The Defence Reform Bill announced in the Queen’s Speech in May 2013 will enable the Ministry of Defence to make radical changes to defence acquisition.
The proposed reforms are significant. The Government wants to change Defence Equipment and Support, the body responsible for procuring and supporting defence equipment, into a Government-owned, Contractor-operated entity, known as a GOCO. This would mean a private sector company would be responsible for managing the UK’s entire defence procurement programme. No other country has done this. A White Paper setting out the Government’s arguments, the options available and the reasons for pursuing the GOCO option will be published in spring 2013. A final decision on the future of Defence Equipment and Support is expected in 2014.
The defence equipment programme accounts for about 45% of the total defence budget and the Ministry of Defence has committed to a £160 billion ten year equipment and equipment support plan. The Defence Secretary has been sharply critical of what has been called the “black hole” in the defence budget inherited from the previous Government caused, in part, by an “overheated defence equipment plan.”
Defence Equipment and Support (DE&S) is responsible for buying and maintaining equipment for the UK’s armed forces. It employs approximately 16,000 people and is based in Abbey Wood, Bristol. It has an annual budget of approximately £14 billion.
Attempts to reform the way the MOD buys equipment are not new. The previous Government commissioned an independent report into Defence Acquisition, led by Bernard Gray. The Review of Acquisition for the Secretary of State for Defence was published in October 2009 and was largely critical of the way defence acquisition is conducted by the Ministry of Defence. Among the report’s main recommendations was a proposal for the Defence Equipment and Support (DE&S) organisation to be outsourced to a “Government owned, Contractor operated” organisation, a proposal which met with significant opposition by the then Government. The report acknowledged the creation of such a body is a “significant and controversial step” The Strategic Defence and Security Review, published in October 2010 (Cm 7948), said a review of defence acquisition would be considered as part of the overarching programme of defence reform.