The rot probably started with staff economies in the MOD and at HQ. In the MOD whole departments were disbanded with little transfer of responsibilities.
Spot on. It was the role of the HQ staff posts (civilians in my day) to state the Service requirement to MoD(PE). In 1985 I trained my successor, but he only did the job for a few months before the entire section was closed. The nearest equivalent today is Requirement Managers, but they are not trained for the job and I've never come across one who understands what his primary role (should) be. Most treat it as a (well deserved) R&R post, but if you get the basics wrong up front, the project/programme seldom recovers.
Over the years report after report to VSOs and Ministers have highlighted this but nothing is done. I wish the likes of Bernard Gray had the balls to respond to criticism from Committees by going public with these reports, all of which have been conveniently swept under the carpet. But he probably doesn't understand the level of detail himself. One of them, in 2000, set out in detail each function of the procurement cycle, described what was required of each and what the actuality was. It concluded that almost half the functions were no longer carried out, with successful projects relying almost entirely on the PM having the experience and competence to carry out multiple jobs; which they are no longer trained to do.