Apr. 25, 2013 - By ANDREW CHUTER  - Defense News

LONDON — The British government plans to hand over the first phase of a scheme to outsource the management of its £14 billion-a-year (U.S. $21.4 billion) defense procurement and support operation by the end of 2014, and is using a just-announced 12-month assessment phase to run a parallel competition to find a consortium to run the government-owned, contractor-operated (GOCO) scheme.

Defence Secretary Philip Hammond said in a written statement to Parliament on Thursday that the government will make a final decision about whether to go ahead with the GOCO outsourcing plan next year after it had run an assessment phase to compare the benefits with a restructured Defence Equipment & Support operation known as DE&S +.

A Ministry of Defence spokesman said if the scheme is approved, a contractor would be appointed in the summer of 2014 and take over the first phase of the GOCO by the winter.

The second phase of the management outsourcing would kick in two years later, he said.

The spokesman said no decision had been taken on which part of the DE&S operation would be taken over first by the contractor.

Sources here, though, said the air sector is being targeted as the most likely part of the procurement and support organization to first move under GOCO control.

Hammond said the assessment phase and a competition to appoint a contractor would take place in tandem.

“In parallel, a commercial competition will be launched that will enable us to determine with potential private partners how a GOCO would work in practice, and what costs and benefits would be. By the end of the Assessment Phase we would expect to have proposals in a form capable of being contracted if we decide to proceed with the GOCO model,” he said.

Hammond made it clear that a two-phase implementation of the GOCO scheme was the MoD’s preferred method to try and erase the cost and time overruns that have dogged British defense procurement for years.

Paul Everitt, the chief executive of ADS Group, the British defense trade lobby group, acknowledged industry needed to deliver needed military capability at a price the country can afford, but warned there were outstanding issues that suppliers still wanted to see resolved.

“Whatever option is put into place following this final assessment phase, it is important that the structure is fully debated with all stakeholders and legitimate issues are appropriately addressed,” said Everitt.

One executive here said industry remains skeptical the scheme will work and has been quietly lobbying against a GOCO.

Executives continue to raise concerns over a raft of issues around intellectual property ownership and exactly who will bear the risk on defense programs.

Others said they were concerned that a GOCO on this scale in a sector of this complexity had not been tried previously.

In a report last year, the Royal United Services Institute think tank here came out strongly against the GOCO option.

“History is littered with outsourcing deals either or both parties eventually find constraining and/or in practice, more expensive,” said RUSI.

U.S.-based contractor Jacobs Engineering has been appointed as the MoD’s delivery partner to assist the ministry in developing the business model for the handover of procurement activities to a contractor.

Jacobs is best known in the defense sector here for its role in the Lockheed Martin-led GOCO that runs the Atomic Weapons Establishment.

Hammond said the MoD expects to publish a white paper “later in the spring” setting out the nature of the procurement problem, options for potential solutions, and the reasons why the focus has been on the GOCO solution.

The MoD spokesman said that assuming the GOCO gets the all-clear, the plan is to lay legislation before Parliament in the next few weeks to allow the change to proceed with a contractor or consortium in place to start operations by December 2014.

Industry sources here termed the government timetable for implementation of the scheme as “racy.”

Bechtel, CH2 Hill and Fluor from the U.S., along with Serco and Atkins in the U.K., are expected to be among a handful of consortia forming to address the controversial requirement to hand over running of DE&S.

Bernard Gray, the chief of defense materiel and the architect of the GOCO scheme, reckons DE&S doesn’t have sufficient skills to negotiate and manage often highly complex deals whereas a contractor would be better able to squeeze a realistic and affordable agreement from suppliers.

25 April 2013 Ministry of Defence

The final assessment phase in a programme that could lead to the overhaul of MOD's equipment and support management commences today.

Defence Equipment and Support (DE&S) is the organisation that buys and supports all of the equipment used by the UK’s Armed Forces.

A core element of the Transforming Defence programme is reforming the acquisition system, delivering lasting improvement in the management of the MOD’s 10-year, £160 billion equipment and support programme.

The assessment phase, announced by Defence Secretary Philip Hammond in a statement to Parliament today, 25 April, is expected to last a year. It will allow the Ministry of Defence to develop and analyse the information required to make an informed decision between 2 options: a private-sector-led government-owned, contractor-operated (GOCO) model, and a restructured, fully-funded version of DE&S that stays within the public sector, known as ‘DE&S+’.

