GoCo NoGo?
"The very fact that this one bidder, the Bechtel consortium, has a bid in of 1,200 pages surely draws attention to the manifest absurdity and complexity of the bid process."
1200 pages is NOTHING. I imagine that's just the initial Requests for Clarification.
1200 pages is NOTHING. I imagine that's just the initial Requests for Clarification.
Thread Starter
Really? Interesting, Bechtel are doing so well too at the moment.....
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Read in the paper today an announcement is due next week and Bernard's baby will be cancelled.
BBC News - Plan to privatise defence procurement to be 'scrapped'
Thread Starter
Guardian too.
Government abandons plan to outsource military procurement | UK news | theguardian.com
No mention of whether Bernie is going to fall on his sword.
Perhaps given that he was told by many this was going to fail, it was a non-starter and it would be the turkey to end all turkey procurements, you do have to wonder if his position is tenable any more.
His mantra seems to have been to find a way to sack those in procurement who are not able to do it effectively and employ those better skilled to do so.
Ironic that he know finds himself at the helm of one of the biggest (in terms of spend) procurement cock-ups of all time. Where does that leave him in terms of having the skills for his own job?
So it could be bye bye Bernie, I don't expect he'll get much of a leaving party (well, not one he's invited to at any rate).
Government abandons plan to outsource military procurement | UK news | theguardian.com
No mention of whether Bernie is going to fall on his sword.
Perhaps given that he was told by many this was going to fail, it was a non-starter and it would be the turkey to end all turkey procurements, you do have to wonder if his position is tenable any more.
His mantra seems to have been to find a way to sack those in procurement who are not able to do it effectively and employ those better skilled to do so.
Ironic that he know finds himself at the helm of one of the biggest (in terms of spend) procurement cock-ups of all time. Where does that leave him in terms of having the skills for his own job?
So it could be bye bye Bernie, I don't expect he'll get much of a leaving party (well, not one he's invited to at any rate).
GoCo Gone - Official
Defence privatisation plan axed
Originally Posted by BBC
The government has abandoned plans to privatise its defence procurement body after only one bidder was left in contention for the contract.
Defence Secretary Philip Hammond said there was no longer a "competitive process" and the risks of continuing were "too great to be acceptable".
Labour described the decision as an "embarrassing U-turn".
The Bristol-based Defence Equipment and Support Agency has an annual budget of £14bn.
It buys equipment, including ships, aircraft and weapons for the armed forces.
The Ministry of Defence (MoD) had been considering replacing the agency with a "government-owned, contractor-operated" (GoCo) body.
But two of three consortiums interested in the contract withdrew.
Defence Secretary Philip Hammond said there was no longer a "competitive process" and the risks of continuing were "too great to be acceptable".
Labour described the decision as an "embarrassing U-turn".
The Bristol-based Defence Equipment and Support Agency has an annual budget of £14bn.
It buys equipment, including ships, aircraft and weapons for the armed forces.
The Ministry of Defence (MoD) had been considering replacing the agency with a "government-owned, contractor-operated" (GoCo) body.
But two of three consortiums interested in the contract withdrew.
Bernard Gray is to appear before a specially convened Defence Select Committee on Thursday. Don't hold your breath waiting for Hodge to ask knowledgeable questions. She'll be too busy grandstanding and, as usual, will miss the blindingly obvious.
The press always say DE&S was to be replaced by the GOCO company, but I don't think Gray ever said that. If he did, he would be wholly contradicting the announcement he made in December 2011. I think this is where the HCDC should be aiming, to establish if he actually understood "his" proposal, and ask why MoD almost immediately denied he'd made the statement. I think the answer would reveal a lot of in-fighting and back-biting in Mandarin Towers and among certain retired VSOs, who quite openly tried to undermine Gray from the outset. I have a feeling his first and greatest mistake was failing to engage the person who developed the model he presented as his own, despite being told to do so by Min(AF).
Oops, got it wrong. Hodge is PAC Chair. Same principle applies though!
The press always say DE&S was to be replaced by the GOCO company, but I don't think Gray ever said that. If he did, he would be wholly contradicting the announcement he made in December 2011. I think this is where the HCDC should be aiming, to establish if he actually understood "his" proposal, and ask why MoD almost immediately denied he'd made the statement. I think the answer would reveal a lot of in-fighting and back-biting in Mandarin Towers and among certain retired VSOs, who quite openly tried to undermine Gray from the outset. I have a feeling his first and greatest mistake was failing to engage the person who developed the model he presented as his own, despite being told to do so by Min(AF).
Oops, got it wrong. Hodge is PAC Chair. Same principle applies though!
