23 Sep 2013

Government warned against defence privatisation

Summary: With recent reports of the privatisation of the Royal Mail hitting most major headlines and causing great controversy across the UK, more Government plans for privatisation have come under fire, this time in the defence industry.

Defence Secretary Philip Hammond recently unveiled plans to part-privatise Defence Equipment and Support (DE&S), the Government body responsible for buying everything from missiles and ammunition to communications equipment for the British military.

The plans call for 16,500 workers to be transferred to the private sector, transforming it into a government-owned, contractor-operated concern (GoCo).

However, Labour politicians have since claimed that doing so would seriously jeopardise the military, with job cuts, conflicts of interest between efficiency and capability stemming from private control, and concerns around continued capability.

More recent concerns have surrounded the re-tender of work after the initial contract period. With the original successful private organisation gaining unprecedented access to military records, finances and plans, there is a real danger of the original contract winner effectively ‘holding the MOD to ransom’ in order to secure a re-tender. After all, no one would argue that top secret military information should pass to new hands every time the contract is due for renegotiation.

Dougie Brownlie, a Public and Commercial Services Union defence sector officer, commented on the dangers of the contract being awarded to a non-UK firm or a firm with a current dispute with the UK: “What would happen if one of the contractors also worked for a country we were in dispute with? Wouldn’t that be a conflict of interest? If it also worked for the Argentinians, who would that contractor supply, us or them?”

Labour has recently outlined a range of questions and amendments to the Defence Reform Bill which outlines the part-privatisation plans.

However, for private firms in the UK, the privatisation model could actually be a real bonus and, if it goes ahead, could prove vital to help the economy. Under public control, DE&S has been criticised for allowing expensive projects to run way over budget, partly because of too much meddling from outside forces and stakeholders within the MOD.

On a clearly highly divisive issue, ministers on both sides will have a fight on their hands in order to either protect the public interest of the MOD, or else deliver value for the economy and the private sector.

Is this another example of a Conservative government too keen to sell off public assets, or could this be another shot in the arm the economy badly needs?You can share your views on this issue via Twitter @DCITenders.