Contractorisation of UK Defence: Developing a Defence-Wide Contractorisation Strategy and Improving Implementation

• Contractorisation in defence has steadily grown since the 1980s, driven by the need to reduce costs, maintain expeditionary capability and invest in equipment and infrastructure.
• The National Security Strategy and Strategic Defence and Security Review (NSS and SDSR) 2015 stated that Ministry of Defence (MoD) civil servants and contractors should be used to support the front line and deploy forward when required. However, there is no publicly available contractorisation strategy for driving best practice and defining which parts of defence are inherently governmental and which parts should be contractorised.
• The main rationale for contractorisation is that a contractor can deliver outputs at a lower cost than in-house military or civil service providers. Contractors can theoretically reduce costs by up to 30% through competitive tendering, lower staff costs, specialisation, multi-skilling and revenue generation. However, this is a broad estimate and each contractorisation project will have different benefits, costs and risks depending on the circumstances.
• Despite the prevalence of contractorisation across defence, there remain a number of challenges that need to be tackled to maximise value. These challenges span the contract lifecycle from high-level contractorisation strategy to implementation, including running a tender process and managing contracts over their lifecycle.
• At a high level, defence could be defined by four inherently governmental areas:
  • Policy and Requirements – Policy and requirement approval roles within Head Office and the Front Line Commands are inherently governmental, although non-inherently governmental support roles could be contractorised further if this is cost effective. This could include contractors defining and analysing requirements that are reviewed and approved by government employees.
  • Direct Participation in Hostilities – Roles in the Front Line Commands involving the operation of weapons and platforms and the direct support of operations through planning and intelligence gathering have been largely untouched by contractorisation. These roles are at the core of the MoD’s mission and operations, and are likely to always be inherently governmental.
  • Enforcing Military Discipline – The enforcement of military discipline carried out by the service police is inherently governmental; however, support roles could be contractorised if this is cost effective.
  • Committing Public Expenditure – Defence Equipment and Support and Information Systems and Services (DE&S and ISS) are both partially contractorised, with many support functions carried out by contractors. If further contractorisation is carried out it should be accompanied by a review of which decision-making roles are inherently governmental.
• Contractorisation of support functions that are not inherently governmental could go further if this is cost effective, particularly those based in the UK. Deployable support functions could be provided by a Whole Force Approach model whereby, on enduring operations, high-readiness military personnel are followed by contractors once an overseas base has been secured. However, this deployment model is based on war fighting against a low-technology, asymmetric enemy where bases in enemy territory can be made relatively secure. The Sponsored Reserves model enables contractor staff to deliver a service to the military or commercially in peacetime, and during operations to change into military uniform and operate under military terms and conditions. Further research is required to understand the cost-effectiveness of these contractor deployment models.
• There are improvements that need to be made across the areas of Strategy, Process, Performance Monitoring, Benefits, Technology and People to ensure the full value of contractorisation to defence is realised while keeping operational risks as low as possible.
• It is vitally important that a detailed contractorisation strategy is created and improvements to implementation are made to underpin the Whole Force Approach. This would ensure that inherently governmental roles are protected and that the full benefit of cost savings is achieved from support roles.

About the Author

Jay Edwards works with the UK Ministry of Defence to develop efficient and effective operating models. He previously worked at BAE Systems CORDA in Farnborough, the NATO Communications and Information Agency in The Hague and was a Visiting Fellow in the International Security Programme of Chatham House in London.