Last edited by tucumseh; 10th Dec 2013 at 15:59.
Statement from SoS
Here's the Sec of State's statement:
Originally Posted by Phillip Hammond
With permission, Mr Speaker, I should like to make a statement on the government’s plans for reform of defence procurement.
The 2010 SDSR set out the government’s vision of an agile armed forces designed to face the challenges of the 21st century. Central to delivering and sustaining that vision, is the ability to procure and support the equipment the armed forces need. There is a widespread acceptance that the present defence acquisition process is not good enough. While there have been notable successes, there have also been many examples of poor performance and sub-optimal outcomes for the armed forces and the taxpayer.
Bernard Gray’s report for the previous government identified three root causes of these problems:
an overheated programme;
a weak interface between Defence Equipment and Support and the rest of the MOD, too often leading to repeated changes to the requirement
and a lack of business skills in DE&S
This government has moved to address all three:
In May 2012, I announced that we had resolved the £38 billion black hole we inherited and balanced the defence budget, with over £4 billion of centrally held contingency to address risks as they crystallised, and a much more disciplined and formalised approach to investment approval, committing funding only when project proposals were properly mature.
As a consequence, DE&S effectiveness is no longer undermined by an overheated programme.
We have also strengthened and improved the interface between DE&S and its MOD customers. We have accepted and implemented the recommendations of Lord Levene’s report on Defence Reform more clearly to define the customers of DE&S as the front line commands, and to give them substantial responsibility for managing their own budgets and prioritising their own requirements. We still have further to go, but we can already see an improvement, and with a substantial reduction in the number of changes to requirements, this is already becoming less of a negative factor in DE&S performance.
We have also started to address the business skills gap within DE&S, through the appointment of Bernard Gray as the Chief of Defence Materiel, and by the recruitment of new senior finance and commercial staff from the private sector.
We are beginning to see the evidence of progress, and while I do not want to pre-empt the Major Projects Review report the NAO will be publishing in the New Year, I am confident that it will show significant improvement in respect of the period since we balanced the budget in May 2012.
But we recognise there is still a long way to go. The reforms we have already instituted are only a start and the challenge of recruiting and retaining the necessary business skills in DE&S is growing, not diminishing – and is likely to get bigger still as the economic recovery gathers pace. A more radical reform of DE&S is necessary if it is to sustain the skills it requires to support our armed forces effectively.
That is why we developed the ‘Materiel strategy programme’.
To address the skills challenge and improve the delivery of complex programmes, DE&S needs to have the freedom to shape its workforce to be world class and to engage effectively with the best of the private sector. The Materiel Strategy is about removing the obstacles to bringing in critical skills and exploiting the capabilities of the private sector, by exploring alternative models for DE&S.
I announced in April that the government had concluded that a ‘Government-owned, Contractor-operated’ model, a GoCo, might well be best placed to deliver the changes required in DE&S; but that we needed to test the market’s appetite for that model, and confirm that it would, indeed, deliver value for money, through a competition. In parallel, I announced that we would work up a public sector comparator, exploring the maximum extent of flexibility that could be achieved within the public sector, a model we have called “DE&S plus”.
The government has maintained an open mind as to which option would prove, overall, to deliver the best balance of risk and potential reward once bids were received.
On 19 November, I informed the house that we had reached the ‘detailed proposals’ stage of the competition, with only one proposal being received from the two consortia remaining in the process. That proposal was from the Bechtel-led Materiel Acquisition Partners. I further informed the house that the government would consider carefully how best to proceed in the light of this development.
I can confirm to the house today that I have decided not to continue the present competition.
The heart of our approach was to test the market’s appetite for delivering aGoCo along the lines we had set out, using the competitive process to drive innovation and value. We have always recognised that there are risks inherent in the GoCo approach. With only one bidder remaining in the competition at this stage, I have had to make a judgment about whether the public-sector comparator alone would generate sufficient competitive tension to ensure an effective outcome for the armed forces and value for money for the taxpayer.
I wish to place on record, Mr Speaker, that ‘Materiel acquisition partners’ have engaged effectively with the very challenging brief we set out. They have presented us with a credible and detailed bid, but we do not have a competitive process. I have therefore concluded that the risks of proceeding with a single bidder are too great to be acceptable.
We have gained many valuable insights from bringing the proposition this far and understanding the issues raised by bidders and potential bidders. My conclusion is that a GoCo remains a potential future solution to the challenge of transforming DE&S, but that further work is necessary to develop DE&S financial control and management information systems to provide a more robust baseline from which to contract with a risk taking GoCo partner.
