The establishment of the new Defence Procurement Agency (DPA) on 1 April, replacing the Ministry of Defence’s Procurement Executive, is intended to usher in a more efficient system for buying Britain’s weapon systems, while achieving significant savings.
The quasi-independent DPA, based at Abbey Wood near Bristol, was announced in last July’s Strategic Defence Review. Its purpose is to meet efficiency and savings targets (also an important part of the `modernising government’ initiative), although no figures for this have been publicly declared.
The DPA’s main task is to make a reality of what the Government calls `smart procurement’ – an initiative to end the project delays and cost overruns which have bedevilled UK defence contracting.
DPA chief executive Sir Robert Walmsley says: `Smart procurement is a revolution in the way we set about equipping the armed forces. Central to the new arrangements will be integrated project teams [IPTs] representing all the parties involved in a project, whether from the user, logistic, scientific, procurement or related industry communities.
`The IPT’s leader will have the responsibility and authority to deliver a project to its agreed performance, cost and timetable,’ Walmsley promises. `Agency status will provide a unifying and energising force to achieve faster, cheaper and better defence procurement.’
The intention is to replace adversarial customer-supplier relationships with an institutionalised spirit of co-operation, where all participants in a project are assigned specific tasks to ensure that the overall programme is kept on track. The DPA’s top management structure is leaner than in procurement executive days and is built around the IPTs, with 95 presently grouped in 11 `peer groups’.
The DPA’s smart procurement objective is `an idea whose time has come, involving a very strong partnership’, one insider says. `It’s early days but, as time will tell, the benefit will be for the taxpayer.’
But there are warnings of dangers ahead. While giving the DPA and smart procurement the benefit of the doubt for the sake of preserving relationships with the MoD, companies have criticisms. A senior defence industry executive familiar with challenges facing smaller firms warns: `If firms know they are supposed to be chummy and co-operative in an IPT for Project A, but are going to be rivals to win a future Project B, they will hold back on anything which could reveal too much about their commercial position.’
Another executive is even more sceptical: `We’ve heard it all before,’ he says. `It depends entirely on the will of people running the MoD to head off political interference.’
He adds: `Smart procurement means you’ve got to go for what is best, not what is politically acceptable. I have not yet seen anything which makes me convinced by it. It implies a level of ruthlessness, but the MoD no longer has the capacity to scrutinise bids properly’ – a view which Walmsley would no doubt dispute.
`This scrutiny capacity was removed under the Heseltine reforms and tenders are sometimes open to too many firms for the wrong reasons,’ the executive says. `The DPA must not let lame ducks into the bidding for the sake of competition.’
Walmsley may still have some convincing to do, but he says he has `no doubt that the formation of the DPA is a necessity for the achievement of clarity in how we measure performance’.