Select Committee on Defence Appendices to the Minutes of Evidence


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 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.


  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.


  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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