We are clear that the only realistic prospect of resolving the challenges facing DE&S in an acceptable timescale is through a significant injection of private sector skills. I have, therefore, decided to build on the DE&S plus proposition, transforming DE&S further within the public sector, supported by the injection of additional private sector resource, thus ensuring that the organisation becomes “match-fit” as the public-sector comparator for a future market-testing of the GoCo proposition.
To do this:
We will recognise the unique nature and characteristics of DE&S as a commercially-facing organisation by setting it up as a bespoke central government trading entity from April 2014;
We will give the new entity a hard boundary with the rest of MOD, a separate governance and oversight structure with a strong board under an independent Chairman, and a Chief Executive who will be an Accounting Officer, accountable to Parliament for the performance of the organisation, delivering another of Levene’s recommendations;
And crucially, we will permit the new organisation significant freedoms and flexibilities, agreed with the Treasury and Cabinet Office, around how it recruits, rewards, retains and manages staff along more commercial lines to reflect its role running some of the most complex procurement activity in the world.
We will of course consult with trades unions on the practical arrangements for implementation.
These changes will reinforce the customer-supplier interface between the military command customers and DE&S, facilitating a more business-like approach, allowing us to move earlier to a hard-charging regime and thus further addressing one of the weaknesses identified in the 2009 Gray report.
They will allow DE&S to procure crucial private sector input through a series of support contracts to deliver key changes to systems and processes, and to strengthen programme management while organic capabilities are built. And they will permit the recruitment into DE&S of key commercial and technical staff at market rates and with minimum bureaucracy.
Mr Speaker, Bernard Gray has agreed to become the first Chief Executive of the new trading entity, thus providing a vital thread of continuity between the original Gray report and the continuing DE&S reform agenda.
Alongside the changes to DE&S, we will continue with the reform of MOD’s wider acquisition system, which is focusing on up-skilling our customer capabilities, a key role for our military, alongside the important role they will continue to play within DE&S.
Mr Speaker, these changes will drive significant incremental improvements in DE&S as well as delivering the mechanisms that will give the organisation a robust performance baseline. That will allow MOD, at a future date, to re-test the market’s appetite for continuing the DE&S evolution into a GoCo, and its ability to deliver value for money against a significantly enhanced public sector comparator.
On both counts, this course of action represents the best way forward, both for our armed forces and for the taxpayer, and I commend this statement to the house.
The 2010 SDSR set out the government’s vision of an agile armed forces designed to face the challenges of the 21st century. Central to delivering and sustaining that vision, is the ability to procure and support the equipment the armed forces need. There is a widespread acceptance that the present defence acquisition process is not good enough. While there have been notable successes, there have also been many examples of poor performance and sub-optimal outcomes for the armed forces and the taxpayer.
Bernard Gray’s report for the previous government identified three root causes of these problems:
an overheated programme;
a weak interface between Defence Equipment and Support and the rest of the MOD, too often leading to repeated changes to the requirement
and a lack of business skills in DE&S
This government has moved to address all three:
In May 2012, I announced that we had resolved the £38 billion black hole we inherited and balanced the defence budget, with over £4 billion of centrally held contingency to address risks as they crystallised, and a much more disciplined and formalised approach to investment approval, committing funding only when project proposals were properly mature.
As a consequence, DE&S effectiveness is no longer undermined by an overheated programme.
We have also strengthened and improved the interface between DE&S and its MOD customers. We have accepted and implemented the recommendations of Lord Levene’s report on Defence Reform more clearly to define the customers of DE&S as the front line commands, and to give them substantial responsibility for managing their own budgets and prioritising their own requirements. We still have further to go, but we can already see an improvement, and with a substantial reduction in the number of changes to requirements, this is already becoming less of a negative factor in DE&S performance.
We have also started to address the business skills gap within DE&S, through the appointment of Bernard Gray as the Chief of Defence Materiel, and by the recruitment of new senior finance and commercial staff from the private sector.
We are beginning to see the evidence of progress, and while I do not want to pre-empt the Major Projects Review report the NAO will be publishing in the New Year, I am confident that it will show significant improvement in respect of the period since we balanced the budget in May 2012.
But we recognise there is still a long way to go. The reforms we have already instituted are only a start and the challenge of recruiting and retaining the necessary business skills in DE&S is growing, not diminishing – and is likely to get bigger still as the economic recovery gathers pace. A more radical reform of DE&S is necessary if it is to sustain the skills it requires to support our armed forces effectively.
That is why we developed the ‘Materiel strategy programme’.
