04 Apr 2017

DE&S urges placing emphasis on whole-life costs in defence procurement

Defence spending and procurement must place as much emphasis on the whole-life costs of equipment as the initial procurement.

This was the message from Nick Elliott, Director General Commercial at Defence Equipment and Support (DE&S), speaking in the Keynote Arena at DPRTE 2017.

He said: “We need to focus on the support spend as much as we do on the buying at the front end. If you buy a puppy, it’s not the £250 you spend on buying that puppy that’s important, it’s the whole-life cost of vets’ bills, food, care and kennels – it’s a much larger investment, and the sooner we start to undertake and manage our whole-life costs the better.’’

He explained that while the Government had honoured its NATO pledge to spend 2% of GDP on defence and was investing £178 billion in equipment, resources were coming under increasing pressure.

In response, DE&S was focused on becoming more commercially minded, striving to ‘operate in a more business-like fashion’.

To that end it was made a Bespoke Trading Entity (BTE) in 2014, with an owners’ council, a board including non-executive directors, and an executive committee.

Elliott said: “In some ways, the specific freedoms of being a BTE are less important than the mindset that instils, that revolves around doing the business basics and doing them well, providing clear direction, setting targets, measuring achievements and performing to plan.

“We are completely focused on making those business basics our DNA.’’

He added: “For DE&S and in turn for our industry partners that means the relentless pursuit of value. We need to embrace constructive disruption in all areas, if we are going to generate a step change in customer value.’’

 

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