Leon, never was a truer word said - there are more savings here than you would care to believe.
I agree that procurement is where the majority of savings should come from
The problem is, you have to do it properly if you want to make the savings. That means a proper/mature/stable specification, open and fair competition, and preventing interference from parties with vested interest during the procurement process.
Oh, and ditching the belief that appointing certain companies as "strategic resources" is the only way of achieving technology and capability transfer.
New Procurement Regs coming in April are going focus the MoD's mind on that one.