To address the skills challenge and improve the delivery of complex programmes, DE&S needs to have the freedom to shape its workforce to be world class and to engage effectively with the best of the private sector. The Materiel Strategy is about removing the obstacles to bringing in critical skills and exploiting the capabilities of the private sector, by exploring alternative models for DE&S.
I announced in April that the government had concluded that a ‘Government-owned, Contractor-operated’ model, a GoCo, might well be best placed to deliver the changes required in DE&S; but that we needed to test the market’s appetite for that model, and confirm that it would, indeed, deliver value for money, through a competition. In parallel, I announced that we would work up a public sector comparator, exploring the maximum extent of flexibility that could be achieved within the public sector, a model we have called “DE&S plus”.
The government has maintained an open mind as to which option would prove, overall, to deliver the best balance of risk and potential reward once bids were received.
On 19 November, I informed the house that we had reached the ‘detailed proposals’ stage of the competition, with only one proposal being received from the two consortia remaining in the process. That proposal was from the Bechtel-led Materiel Acquisition Partners. I further informed the house that the government would consider carefully how best to proceed in the light of this development.
I can confirm to the house today that I have decided not to continue the present competition.
The heart of our approach was to test the market’s appetite for delivering aGoCo along the lines we had set out, using the competitive process to drive innovation and value. We have always recognised that there are risks inherent in the GoCo approach. With only one bidder remaining in the competition at this stage, I have had to make a judgment about whether the public-sector comparator alone would generate sufficient competitive tension to ensure an effective outcome for the armed forces and value for money for the taxpayer.
I wish to place on record, Mr Speaker, that ‘Materiel acquisition partners’ have engaged effectively with the very challenging brief we set out. They have presented us with a credible and detailed bid, but we do not have a competitive process. I have therefore concluded that the risks of proceeding with a single bidder are too great to be acceptable.
We have gained many valuable insights from bringing the proposition this far and understanding the issues raised by bidders and potential bidders. My conclusion is that a GoCo remains a potential future solution to the challenge of transforming DE&S, but that further work is necessary to develop DE&S financial control and management information systems to provide a more robust baseline from which to contract with a risk taking GoCo partner.
We are clear that the only realistic prospect of resolving the challenges facing DE&S in an acceptable timescale is through a significant injection of private sector skills. I have, therefore, decided to build on the DE&S plus proposition, transforming DE&S further within the public sector, supported by the injection of additional private sector resource, thus ensuring that the organisation becomes “match-fit” as the public-sector comparator for a future market-testing of the GoCo proposition.
To do this:
We will recognise the unique nature and characteristics of DE&S as a commercially-facing organisation by setting it up as a bespoke central government trading entity from April 2014;
We will give the new entity a hard boundary with the rest of MOD, a separate governance and oversight structure with a strong board under an independent Chairman, and a Chief Executive who will be an Accounting Officer, accountable to Parliament for the performance of the organisation, delivering another of Levene’s recommendations;
And crucially, we will permit the new organisation significant freedoms and flexibilities, agreed with the Treasury and Cabinet Office, around how it recruits, rewards, retains and manages staff along more commercial lines to reflect its role running some of the most complex procurement activity in the world.
We will of course consult with trades unions on the practical arrangements for implementation.
These changes will reinforce the customer-supplier interface between the military command customers and DE&S, facilitating a more business-like approach, allowing us to move earlier to a hard-charging regime and thus further addressing one of the weaknesses identified in the 2009 Gray report.
They will allow DE&S to procure crucial private sector input through a series of support contracts to deliver key changes to systems and processes, and to strengthen programme management while organic capabilities are built. And they will permit the recruitment into DE&S of key commercial and technical staff at market rates and with minimum bureaucracy.
Mr Speaker, Bernard Gray has agreed to become the first Chief Executive of the new trading entity, thus providing a vital thread of continuity between the original Gray report and the continuing DE&S reform agenda.
Alongside the changes to DE&S, we will continue with the reform of MOD’s wider acquisition system, which is focusing on up-skilling our customer capabilities, a key role for our military, alongside the important role they will continue to play within DE&S.
Mr Speaker, these changes will drive significant incremental improvements in DE&S as well as delivering the mechanisms that will give the organisation a robust performance baseline. That will allow MOD, at a future date, to re-test the market’s appetite for continuing the DE&S evolution into a GoCo, and its ability to deliver value for money against a significantly enhanced public sector comparator.
On both counts, this course of action represents the best way forward, both for our armed forces and for the taxpayer, and I commend this statement to the house.
Thread Starter
What a surprise.
I wonder what this charade has cost since Bernie started it? (£m)
Will MAP be seeking MoD to refund its bid costs? (£m?)
