A Short Analysis: What does the Private Security Sector have to offer the MoD?

It has been a hot topic for some time, and all the arrows point towards an increase in government security outsourcing within the not so distant future, with a critical consideration being the use of Private Security Companies within defence structures.

The National Security Strategy and Strategic Defence and Security Reviews 2015 (NSS & SDSR 2015) highlighted gaps within both military capability and capacity, and specifically welcomed private sector input into various defence problems and shortfalls. On behalf of the private sector, the public sector and the wider public, it is time to answer the question, what does the private security industry have to offer the MOD?
This short analysis aims not to describe the nuts and bolts services that the private security sector could provide to the MOD, but the strategic, capacity and capability enhancements that could be the benefit of the private public security partnership.

Innovation

There are potential large innovation benefits to be realised from military outsourcing. The innovation displayed in the private sector is often absent in the public sector. The application of the latest commercial techniques and processes, staff performance based incentives, and innovation as a means of competitive advantage within the private sector marketplace all point to private sector innovation being assessed as at a superior level to that within the military. This could lead to improved quality of service for the UK MOD and is further desirable when guaranteed by contract. In a 2015 Centre for Historical Analysis and Conflict Research (CHACR) forum it was specifically noted that SME’s often demonstrate greater levels of innovation in developing more flexible and agile business models that could contribute to many Army roles.

Financial

Outsourcing to private contractors via competition leads to cost savings as well as innovation, and in the opinion of Professors such as Keith Hartley, outsourcing is likely to lead to cost savings of some 20%. On the other hand, public sector organisations within the government and MOD can be regarded as public monopolies, and since they are not subject to any competition, in house public monopolies can be characterised by prices, inefficiencies and a failure to innovate.

Many features and drivers that make private organisations efficient are often missing from the public sector, such as profit motive by competition and rivalry, and the threats of takeover and bankruptcy. Reductions in defence outsourcing have made significant impacts upon the UK’s defence capabilities; embracing private sector efficiencies going forward may be not only desirable but essential in building and maintaining capacity in a financially viable way. The MOD SME Policy 2015 concluded that SME’s in particular, including those from adjacent sectors, are able to bring flexibility, boost innovation and increase competition, all of which means delivery of best value for money capability for the Armed Forces.

Experts discuss two main sources of cost savings from outsourcing. Firstly the transfer of resources from the public sector to the private sector, where increased efficiency reflects profit incentives under private ownership and the pressures and sanctions of the private capital market. Secondly, further cost savings and innovation as a result of the pressures of competition which forces private sector companies to be efficient.

Capacity building

Perhaps the most desirable case for a partnership between the MOD and the private security sector is in its potential to build capacity and capability within the MOD. With defence budgets and personnel numbers consistently diminishing, yet no intention to decrease its global defence presence, the MOD risks a capacity deficit which could be alleviated by the private security sector. Adaptability was at the core of the Future Force 2020 vision set out for the Armed Forces in 2010, and the Joint Force 2025 vision set out in the 2015 NSS & SDSR requires even greater adaptability by the armed forces by 2025 in order to tackle a wider range of more sophisticated adversaries. It is easy to see that gaps will and do exist between requirements and capacity.

Within the NSS & SDSR 2015, concerns are expressed about military manpower and the low level of spare capacity to provide flexibility and resilience in unexpected emergencies. At the same time the documents set out plans to reduce the civilian headcount by almost 30% to 41,000 by 2020 in order to achieve efficiency savings of 9.2 million GBP, this is in addition to the 30% cut in MOD civilian personnel since 2010. Many argue that such drastic cuts in military manpower are not practical or feasible in relation to the maintenance of military capabilities, and even that given the global threat landscape such drastic cuts will be largely detrimental to the security of the UK.

The NSS & SDSR 2015 review by the House of Lords and House of Commons concluded that despite the government’s commitment to maintain the size of the Regular Army at 82,000, and to increase the Royal Navy and Royal Air Force by a total number of 700 personnel, the manpower fielded by the UK Armed Forces is inadequate bearing in mind the range, complexity and potential concurrency of the tasks expected of them. Linked with the statement that the House of Lords and House of Commons are concerned that the Armed Forces will not be able to fulfil the wide-ranging tasks described in the NSS & SDSR 2015 by 2025 with the capabilities, manpower and funding set out in the document, it becomes unavoidably apparent that efficient, cost-effective and adaptable capacity boosts are required within the MOD, the kind that, in the correct circumstances, could be provided by the private security sector.

Resilience

Interlinked with the details discussed on capacity building is the subject of resilience, specifically how the private security sector may increase resilience within the MOD. It is widely agreed, and communicated by the CHACR, that both the MOD and defence industry recognise that there are insufficient suitably qualified and experienced personnel to deliver and sustain current and future defence outputs. With this in mind one must consider how the MOD can be resilient to unplanned and unexpected changes within the environment and how it may cope with the subsequent levels of required response, specifically in high tempo and successive situations.
The private security sector can offer capabilities and operational uplift in not only a responsive, but also a cost effective manner, from individual well trained and current staff members, to groups numbering in the hundreds or potentially thousands, as were seen during the Iraq and Afghanistan wars. A great benefit of this is that the requirement is only paid for when it is needed. In this case it is worth considering how private sector contingencies, if maintained and retained effectively, could add a very effective layer of resilience within the MOD.

Within the Whole Force Approach Seminar at the CHACR in 2016, the Whole Force Approach vision was designated as:
“Effective, agile and resilient capability delivered by an integrated, pre-planned and affordable mix of Regular and Reserve Military, civilian and industry resources as a first choice to meet defence outputs”

If clear, close and effective partnerships are formed between the MOD and private security companies, where supply and demand move from an ad-hoc to more of a systematic and integrated approach by both parties, resilience will be promoted within the MOD if both pre-planned and responsive capacity can be consistently maintained and supplied in a commercially viable way.

Summary

On closing this short report, one could summarise that as global threats increase and evolve, and economic pressures and rising input costs further squeeze diminishing defence budgets, policy makers will be forced to consider moves that may have previously been out of the realms of consideration, and this is likely to include a review of private security sector inputs into military operations. Ethical and moral considerations aside, this seems like a positive situation for both the private security sector and the MOD. At a CHACR forum in 2015, General Sir Nick Carter, Chief of the General Staff, closed his keynote speaker address by emphasising that work needed to be done to change the Army’s culture in order to make it more accepting to the idea that the Whole Force Approach is not an unfortunate necessity, but an indispensable requirement for our future operational capability.

The almost hostile public resistance to private security sector input into military operations is assessed as largely a cultural issue. The public are rightly concerned about the ethical, moral and accountability issues involved in such moves. However, the public are also largely unaware of the private security industry’s regulatory journey from the Montreux Document of 2008 through to the current operating frameworks of ISO 18788, which are largely focused upon the provision of responsible, ethical and moral operations, and are externally audited to provide transparency and accountability. This regulatory journey is focused upon those companies providing private security services within complex environments such as conflict and post-conflict regions, such as those in which the MOD regularly operate.

Discussions are ongoing with the government, largely driven by the Security in Complex Environments Group, on the subject of how to promote and implement a partnership between the MOD and the private security sector, driven not only by desire, but necessity. This topic is likely to remain a hot one for quite some time.