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Procurement Privatisation

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Procurement Privatisation

Old 24th Apr 2013, 19:16
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Procurement Privatisation

Inspired or insanity?

MoD poised to privatise part of troubled defence procurement process | UK news | guardian.co.uk

Not seen anything yet to move me out of the 'insanity' camp.

Looks like RAF projects could be the 'pilot' sell off.

Last edited by JFZ90; 24th Apr 2013 at 19:17.
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Old 24th Apr 2013, 20:08
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Having watched Save As You Starv, FSTA and MFTS etc with interest from afar............ Insanity!!
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Old 24th Apr 2013, 20:55
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Because the self-licking lollipop of qinetiq has worked so well for us. The bit that concerns me is the on-paper cost of mil personnel in DE&S and what a GOCO contractor will do with that. They will see mil as an expensive overhead and cut to bare minimum; the result being an even less informed procurement executive on front line ops.

Of course there is some benefit in greater stability/less time away from core duties by removing mil pers, but the effect on the degradation of front line knowledge and credibility of teams with reduced mil experience will be telling.

H
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Old 24th Apr 2013, 21:03
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"Day-to-day management would be undertaken by a private company, possibly from abroad".
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Old 24th Apr 2013, 21:35
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They could save money by getting rid of `50-shades -of -Gray` and his injunction and expenses ;maybe `Toys "R" Us `are in the frame to run it..
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Old 24th Apr 2013, 23:01
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`Toys "R" Us `are in the frame to run it..
I was thinking maybe Disney. Afterall, I hear Mickey Mouse already wears a DE & S watch!
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Old 24th Apr 2013, 23:39
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some good points here

RUSI - RUSI NEWS

what i can't get my head around is how will reqts be effectively controlled with the goco? with the 10,000's of individual and diverse projects being delivered by de&s (the vast majority to PTC), who will control and hold the goco to account? is someone in cap / flc commands just going to agree 6-7 KURs for each project upfront then leave all the control and spending to a company? just how will that work on an aircraft programme? who will control integration / interoperability between projects & how?

i fear there maybe some nasty shocks in store when the goco turns around and says "you didn't ask for that - send more cash". there is surely a real risk that either current overruns/spends will look trivial, or it will result in kit that is not fit for purpose.
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Old 25th Apr 2013, 06:58
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i fear there maybe some nasty shocks in store when the goco turns around and says "you didn't ask for that - send more cash". there is surely a real risk that either current overruns/spends will look trivial, or it will result in kit that is not fit for purpose.
You mean just like we have now ? From the publics point of view, its exectly how the UK MOD has behaved for the last 20 years. Vast sums of money wasted by ineffective procurement at all stages and absolutely no consequneces and frankly, no interest in being the slightest bit efficient or effective.

Thats exactly what we have but there are no consequences for those in the current process when abject failures cause price and time overruns.

At least under a go-co, some folks could be sacked and the system would gradually learn that actions have consequences. I know the MOD isn't Tesco, but a lot could be learned about effective supply chain management, and getting the right thing defined at the outset.
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Old 25th Apr 2013, 07:19
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Roland mentioned "Save as you starv" and I agree that the Catering Retail and Leisure (CRL) contract has some significant shortfalls that need ironing out. However, I recently heard that significant "gain shares" (which is 50/50 dividend share to the station and contractor) have been delivered back to RAF stations - 10s to 100s of thousands of pounds - which they can spend on stuff on station for 'quality of life' improvements. Now if a little more was spent back on improving CRL and the price/food quality then I suspect it would find a happy median.

So I see no reason why PFI shouldn't work if we had some decent individuals doing contract monitoring and tweaking them to our benefit (ie. the Service). If the RAF did this we might gain another lever to pull and gain some control back from DIO or DE&S or this proposed GoCo.

