UK Defense Acquisition Policies Criticized, Defended, Improved
The UK Ministry of Defense (MoD) has responded to a Public Accounts Committee report that was highly critical of MoD’s performance and execution under Britain’s “Smart Acquisition” guidelines. The 20 largest projects currently in development are a total of GBP 5.9 billion over the originally approved targets, claims the report, and months behind schedule.
The MoD responded, of course, citing numerous improvements over the past year. It also released a new procurement handbook that offers the broad thrust of their future procurement practices.
The Public Accounts Committee recommendations included:
- A potential for greater expenditures (up to 15% of total cost) in a project’s assessment phase
- Higher qualification standards for vendors
- Increased focus on actual progess vs. process
- A recommendation to “develop measures of maturity for procurement strategy, supplier relationships, technical risk and finance for projects.”
Another strategy is to share the risk of complex projects by including incentives and penalties to insure that the project will come in on time and on budget. To quote the MoD, “Such innovations recognise that conventional approaches to assigning risk to the main contractor do not necessarily put the risk where it can be managed. Under the Alliance, all parties work together to achieve a common objective, with a collective sharing of risk and rewards.” DID has covered Britain’s CVF Carrier Strike program, as well as the potential for privatization of Britain’s Airbus 330 AirTanker Project.
The new procurement initiatives undertaken by the MoD do appear to have created some improvements. Britain’s MoD cites the fact that the 2004 statistics (the most recent reported) were an improvement over 2003. While the increase in estimated project cost for 2004 was GBP 1.7B and the aggregate slippage to schedule was 62 months, this compares to 2003 at GBP 3.1B and 144 months. MoD states that they expect the trend to continue in the 2005 report, due out next month.
Total deliveries to the Armed Forces in 2003-04 totaled GBP 3.7B, and included “the Strategic Sealift cargo service 20 months ahead of schedule; delivery of new deployable accommodation for Operation Telic a year early and the delivery an artillery locating radar system six months early. Also delivered were 24 new or updated aircraft and helicopters, four warships and support vessels and a range of new land equipment.”
Lord Drayson, Minister for Defence Procurement, also used a recent speaking opportunity at the Royal United Services Institute Conference on Defence Project Management that Smart Acquisition remains the MoD’s long-term strategy to improve the way to acquire military capability, but that it not a ‘quick fix’.
He claimed The Department is delivering first class projects which compare very favourably with both private and public sectors. The consistent application of Smart Acquisition principles across the board, however, is what remains at issue.
Part of the MoD’s efforts toward implementing Smart Acquisition is an effort to clairfy what the MoD calls “Defence Values for Acquisition.” These values are fully set in context in the latest edition of the Acquisition Handbook, which sets out the principles of Smart Acquisition and the latest good practice and reference material. Key principles include:
- Recognise that people are the key to our success; equip them with the right skills, experience and professional qualifications;
- Recognise the best can be the enemy of the very good; distinguish between must have, desirable, and nice to have if affordable;
- Think incrementally; seek out agile solutions with open architecture which permit “plug and play”; allow space for innovation and the application of best practice;
- Quantify risk and reduce it by placing it where it can be managed most effectively; stopping a project before main gate can be a sign of maturity;
- Recognise and respect the contribution made by industry; seek to share objectives, risks and rewards while recognising that different drivers apply;
- Embed a through life culture in all planning and decision making;
- Realise that success and failure matter; we will hold people to account for their performance.
Additional Readings & Sources
- House of Commons Select Committee on Public Accounts (Oct 13/05) – UK Ministry of Defence Major Projects Report 2004: Conclusions and Recommendations
- House of Commons Committee of Public Accounts (Oct 13/05) – Third Report: Ministry of Defence: Major Projects Report 2004 (HC 410)
- UK Ministry of Defence (Oct 13/05) – PAC Report – Ministry of Defence Response | Press response with additional background items
- UK Ministry of Defence (Oct. 19/05) – The Defence Industrial Strategy: Key Values For Delivering Success