THE FACTORS TO BE USED IN THE MOD'S PROCUREMENT
DECISIONS (CONTINUED)
20. The Defence Industrial Policy envisages
identifying where 'wider factors' impinge on a particular project
at the earliest opportunity,[57]
and then ensuring that these are "declared and explained
to potential bidders as far as foreseeable".[58]
CDP told us that—
The important thing is that the contractors know
this is the list [of factors] from which the project team leader
will be working. Quite correctly the top four are starred,[59]
because those are the primary drivers, but they get conditioned
by other considerations and the only way in which you can determine
the extent to which they are going to be conditioned is on a case
by case basis. Industry understands that.[60]
This would indeed be clearly welcomed by industry,
as Sir Richard Evans told us—
…it would be much better for these issues
to be dealt with as early on in the review process as is possible,
rather than allowing the whole process to continue towards something
of a conclusion at which point there is a huge amount of effort
devoted in order to bring these issues out into the open in terms
of influencing the outcome of the decisions one way or other…It
will be much better for everybody if indeed these wider issues
were clearly understood, openly debated, and taken into consideration
before industry and the MoD expend huge amounts of money on going
down the track that might ultimately produce a result that when
these wider issues have been taken into account makes a lot of
that expenditure quite nugatory.[61]
21. While our predecessors' 1998 joint inquiry
recognised that industrial factors were at that time being given
more systematic consideration in procurement decisions, with a
formalised input from the DTI,[62]
they also heard from industry that it had remaining concerns that
the "long term industrial implications of MoD procurement
decisions had not been given effective weight".[63]
But at that time the MoD's list of industrial factors (paragraph
11) did not amount to an industrial policy. Sir Richard Evans
told us in this latest inquiry that industry had argued for some
time that "there needed to be some process by which we were
able to create what we would like to see to be a pretty seamless
focus on a number of critical areas".[64]
So while our industry witnesses thought that there was nothing
startlingly new in the Defence Industrial Policy,[65]
they saw its publication last October as "something of an
industrial triumph…in that for the first time we had joint
agreement on a number of specific objectives", and welcomed
in particular the fact that some previously implicit aspects of
industrial policy were now made explicit.[66]
22. Sir Richard Evans cautioned that—
that is the relatively easy part of the task…The
biggest challenge now lies ahead of us, which is all related to
delivery.[67]
I certainly do not think that this is the definitive
statement on the subject…Unless this remains a dynamic policy
document which is constantly being refreshed as experience is
gained out of the implementation of the recommendations contained
in there, then a lot of us would feel pretty disappointed and
to some extent cheated by it.[68]
Similarly, when we questioned Lord Bach on the sometimes
different ways that the statements in the Defence Industrial Policy
could be interpreted, he told us that he saw "case law"
developing on the Defence Industrial Policy from procurement decisions
made over the following few years.[69]
23. We very much welcome the publication
of the Defence Industrial Policy, bringing as it does a useful,
though long overdue, increase in transparency to this important
area. The way its provisions and statements should be interpreted
will inevitably have to be developed; by further debate and through
"case law". Indeed, in some areas, including the use
of competition and open markets and in risk management (two of
the perhaps more contentious of its themes, and covered in
the following section of this report), the Policy's utility
will be evident only with the passage of time. It does however
provide a helpful launch-point for developing policy in this important
area.
57 Defence Industrial Policy, paragraph 19 Back
58
Defence Industrial Policy, paragraph 25 Back
59
The MoD's guidance to project managers , Implementing Industrial
Policy (MoD website: www.mod.uk/arms/content/docs/indpolgd.htm),
states that they "attract significantly more weight"
(paragraph 12). Back
60
Q 120 Back
61
Q 7 Back
62
HC (1997-98) 675, paragraph 8 Back
63
HC (1997-98) 675, paragraph 9 Back
64
Q 1 Back
65
Q 3 Back
66
Q 1 Back
67
Q 1 Back
68
Q 5 Back
69
Qq 240, 245 Back
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