LJ
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Old 25th Apr 2013, 07:43
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Sadly, the attitude of Service manning (the need to move fast-trackers every 18mths) means that often the 'value added' provided by a serviceman in DE&S/Cap Dev areas is in short supply as they just gain competency when they're moved. The best PMs I've worked with in DE&S are either 'mong stream' S/L and W/C who've settled in the West Country (but are often ignored or overruled by Gp Capts/B1 CS who are going places....) or ex-mil contractors who bring experience and gravitas to the role - but you do pay for the privilege. In many cases the best CS have their morale and enthusiasm crushed lest they embarress their seniors. I'm tired of seeing poor decisions taken by ill-informed people based on turning dashboards the correct colour in order to meet bonus targets and to hang with the military need. If, and it's a big if, Manning wake up to the true needs of acquisition and nurture SQEP individuals to place in Cap Dev in the FLCs then DE&S could be massively streamlined if the Cap Dev area were holding them to task. Properly drafted requirements with behaviours driven by contract are the way ahead - but I'm not holding my breath. If a GoCo hires the right people, and is prepared to pay them the right money, it could make a tangible difference. Hmmm........

Last edited by Evalu8ter; 25th Apr 2013 at 07:48.
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Old 25th Apr 2013, 07:57
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A couple of points spring to my mind. Firstly, there is likely to be a Transfer of Undertakings (Protection of Employment) (TUPE) requirement on the GOCO so don't expect there to suddenly be a 'clean sweep' with lots of new staff.

Secondly, there might just be a chance that a commercial outfit might force the DE&S system to clean up its act. Perhaps this would prevent the sort of recent farce witnessed in a major UOR, in which the bizzare requirements set in the SRD guaranteed that no bidder could be compliant with the ITT! Net effect - significant delays in delivering an operational capability to the front line, and additional costs to the bidders, who all now have to re-compete against a revised SRD. DE&S' own rules state that the MOD expects bid costs to be recouped by the winning team in the delivery phase, so who do you think will ultimately be picking up the tab?

I work for a small commercial outfit and if we operated in the manner DE&S did, we'd be out of business in no time....
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Old 25th Apr 2013, 07:58
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Why not try COGO?

Take some costly and ancient piece of kit, a Land Rover say. Contractor determines that a new fleet of Toyotas can be acquired and operated at a lower through life cost than the old kit.

The Service is responsible for maintenance and operation - we have an expeditionary force so we can deploy and maintain without having to start a new contract to have grey suits wherever doing the dirty stuff.

When cost basis changes the contractor changes the kit.
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Old 25th Apr 2013, 07:58
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who will control integration / interoperability between projects & how?
This is a good question, inadvertently (it seems) answered by Bernard Gray in his Radio 4 interview of 27.12.11 (“Buying Defence”). He cited a long-mandated policy but clearly didn’t actually know it was mandated, or even existed, as he presented it as an original thought. Clearly, a lackey who didn't understand the policy, but only knew that it was responsible for successful programmes, simply scribbled it into a briefing.

When this was pointed out to MoD by an MP, they promptly denied Gray had even uttered the words. When the MP passed on an audio recording of the interview, MoD still denied it.


At the time, on another thread, I opined being caught in this lie would probably delay the GOCO announcement by some time, as MoD desperately struggled for alternative words that meant the same. It seems the delay was about 16 months.

The article in the Guardian is so light on facts and detail as to be worthless. There is far more in Gray’s 30 second interview from 27.12.11.

The Defence Standard that lays down the procedures for this policy was cancelled, without replacement, 3 years ago, yet remains mandated in ALL aircraft/aircraft equipment contracts. MoD no longer have a complete copy of it. Despite cancelling it, MoD didn’t think it wise to amend the contracts that call it up, perhaps because a flagship Army programme relies 100% upon it. Nor did they withdraw copies from those Contractors who use it as the Bible.

Finally, an old chestnut. The assumption that only servicemen can manage procurement is absolute nonsense. No one likes discussing the fact that many, in fact the majority, of projects are delivered to time, cost and performance. MoD’s main problem is their unwillingness to learn from these successes, instead only looking at the failures. And when they discover that failures could have been avoided by following mandated regulations (in the main, the above Def Stan and the underlying training necessary), they walk away, because that reveals where the true problem lies, and with whom. (And the list of names on the RUSI website doesn’t give you confidence they’d be in any way objective).

Always follow the lies because that is where the truth can be found. Ask why MoD would deny Gray said something, when it can be listened to and downloaded from the BBC website!! The mentality is that of a 2 year old, and getting rid of such people should be the first step.

