The Ministry of Defence may have achieved herd stupidity
To realise its vision of becoming a science and technology superpower, the government has announced the launch of a new research agency that will fund high-risk, high-reward science projects with a directive to permit a much higher level of tolerance for failure than is normal – recognising that in research, the freedom to fail is often also the freedom to succeed.
The agency – christened ARIA, the Advanced Research and Invention Agency, provided with a budget of £800 million over five years, will have the freedom to experiment with funding models and spend taxpayers’ cash on basic science and cutting-edge technologies without requiring prior approval from the political or administrative elite. It is the brainchild of the former chief adviser to the Prime Minister, Dominic Cummings, who modelled it on the highly successful cold-war era US research agency DARPA, the Defense Advanced Research Projects Agency.
But whereas the American DARPA was given an explicit defence brief and set-up within the Department of Defense with a mandate to contribute towards the technological superiority of US Armed Forces, no such requirement has been imposed upon the British ARIA. What’s more, ARIA has been established within the Business, Energy and Industrial Strategy department with an instruction to focus on the advancement of civilian research.
There is a good reason why the Ministry of Defence has been frozen out of any prominent role in the research activities of ARIA – it simply hasn’t got any intelligent or competent people within its ranks to make a difference. Indeed, MoD may very well have achieved herd stupidity.
Consider the evidence.
The clear message behind the government’s defence procurement policy is that equipment for the Armed Forces is to be purchased through fair and open competition – the only exceptions being off-the-shelf purchases and single-source development contracts, the latter to be handed out on a preferential basis (to the Select Few).
Indeed, the government confirms this stance in its Defence Industrial Policy* by saying:
“We strive to provide our Armed Forces with the capabilities they need at the best value for money, obtaining this through open competition in the global market, wherever possible. Competitive tension is the greatest driver for innovation, productivity and earning power in any economy.”
The government intends to achieve this by selecting the single, preferred prime contractor from a choice of industry teams by running a multiple-phase, winner-takes-all competition on the basis of a level playing field genuinely open to all-comers, including non-domiciled suppliers – to ensure it gets the very best value for money for the taxpayer.
However, “sudden death” competition (which abruptly reduces the field of bidders from six to one following a one-off release of the invitation to tender) currently used by MoD, has been rendered ineffective by defence contractors who are quoting identical bottom-line selling prices against the same requirement – which amounts to price-fixing on a grand scale, with the active connivance of the Secretary of State for Defence.
This is completely at odds with protecting MoD’s commercial interests, which is what Ministers are so fond of telling the public. Worse still, MoD’s Project Team Leader located at its arms-length procurement organisation in Bristol is being denied the opportunity to choose the single prime contractor on the basis of price competitiveness, and therefore value for money.
This farcical situation has come about because MoD’s longstanding policy of disclosing the total budgeted expenditure figure or associated year-on-year financial funding profile in the ITT has resulted in defence contractors quoting identical bottom-line selling prices in their ITT responses – an entirely predictable result!
How stupid can you get?
Even the then Comptroller and Auditor General came around to accepting the view that it is not clever to reveal what the government is going to spend on a particular programme, right at the outset, because in so doing, it loses a lot of negotiating leverage with the people it might contract with.**
Sir Amyas Morse, who completed 10 years as C&AG, had a ringside view of the inner workings of government and is therefore extremely well-qualified to comment on central government contracting practices.
It is not for MoD to tell the private sector what the price of a new equipment programme should be. Instead, it is very much the business of defence contractors to tell MoD how much each new equipment programme will cost, based upon the prevailing value of goods, services, labour and finance in the free market shaped, not by the interfering hand of people in the pay of the State who always get it wrong, but by competitive market forces driven by the profit motive and winning mindset.
There is not a single person at the MoD who has the guts or wherewithal to call out the stupidity of such practices which have been going on for decades.
It would explain why the MoD has failed so miserably to deliver equipment to the Armed Forces which is fit for purpose, adequately sustained in-service and constitutes value for money through-life for as long as anyone can remember.
@JagPatel3
* Defence Industrial Policy document, Industry for Defence and a Prosperous Britain: Refreshing Defence Industrial Policy, published December 2017, p.23, PDF file (1.28 MB). https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/669958/DefenceIndustrialPolicy_Web.pdf
** See answer to Q50, oral evidence from Sir Amyas Morse before the Public Administration and Constitutional Affairs Committee, Inquiry into The Government’s Management of Major Projects, HC 1631, 6 November 2018. http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/public-administration-and-constitutional-affairs-committee/the-governments-management-of-major-projects/oral/92338.html