In this article, Shadow Defence Procurement Minister Stephen Morgan MP tells the UK Defence Journal why he believes the Government needs to reform its procurement process.
This article represents the opinion of the author and is part of UK Defence Journal efforts to highlight a wide range of views on topical defence issues.
The UK defence sector goes beyond keeping citizens safe and protecting our borders. It is an intrinsic cog in the economic prosperity, growth of ideas and development of people in the UK.
With that in mind, it falls on government’s shoulders to ensure the sector receives due investment, recognition and priority; and on the shoulders of opposition to apply scrutiny when they fail to do so.
As newly appointed Shadow Minister for Defence Procurement, that is exactly what I intend to do.
With over 135,000 people directly employed by the UK defence industry, an annual turnover of £22 billion and a tradition of producing cutting-edge innovation, we need to be asking the question – is government doing enough to support UK defence?
The 100 page, independently commissioned report by Phillip Dunne MP in 2018 makes a number of recommendations that ring true. None more so than the observation that the Ministry of Defence (MoD) “needs to take account of prosperity in all major procurements”.
In essence, the narrow view adopted by government fails to take into account the wider implications of procurement structures. At present, the MoD does not factor in the socioeconomic value of defence contracts when making procurement decisions.
The consequences? The many benefits of awarding contracts to British companies fly under the radar. From the revenue generated to the Exchequer’s coffers to the higher National Insurance contributions, government currently fails to acknowledge the blindingly obvious benefits of building British.
What makes this government failure all the more cutting is the fact tendering companies are already used to having to prove the socioeconomic value of contracts when bidding with other countries.
It is equally concerning that at a meeting chaired by the PMs top aid, Dominic Cummings, he fired shots at Britain’s defence companies. The reports suggested he wanted to see fewer “bespoke” defence projects and for Britain to buy “off the shelf” from other countries. The government is showing its true colours when the PMs top adviser launches such a scathing attack on British business.
The dialogue around defence procurement needs to be broadened to include the complex myriad of consequences stemming from a contract being awarded.
The structural failings of government’s current procurement strategy are epitomised by the Fleet Solid Support (FSS) ships for the Royal Fleet Auxiliary. The failure to classify the vessels as warships means they could be built outside the UK. Justification offered by government that “value for money” is at the heart of this decision-making process while simultaneously refusing to consider the socioeconomic impact is deeply concerning.
The school of thought adopted by Sir John Parker, who reviewed the National Shipbuilding Strategy, resonates when he says, “I recommend that UK-only competition should be considered for future defence-funded vessels including amphibious vessels and mine countermeasure vessels.”
Reports by Oxford Economics have highlighted that for every £100 million investment in the UK defence industry around £230 million is generated to the UK economy. Government is not only missing a trick here; they are letting down people across the UK in failing to recognise the untold benefits of internal investment. Trade Unions, British companies and parliamentarians recognise this, why can’t government?
Above and beyond the fiscal fruitfulness of awarding contracts to British companies are the implications this would have for sovereign capability. The Ministry of Defence’s preference for open competition when it comes to defence procurement greatly risks the UK’s operational advantage and freedom of action.
If we do not allow our own to design, develop and produce cutting-edge defence technology a capability rift can occur and mean we are forced to rely more on more on overseas allies. Britain for time eternal has been global defence pioneers, current government strategy heavily puts this at risk.
What is the answer to the government’s defence procurement problems? A Defence Industrial Strategy with a clear vision of what is being procured and what good value looks like. Key to that is understanding the implications for our economy and jobs. Labour has long seen the bigger picture when it comes to defence procurement and remains committed to building British.