Last edited by tucumseh; 25th Apr 2013 at 08:00.
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Old 25th Apr 2013, 09:27
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No one likes discussing the fact that many, in fact the majority, of projects are delivered to time, cost and performance.
Tuc

Is that because the majority are simple rather than complex systems? Its obviously going to be a lot easier to buy something on CTP if it is simple. Don't know the answer, just asking.

Having worked in procurement I think part of the problem is the mandatory adherence to KURs and the SRD. Sometimes you know what is the right buy; if it is the only thing out there that can do what you want (C17, E3) or it is blindingly obvious that if you need a system to do X the answer is Y you should just buy it. However we have to write a requirement (which may not completely encompass everything that the single requirement manager can think of when drafting the SRD) and then allow bidders to bid against the KUR/SRD, with systems that might deliver anything from X-- through X to X++. The scrutineers wont allow you to just buy X++ even though, invariably, it is the right answer because X-- is cheaper (and doesn't meet the requirement); as the RM you then have to "move the goal posts" as you try to get the capability you actually want, particularly when you remember that critical capability that was a "compartment" on the old system and you now need to add to the SRD; which the contractor will seize upon as a new requirement for which he can charge more and delay the programme; meanwhile technology moves on and the in service platform you are trying to replace gets some upgrades, possibly through UOR action; which means your replacement is now a backwards step. In the mean time other nations who just bought Y in the first place are wondering why they have a platform in service meeting their requirement and doing the job for which it was procurred, whilst you are still tied up in negotiations with the "preferred bidder". And relax.

LJ
10s to 100s of thousands of pounds
I would be stunned by 10s of thousands let alone 100s of thousands. Of the various tri-service stations that I have visited recently I have yet to hear of anyone getting £s back let alone 10s or 100s. Of course it would also suggest that had the Service decided to invest properly in its messes and on base "all ranks coffee shops", "we" would be receiving 100% of the gain share not 50%. Any ideas as to which stations have received this substantial windfall?
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Old 25th Apr 2013, 12:32
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Intelligent Customer

Having an intelligent customer capability is vital. In the infrastructure environment, the RAF has not had any professionally trained or experienced construction professionals (eg builders, architects, civil engineers, QS) for many years, rather, the task fell to junior officers of the Admin Branch (Pers Branch in new pence), with not so much as a day’s experience on a building site. The justification for not having SQEP was that DWS/DE/DIO would provide that intelligent input.

If that was so….

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Old 25th Apr 2013, 12:42
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Quis Custodiet Custodies?

One though that springs to mind - once procurement has been privatised who arranges the next contract for the same service? It would seem from the current rules that the incumbent contractor is either compromised already or would have to be excluded from bidding again. Nobody else would surely accept that the incumbent could run an unbiased competition.

the result would surely be complete stagnation whilst the issues are sorted out or a complete change of contractor with the same stagnation over the handover and learning period.
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Old 25th Apr 2013, 13:03
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Quis Custodiet Custodies?

One though that springs to mind - once procurement has been privatised who arranges the next contract for the same service? It would seem from the current rules that the incumbent contractor is either compromised already or would have to be excluded from bidding again. Nobody else would surely accept that the incumbent could run an unbiased competition.

the result would surely be complete stagnation whilst the issues are sorted out or a complete change of contractor with the same stagnation over the handover and learning period.
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Old 25th Apr 2013, 13:06
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Is that because the majority are simple rather than complex systems? Its obviously going to be a lot easier to buy something on CTP if it is simple. Don't know the answer, just asking.
I can only speak from personal experience. 131 projects while in MoD(PE) and its bastard offspring, including Air (mostly), Land and Sea. Plus a few two grades before being promoted into MoD(PE) – concepts unknown to most in MoD these days. I was what you’d call a “Requirements Manager” in the post before being the lowest grade in PE. Another alien concept!

The “easiest” were ALWAYS those where the proper contractor was selected and the Requirement written by someone trained to do so. Most importantly, where proper Materiel and Financial provision had been made (how many so called Requirements Managers know how to do this, or even realise it is their primary role?)

