A new report from the UK Public Accounts Committee (PAC) insists that the Ministry of Defence (MoD) must do more to encourage competitive procurement policies. Almost half of the contracts to supply equipment for the UK’s defence needs are not subject to competition, the report claims.
The MoD is currently under pressure to make savings of £1.7bn. Meg Hillier, Chair of the Public Accounts Committee, said that developing a clear strategy to drive competition was essential if the ministry was to meet this target.
In 2014 the government introduced the single source contract regulations in order to improve transparency in contracting and procurement costs. However, the PAC report notes that several current MoD contracts still have not been brought within the remit of the regulations.
The report accepted that in some circumstances the MoD had no choice other than to use a single supplier, and so in those cases procurement could not be undertaken competitively. However, it was still felt that the level of non-competitive procurement could be reduced in line with government policy.
Elsewhere in the report the MoD was criticised for relying upon high levels of “cannibalisation”. This practice, of taking parts from one machine, vehicle or vessel so that it is possible to maintain the operational capability of another, was said to have increased by 49% over the last five years in the Royal Navy alone.
The report also suggested that cannibalisation was not routinely monitored. This means that it is impossible to keep track of costs as the necessary controls, processes and data are not available.
Hillier said that the MoD needed to fortify its procedures in terms of overseeing and scrutinising the way that it conducted aspects of its business. She also claimed that some suppliers were still refusing to follow the 2014 contracting regulations and that this was unacceptable.
“Government must ensure the Single Source Regulations Office has the teeth to do its job properly,” she added.
Steve has over 28 years of success as CPO, MD and Procurement BPO leader in a range of industries. Steve is COO at Odesma, responsible for Odesma’s delivery capability & infrastructure.