The proposed reform of DE&S is one of the biggest and most significant business changes undertaken by any government. Throughout the next 12 months, MOD will continue to work with the Treasury and the Cabinet Office on the ‘DE&S+’ option to explore the extent of change that could be delivered whilst keeping the organisation fully within the boundaries of the public sector.

In parallel, a commercial process will be launched today that will enable the department to start discussions with potential industry partners about how a GOCO organisation would work in practice.

In a Written Ministerial Statement to Parliament, Philip Hammond said:

I would like to put on record my appreciation of the excellent staff at DE&S and the work they do. This programme is about giving them access to the necessary skills, processes and resources to enable them to do their jobs better, ensuring that the Armed Forces are provided with battle-winning equipment on time and to budget.

At the end of this 12-month assessment phase we will have a comprehensive set of qualitative and quantitative data for both possible operating models which will enable us critically to evaluate the 2 options and make a final decision about the future of DE&S.

The final decision on the future operating model for DE&S is scheduled to be taken in summer 2014.

15 Nov 12  UK MoD - A Defence Policy and Business news article

A group of 30 Army personnel are part way through a secondment with the UK Trade and Investment Defence and Security Organisation where they are supporting UK businesses exporting defence products to foreign investors. Report by Leigh Hamilton.

The Export Support Team (EST) is located at two bases, Larkhill and Bovington, where 26 soldiers and four officers perform a range of tasks including support for exhibitions overseas and in the UK, production of media materials and after-sales training and support.

With exhibition support being the main focus for these personnel, a lot of their time is spent manning stands with British companies who are showcasing their equipment. But that doesn't mean they are just standing about smiling.

The soldiers provide the companies with a trustworthy, educated voice on kit that is either already being used by British forces, or inventions that are new to the market.

Authoritative military advice can help facilitate million-pound deals for UK companies.

But doesn't this sound like our servicemen and women are being paraded around like a model in a car showroom?

The Export Support Team spend most of their time supporting UK export exhibitions at home and abroad

[Picture: Crown Copyright/MOD 2012]

According to the EST's Officer Commanding, Lieutenant Colonel Robin Bolton, the answer to that question is a definite 'no':

    "We have to be careful that we're not the salesmen, the companies are there to sell their own equipment. We are working on behalf of government.

    "We are seconded from the Ministry of Defence to do that and the benefit to MOD is such that it is worth having the soldier there as a front man giving the customer, the end user, advice not as a salesman."

Warrant Officer Class 2 Rob Daniels runs the Plants and Logistics Team within the EST and is also keen to eradicate the belief that the team acts as salespeople for private companies:

    "We don't sell, that's the key point. We support companies who do the selling; we just lend the military support to them when needed."

The Export Support Team often provides training

[Picture: Crown Copyright/MOD 2012]

Now that issue has been straightened out, how does the MOD benefit from 30 of its personnel working with another government department?

Lieutenant Colonel Bolton explained:

    "If there's a production run of artillery rounds for instance that the British Army needs for its own use, if we can be part of the effort that leads to another country buying the same sort of round, then the unit price per shell will go down for the British customer."

Surveillance Target Acquisition Sergeant within the EST, Sergeant Paul Tarpey concurred:

    "I think personnel being in roles like this benefits the MOD because of the experience that soldiers are getting. I can go back and advise my regiment on knowledge of the future capabilities that are on the market that people will not know about unless they're in a job like this.

    "It is also beneficial because money is coming back into the system because we're not doing anything for free, we're not doing any favours, they're paying for our services."

[Picture: Crown Copyright/MOD 2012]

Another aspect of the EST's role is to offer after-sales training. With their in-depth knowledge of the equipment they are demonstrating, the military personnel are often paid to travel to carry out training for the individuals who will be using the items.

It seems a posting supporting the British defence industry can be a far cry from serving on the front line in Afghanistan, as exhibitions can take personnel to more glamorous locations such as Dubai, Paris or India. But, as WO2 Daniels explained:

    "I received a brief on it by my predecessor who painted a picture of foreign travel and palm trees and sunny beaches, but it's not like that.

    "You do get to visit some interesting places that you may not have seen otherwise, but at the same time it's hard work and you're always focused on why you're there, what you're there to achieve and who you're supporting."

This article is taken from the November 2012 issue of Defence Focus - the magazine for everyone in Defence.