Perhaps the most difficult one was a piddling little £5M job. DEC wanted 20 systems they acknowledged cost £1M each. Plus platforms to host them. So why staff and have approved £5M? And then accept a cut to under £3M at screening? In a project management sense it was an “easy” job. But having to “manage” DEC is an entirely different thing. (It was Army).

-re “mandatory adherence to KURs and the SRD”. I’ve seen many major programmes with KURs that defy physics. You are right, KURs are allegedly mandatory, but the first thing a sensible project manager does is prepare a “SRD Clarification Paper” written in such a way it doesn’t actually say “This is balls” but in a way which allows you to meet the End Users’ actual needs, not what someone thinks they need. This is an artform. On my last but one Army project, I met all of ONE single KUR out of 15, and perhaps a dozen of about 90 others, yet the General Officer Commanding sandy places described it as his ”equipment of choice” and wondered why we pissed billions down the drain on a useless system that nobody used. That one example illustrates what is wrong, just as well as your own examples do. Communication, flexibility and common sense – and the PM understanding the technical and operational requirement.

On the subject of SRDs etc, the move away from Cardinal Points Specifications to a policy of not “solutionising” was not because this is a better way, but because as a matter of policy MoD had rid itself of staffs able to prepare a CPS. Contractors will tell you most SRDs are too vague. It leads to bidders offering vastly different “solutions” and the best bid is difficult to select as you are seldom comparing like with like. Since the introduction of SRDs, the most successful projects I’ve managed are those where I quietly ditched it and agreed a CPS with the firm, very often one I’ve written. Also, far too many Invitations to Tender don’t contain enough (or any) “differentiators”. Too often you see 95% of the marks available to anyone who can just tick “yes” to 600 yes/no ILS questions. And too often the wrong company, and wrong product, is selected.

And then you have political interference, and contract awards to companies with senior politicians and retired VSOs on their board. It isn’t overt corruption (ok, sometimes it is). But former rank brings access to DE&S, and that access leads to influence being maintained.

Too much of procurement is outwith the PM’s sphere of influence, and it is manifestly unfair to blame them for all cock-ups without ascertaining the facts.

Last edited by tucumseh; 25th Apr 2013 at 13:10.
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Old 25th Apr 2013, 13:48
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Originally Posted by Xercules View Post
once procurement has been privatised who arranges the next contract for the same service?
The initial contractor won the competition by offering a price at the in-house cost less x%.

5 years down the line the ability of the Service to take the work back in house is severely compromised and the sitting contractor can now up his offer. While a new bidder might undercut in price they may also under-estimate the risks which places the ball back with the initial contractor.

Barrel and over springs to mind.
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Old 25th Apr 2013, 14:37
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On the subject of SRDs etc, the move away from Cardinal Points Specifications to a policy of not “solutionising” was not because this is a better way, but because as a matter of policy MoD had rid itself of staffs able to prepare a CPS. Contractors will tell you most SRDs are too vague. It leads to bidders offering vastly different “solutions” and the best bid is difficult to select as you are seldom comparing like with like. Since the introduction of SRDs, the most successful projects I’ve managed are those where I quietly ditched it and agreed a CPS with the firm, very often one I’ve written. Also, far too many Invitations to Tender don’t contain enough (or any) “differentiators”. Too often you see 95% of the marks available to anyone who can just tick “yes” to 600 yes/no ILS questions.
Heresy, heresy, burn the heretic! I can hear the "systems engineering" purists writing the requirements for their instruments of torture now!

It's a huge part of the problem in that theoretically giving the contractor total freedom to propose solutions is a good thing. That may be so at pre-concept and concept phase, but beyond that it leads to uncertainty which leads to risk, which leads to suffering (to paraphrase Yoda). Trouble is the theoreticians have convinced many of the scrutineers and finance types that theirs is the true path, when as you say it's actually having requirements managers who understand the requirement and its derivation and PMs who are sufficiently experienced in the relevant area to make pragmatic decisions.

I remember the utter bewilderment of many in teh shipbuilding industry when the CVF SRD came out. If you want a price, you'd better write us a shipbuilding technical specification they said - which in essence was the SRD with pragmatic levels of solutioneering built in.
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