In a March 5, 2020 article published on the UK Ministry of Defence website, it was announced that “a review that will revitalize the UK’s defence and security industrial sectors and improve productivity has been launched.”
The review will identify how the government can take a more strategic approach to ensure competitive, innovative and world-class defence and security industries. It will also suggest how defence in particular might better drive investment and prosperity across the UK.
The Ministry of Defence will lead a cross-government team, engaging closely with industry, Parliament, and other stakeholders over the course of the review. The findings will feed into the broader Integrated review of foreign policy, defence, security and international development that the government is currently conducting.
Defence Secretary Ben Wallace said:
“Our relationship with industry is crucial to maintaining the UK’s position as a Tier 1 military power. The review will ensure we are in the best position to support industry whilst guaranteeing the most advanced, world-leading capabilities for our armed forces.”
Many of the UK’s defence and security companies are going from strength to strength, but there are a range of challenges for the future. The review will examine the way industry is being impacted by the pace of technological change, the need for innovation and partnership, and increased competition from abroad, alongside the difficulty of ensuring that we have the necessary skills. The review will then consider how these challenges are addressed and how the government can maximise potential opportunities.
The defence and security industry employs hundreds of thousands of people, including thousands of apprentices, across the UK. From building warships in Scotland and armoured vehicles in Wales, to manufacturing aircraft in England and satellites in Northern Ireland. The MOD invested £19.2-billion into industry, commerce and employment in the last year.
Defence Minister Jeremy Quin said:
“The UK defence and security industries play a crucial role in maintaining our global influence and relationships with allies, as well as supporting employment and economic growth across the country.
“The review will explore the role of the defence and security sectors in ensuring that we have the right capabilities for safeguarding our national security whilst driving prosperity and innovation across all parts of the United Kingdom.
“Our industries are also at the forefront of technology development in creating new ways to prevent and defend against terrorism and serious organised crime. On the international stage, UK defence and security companies play a crucial role in maintaining the UK’s global influence, underpinning our strategic partnerships with key allies.”
The analysis undertaken as part of the review will inform findings of the broader Integrated Review of Security, Defence, Development and Foreign Policy which will be taking place in parallel.
This review will face a number of challenges, including Brexit and its impact on its relationships with European industries, notably for Thales, Airbus, Leonardo and MBDA.
And with non-European states, the relationships with Canada, Australia and the United States are crucial as well with key challenges facing those various partnerships as seen in the F-35, new frigate, loyal wingman and other key programs.
A recent piece published by RUSI by three former senior UK defense officials raised their concerns about the review.
Dominic Cummings, the Prime Minister’s Chief Special Adviser, is planning a full review of defence procurement. This is welcome if, unlike recent reviews, it is thorough and does not shirk politically embarrassing issues. Over 90 percent of defence programmes are brought in on time and budget, and many by excellent agile small and medium-sized enterprises, so Cummings – or more appropriately those who will execute the review – will need to focus on large, high-risk programmes.
Almost all major public sector procurement is bedevilled by cost escalation. Just look at the Hinkley Point nuclear reactor programme (up from an estimate of £16 to over £20 billion), Crossrail (up 1½ times to £18 billion) or the HS2 high speed railway project, which was initially estimated to cost £34 billion, but may yet end up costing £88 billion). Cost overruns, serious delay, poor delivery and lack of political consistency are not problems confined to the Ministry of Defence. So a thorough review could yield benefits right across government.
The principal procurement failings include over-specification, over-optimistic initial cost forecasting (which our bidding process encourages), poor contracting, political and ideological interference, inappropriate use of public–private partnerships, delay and change in specification, inadequate examination of through-life costs, lack of adequate programme control, and political reprogramming caused by budget cuts. All these lead to avoidable cost increases.
In a recent letter to the Times, David Gould, a much respected senior civil servant, contrasted his experience in defence procurement in UK with his new employer in Australia: ‘Striving to execute UK strategic programmes without knowing how much money would be available in any year (sometimes monthly) [compared] with Australia where I was given clear and simple objectives by a Government willing consistently to fund them’.
For the complete RUSI article, see the following:
https://rusi.org/commentary/spotlight-britain’s-impending-defence-procurement-review