Two major reports on UK defence acquisition, two contrasting visions of reform

By Professor Trevor Taylor for RUSI.org

Two major independent reports on UK defence acquisition were published between the middle and end of October. Bernard Gray's 'Review  of Acquisition for the Secretary of State for Defence'[i] was by Charles Haddon-Cave QC's 'Independent Review into the broader issues surrounding the loss of the RAF Nimrod MR2 aircraft XV230 in Afghanistan 2006'[ii].

The two reports have much in common, not least in their recognition of over-commitment in the UK defence budget, its negative consequences, and the need to address it. However, in terms of explicit or implicit wider guidance to the MoD, there are some contrasting emphases in the two documents. 

In particular, the Gray report argues for extensive organisational change in the Defence Equipment and Support Organisation, including some narrowing of its area of responsibility.  However, Haddon-Cave finds that one element behind the Nimrod disaster was that 'the MoD suffered a deep organisational trauma between 1998 and 2006 due to the unending imposition of cuts and change .... This organisational trauma stemmed from the 1998 Strategic Defence Review which unleashed a veritable 'tsunami' of cuts and change within the MoD which was to last for years'. These developments led to 'organisational confusion, complexity, distraction and dilution' in what was then the Defence Logistics Organisation. Clearly, the Haddon-Cave report's words, including his diagnosis of 'change fatigue', would require any further change proposals to be carefully scrutinised.

Secondly, Haddon-Cave's report argues that the move under Smart Procurement and Smart Acquisition to a focus on projects and the demotion of functional considerations led to neglect of the safety perspective. While he does not go so far as to suggest the weakening of Integrated Project Teams and their leaders and their leaders, he is aware of the dangers of focus on delivery to time and cost. Gray, on the other hand, is keen to strengthen Integrated Project Teams and their leaders. Safety considerations do not play a prominent role in the Gray report, indeed they receive scarcely a mention.

Haddon-Cave is not enthusiastic about the primacy of financial considerations in the MoD. He quotes prominently the words of a former senior RAF officer addressing the 1998-2006 period: 'There was no doubt that the culture at that time had switched. In the days of Sir Colin Terry (Chief engineer RAF 1997-1999) you had to be on top of airworthiness. In 2004 you had to be on top of your budget if you wanted to get ahead'. The Gray report, on the other hand, recommends a louder financial voice in defence, with increased power being given in both the MoD and the DE&S to the senior financial figure.

Haddon-Cave is wary of comparing defence, which he sees as having special features, with the private sector whereas Gray compares the MoD unfavourably with the behavior and decision-making of some commercial, civil companies.

Haddon-Cave is emphatic in his criticism of the behavior of BAE Systems and QinetiQ and their agents, and details the negative consequences of their concern with profit and future business.  In contrast, Gray feels that only the private sector can provide the talent for much of defence acquisition, recommending that the DE&S is turned into a government-owned, company-operated organisation. While this recommendation has already been rejected by the Government, it remains the case that the Haddon-Cave report overall raises doubts about reliance on the private sector for some functions.  We should note the report's four reasons for doubting the 'breadth, depth, and scale of outsourcing' from the MoD to industry:

 

First the long-term corrosive effect which the 'habit' of outsourcing is having one the ability and confidence of the Services to think for themselves. Second its undermining effect on the ability of the Services to continue to act as 'intelligent customers'. Third, the long-term damaging effect of the inexorable drain of skilled and experienced manpower at all levels away from the Services to Industry'.  Fourth the cost of so much outsourcing which might be done more effectively, and economically, in-house'[iii].

 

Much of the value of the Gray Report was in providing detailed evidence in public on issues of which there was already great awareness in the MoD. It offered a stimulating and in some cases radical set of recommendations, but which in general concerned how to make Smart Acquisition work better. This is not surprising given that Gray himself, as a former adviser to the then Secretary of State for Defence George Robertson, had some responsibility for this process.

 

By contrast, Haddon-Cave raises fundamental issues about the nature, value and direction of Smart Acquisition. Which report, it might be asked, will have the greater long-term impact? Haddon-Cave will almost certainly mean a strengthening of the RAF safety machinery and, by naming some specified individuals as having significant responsibility for the for the loss of XV230, his report  has given new life to the concept of personal responsibility and accountability in the defence sector.  Corporate manslaughter charges remain a possibility.  However, its wider messages have limited prospects. It can only be supposed that his report received a cold reception in the UK Treasury, and his arguments are unlikely to throw off balance the deep commitments to the project and programme approach, and to out-sourcing, that  are so prominent across government.

 

The views expressed above are the author's own, and do not necessarily reflect those of RUSI

 

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[i]http://www.mod.uk/DefenceInternet/AboutDefence/CorporatePublications/PolicyStrategyandPlanning/ReviewOfAcquisition.htm accessed 4 November 2009

[ii] http://www.nimrod-review.org.uk/documents.htm, accessed 4 November 2009

[iii] Nimrod report p.565