15 May 2013

‘Privatising’ defence organisation may harm UK foreign relationships

Summary: American officials have issued strong warnings about a Ministry of Defence plan to part-privatise Defence Equipment and Support (DE&S).

Ministers are poised to announce the next stage of controversial reforms that will give private firms a chance to run DE&S, the organisation that buys and supplies billions of pounds worth of defence equipment to the British military.

Bernard Gray, Chief of Defence Materiel, was brought in by the previous Labour government to examine the issue, has persuaded ministers that a GoCo (government-owned, contractor-operated) model should be the preferred model for future management of Defence Equipment and Support. Ministers have since implemented a consultation to bring the idea to fruition.

A number of close allies to the UK have since told British officials they will be imposing safeguards to limit the risk to their own systems by the establishment of GoCo.

Australia has said it had put co-operation with Britain on watch and Canada is also believed to be scrutinising the move. The move also threatens to curtail the Special Relationship status that Britain’s armed forces enjoy its American counterpart.

GoCo has been set up to eliminate deep-seated problems in the Ministry of Defence procurement that have led to cost over-runs and systems failures.

An MOD source said: “This is the culmination of a lengthy process across Whitehall to get the go-ahead for the assessment phase for a GoCo, and it now gives DE&S the ability to further explore opportunities. A white paper will be brought forward to outline our radical plans to reform defence procurement, which has been plagued with delays and cost overruns in recent history.”


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