providing
services to central government. PCS is the largest non-industrial
trade union within the Ministry of Defence (MOD). We represent
civilians in the main administration, support, executive, IT and
communication grades within the Department and members of the
senior civil service. We also represent the MOD Guard Service
(MGS).
As a result of our wide-ranging membership PCS
has civilian members based in nearly every MOD establishment across
Britain and overseas, as well as in private companies which provide
services for the MOD. These companies range from Royal Ordnance,
QinetiQ (formerly the Defence Evaluation and Research Agency—DERA)
and DML to Vosper Thorneycroft, Flagship, Fleet Support and Amey.
The events of 11 September have focused minds
on the threat from a new form of terrorism. We therefore welcome
the opportunity to provide a submission to the Committee on this
issue as we have a number of concerns. We are aware that the MOD
will be giving oral evidence and hope that our points will be
useful to the committee in its deliberations. Our members within
the MOD are used to working in a security conscious environment.
In particular our members in the MGS who are employed in guarding
many establishments are very aware that they are more likely to
be targeted by terrorists.
THE ROLE
OF THE
MOD GUARD SERVICE
The MOD Guard Service was established as a response
to the Deal bombing. Unfortunately, following its successful establishment,
the MOD has failed to capitalise on the opportunities this initiative
created. Despite a shortage of service manpower, many establishments
are still guarded by expensive service personnel. Similarly, despite
the existence of armed MGS in Northern Ireland and Germany, the
MOD has created and is expanding the Military Provost Guard Service,
which is more expensive than the MGS. At the same time many MGS
have been under almost continuous threat of privatisation, especially
whenever it is perceived that the terrorist threat has lessened.
The MOD needs to reverse this position, capitalise on the existence
of a professional guard service, and expand it to replace more
expensive methods of guarding and to cover other key installations.
As the Defence Committee's report in 1996 highlighted,
the MOD has a multiplicity of policing, security and regulating
and law enforcement authorities. The MOD Guard Service undertakes
all types of unarmed guarding tasks on the UK mainland. It also
provides armed guarding in both Northern Ireland and in Germany.
A number of developments have taken place since the Defence committee's
last report on MOD police and guarding. (ref. Eighth report 1995—6
HC 189) The MGS and the Civilian Guard Service (CGSU) within Germany
have suffered from a near continuous programme of reviews and
studies with a view to contractorising these functions. The MOD
has also now been given responsibility across Whitehall for security.
A number of comparisons have demonstrated that the MGS is a cheaper
option than service personnel, the Ministry of Defence Police
(MDP) and the Military Provost Guard Service (MPGS).
In addition the new threats from terrorism requires
a fundamental review of what are likely terrorists targets. This
will include key installations in the UK, not just MOD establishments
and companies such as Royal Ordnance. There has been no indication
from MOD to the unions that such a fundamental review is being
undertaken. This review should also include consideration of whether
the MGS could undertake armed guarding at certain MOD and other
key installations within the UK mainland. The MGS employ many
ex-service personnel (some of whom are also members of the Territorial
Army), so it would make sense for the existing MOD Guard Service
to be used to provide improved security and guarding at both MOD
and key installations across the UK.
PRIVATISATION AND
RISK
The MOD has the largest programme of Private
Public Partnering/Private Finance Initiative (PPP/PFI) projects
across central government. The philosophy behind PPP is to transfer
risk from the Department to commercial companies. Our experience
is that the PPP process fails to adequately consider the risks
to the Department of such an approach. The process, once initiated,
considers the risks associated with non-delivery of the project.
However, not enough account of the non-delivery of the "outputs"
is built into the process at scoping, and even less at evaluation
stages.
A further concern is that PPP/PFI projects are
seen as the only means of providing much needed capital investment,
be it new buildings or equipment. This is often the genesis of
a PPP/PFI project. However the economics of PPPs and the lengthy
timescales of these projects (sometimes up to 30 years) results
in services being included in the scope of projects for no other
reason than to provide income streams for the commercial companies
to ensure that companies will bid for the work.
This pressure to find services to include in
the scope of these projects means that there is considerable blurring
of what is considered core and non-core work within the Department.
Unarmed guarding is an example of this. PCS has had to argue that
guarding should be considered a core activity on each project
because each Top Level Budget holder (TLB) area in MOD takes a
different view. If this continues there will be an inevitable
increase in contract guarding within the MOD, resulting in a greater
two-tier approach to this area than already exists. The security
implications of this overall approach to PPP/PFI projects have
not been properly explored by the Department.
With PPP/PFI timescales of up to 30 years, there
is a further risk to the Department of the loss of control, and
loss of flexibility to deal with rapidly changing circumstances,
especially if you are committed to the delivery of services through
an arrangement with a consortium of companies for considerable
lengths of time.
The Strategic Defence Review (SDR) focused on
providing a rapid and flexible defence capability. The current
PPP/PFI philosophy within the MOD will not provide either the
adaptability or the flexibility, which the MOD requires in the
delivery of support to the armed services. We understand that
the MOD must show value for money to Parliament and the taxpayer,
however this will not be forthcoming. PPP/PFI initiatives within
the Department have only been measured against robust public sector
comparators after considerable pressure from the MOD trade unions.
Even where contracts have been entered into for three to five
years the MOD admits there is no evidence of a consistent auditing
process to evaluate whether the savings claimed by letting the
contracts have actually been realised. We believe that MOD projects
over 15-30 years will in effect mean handing a blank cheque to
its commercial suppliers.
Another serious concern is that whilst the process
focuses predominately on outlining the requirements in terms of
"outputs" and savings, there is no requirement for "people"
standards. This allows contracts to be let or relet which in some
cases must breach statutory requirements because they can only
be delivered with employees on extremely poor wages, terms and
conditions. In the current situation, where terrorism operates
in a fundamentally new and sophisticated way, companies and the
MOD run a risk of becoming increasingly vulnerable to terrorist
infiltration and attack. Once again we see no evidence that the
MOD properly monitor a company performance or that there security
arrangements are maintained throughout the contract.
It can only be regarded as speculation that
the terrorist attack on the World Trade Towers on 11 September
2001 was intended to cause economic instability. However, it is
clear that for a short period there was considerable chaos on
the economic front and the world markets, which highlights a potential
weakness in the contratorisation and privatisation programme being
pursued by the Ministry of Defence.
MOD is developing through the smart procurement
process, greater reliance of the MOD on the "just in time"
approach to the issue of logistics support and delivery of stores
and equipment. Whilst these systems work well during times of
peace and in the normal day-to-day operational requirements, there
are serious concerns about what would happen if key defence contractors
and manufacturing companies became the deliberate target of terrorists,
either directly or indirectly, as recent evidence indicates terrorist
organisations have significant abilities to use the international
banking system and other financial institutions.
Clearly when bids from potential contractors
are considered, the vulnerability of such privatisation and contractorisation
to terrorist acts from a financial viewpoint needs to be included
as part of the risk assessment process.
We are not suggesting that the defence contracting
companies are either financially unstable or have not shown themselves
as being very capable of weathering market forces and downturns.
However, the greater sophistication of terrorist attacks, are
a new and important consideration when determining the vulnerability
of services to be provided in terms of strategic and operational
requirements.
CONCLUSION
In this submission we have focused on key issues
of concern. PCS will be more than happy to provide more evidence
and examples, in confidence if necessary, to support out statements.
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