It is broke — and it’s time to fix it: The UK’s defence procurement system – Report Summary

Summary

The war in Ukraine has been a ‘game-changer’ in defence and security terms for the United Kingdom. Faced with a revanchist Russia, which is prepared to use high-tech weapons, from drones to cruise missiles, combined with barbaric methods, we can no longer take our national security for granted. For the first time since the end of the Cold War, we have to face the prospect that we could become involved in a peer conflict with Russia, with little further strategic warning or opportunity to scale up our industrial, as well as military capabilities. In this new, more challenging environment we need a defence procurement system which can not only equip our Armed Forces to fight and to win, but also sustain them over time, should any such conflict become protracted (as in Ukraine).

Against this backdrop, we established a Sub-Committee in January 2023, to take a detailed look at the principal entity for purchasing and then maintaining the UK’s military equipment, Defence Equipment and Support (DE&S). However, in the course of our inquiry, which lasted some six months, it rapidly became apparent that, while there are major issues within DE&S, there are also several wider factors, across Defence as a whole, which also materially impact our ability to procure equipment successfully. We have therefore also sought to address these in our Report, to provide a coherent whole.

During our inquiry, Clive Sheldon KC published his long-awaited and forensic 167-page Review into the management of the highly-troubled Ajax Armoured Fighting Vehicle programme. This performed a valuable public service, not least in exposing the ‘inner wiring’ of the Ministry of Defence’s (MoD) procurement system and its numerous weaknesses. Sheldon’s Review contained 24 specific recommendations, some of which we have subsequently also sought to incorporate into our own study.

We have discovered a UK procurement system which is highly bureaucratic, overly stratified, far too ponderous, with an inconsistent approach to safety, very poor accountability and a culture which appears institutionally averse to individual responsibility. We agree with the previous conclusions of the Public Accounts Committee from November 2021 that our procurement system is indeed “broken”. We believe the system is now in need of major, comprehensive reform.

However, this Report is intended not just to prove that the system is crying out for change—which it evidently is—but also to suggest how that reform might be achieved, in order to provide a procurement system which is demonstrably ‘fit for purpose’ in the 21st century. To that end, our Report makes 22 specific recommendations, to seriously overhaul the system. At the heart of these is improving accountability and aligning it more clearly with responsibility, to actually empower those who need to deliver change to do so. As part of these multiple changes we recommend giving Senior Responsible Owners (SROs) much greater power over their programmes, with rights of direct escalation to the CEO of DE&S and then Ministers, if programmes begin to go badly wrong. We also recommend putting the CEO of DE&S back onto the Defence Board and also making them, rather than the Permanent Under-Secretary at the MoD, the Accounting Officer for all purchasing and support of UK equipment. These changes should also materially improve accountability to Parliament, which has to vote the funding for defence programmes in the first place.

We also need a system which places a much greater value on time, promotes a sense of urgency rather than institutional lethargy, and prevents endless ‘requirements creep’ by our own military. This reformed system should also make much greater use of both spiral development and also Urgent Capability Requirements (UCRs) both as a procurement methodology in itself but also as a ‘mindset’, which stresses the imperative of delivering battle-winning equipment, in a timely manner and at an affordable cost. The Government will need to use this revised system to help our Armed Forces, in particular the Army, speedily address the serious equipment deficiencies in their current Order of Battle.

This Report also emphasises the importance of improving skills within DE&S, including a professional procurement stream within the military; extending time in post for key positions to improve continuity and giving access to specialist contract lawyers, to help write far more robust contracts. We also stress that DE&S must improve its relationships with industry, from increasing transparency about forthcoming requirements, expanding the emphasis on exportability, better defining ‘social value’ in competitions, through to fostering critical skills, preventing skill-fade and encouraging and developing the Defence apprentices and workforce of the future.

This is also a political imperative, as, if Defence is to acquire the increased resources which we strongly believe it really needs, including over the medium to long term—and not least from a Treasury grown weary from years of multiple, high-profile procurement failures—then the Ministry of Defence now needs to demonstrably ‘put its own house in order’, to make a convincing case that it really can spend money wisely. As procurement and subsequent in-service support of equipment now accounts for approaching half of the entire MoD annual budget, if this area cannot be fixed convincingly, those additional resources are unlikely ever to arrive at the scale really necessary to ensure our national security, as our century evolves.

With a war in Europe now raging on the eastern border of Europe, we can no longer afford, strategically, militarily, or financially to continue the broken procurement system which we have been operating, for decades. If we are to keep our nation safe, our adversaries deterred and our allies reassured we now urgently require full-scale reform of the way we be buy and support our fighting equipment.

In short, it is broke–and it’s time to fix it.