Is Bernie "match-fit", given he has been instrumental in the nugatory costs above?
What do you think of the person that thought using the phrase "match-fit" was a good idea?
FoI request anyone?
I wonder what this charade has cost since Bernie started it? (£m)
Will MAP be seeking MoD to refund its bid costs? (£m?)
Is Bernie "match-fit", given he has been instrumental in the nugatory costs above?
What do you think of the person that thought using the phrase "match-fit" was a good idea?
FoI request anyone?
Thread Starter
The GoCo NoGo | Think Defence
Poster on this link says it has cost £7m apparently before the penny dropped that this was never going to be viable, and bid costs could be £10m.
Having now therefore potentially wasted £17m, shouldn't they now get rid of the naive architect of this folly and get a more commercially astute CDM in place?
Poster on this link says it has cost £7m apparently before the penny dropped that this was never going to be viable, and bid costs could be £10m.
Having now therefore potentially wasted £17m, shouldn't they now get rid of the naive architect of this folly and get a more commercially astute CDM in place?
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Alongside the changes to DE&S, we will continue with the reform of MOD’s wider acquisition system, which is focusing on up-skilling our customer capabilities, a key role for our military, alongside the important role they will continue to play within DE&S.
Mr Speaker, these changes will drive significant incremental improvements in DE&S as well as delivering the mechanisms that will give the organisation a robust performance baseline. That will allow MOD, at a future date, to re-test the market’s appetite for continuing the DE&S evolution into a GoCo, and its ability to deliver value for money against a significantly enhanced public sector comparator.
Mr Speaker, these changes will drive significant incremental improvements in DE&S as well as delivering the mechanisms that will give the organisation a robust performance baseline. That will allow MOD, at a future date, to re-test the market’s appetite for continuing the DE&S evolution into a GoCo, and its ability to deliver value for money against a significantly enhanced public sector comparator.
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"get a more commercially astute CDM"
Wikipedia: "Gray worked for five years in investment banking and capital markets for Bankers Trust and Chase Manhattan in London and New York."
Perhaps the MOD should go back to "a more commercially astute" General like Sir Kevin O'Donoghue? If the rumours are anything to go by, it wasn't his commercial nous which was lacking, rather it was the political in-fighting which led to the failure.
Perhaps the MOD should go back to "a more commercially astute" General like Sir Kevin O'Donoghue? If the rumours are anything to go by, it wasn't his commercial nous which was lacking, rather it was the political in-fighting which led to the failure.
Considering the DE&S spend is around £15,000,000,000 EVERY YEAR, I don't know why posters are getting excited over a one off expenditure of 0.1% of that figure that was spent in a genuine attempt to overhaul the entire system.
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From the Ministers statement it looks like the DE&S will become a trading fund. This was always the unloved bastard child option of the original Materiel Strategy.
I bleive it was just above Do Nothing as an option with Bernard pushing full tilt for the GO-CO, now he will head it! Wow what a u-turn! Are you sure he's not a Minister as well goven this swift change of tempo? Or is it a pre-emptive to block the young thrusting COM JE 3* (ex HELS 2*!)?
I bleive it was just above Do Nothing as an option with Bernard pushing full tilt for the GO-CO, now he will head it! Wow what a u-turn! Are you sure he's not a Minister as well goven this swift change of tempo? Or is it a pre-emptive to block the young thrusting COM JE 3* (ex HELS 2*!)?
Originally Posted by Manandboy
The whole thing is a re-invention of QinetiQ under a slightly different guise - fantastic in terms of smoke, mirrors and bullsh1t, but basically a profit-making organisation totally dependent on the expertise and support of military personnel.
Sadly both the continuity and specialisms of the "boffins", and the advantages available from the military partnership, have both been squandered.
Whilst short-sighted and unrealistic commercial management are in the frame for the former, it is sadly the military alone who are in the spotlight for the state of the uniformed element of the partnership.
Thread Starter
Considering the DE&S spend is around £15,000,000,000 EVERY YEAR, I don't know why posters are getting excited over a one off expenditure of 0.1% of that figure that was spent in a genuine attempt to overhaul the entire system.
Wikipedia: "Gray worked for five years in investment banking and capital markets for Bankers Trust and Chase Manhattan in London and New York."
JFZ90,
Fair point. However, if I'm honest, I'm still a fan of Gray. Ultimately it was he, in his original report, who pointed out that the Emperor had no clothes. I had some involvement in this area and saw the appalling head-in-the-sand attitude to the unaffordable bow-wave of committed expenditure by all at the top.
Gray wasn't a genius to see it - we all knew about it, But at least he brought it to a head with a report that did not whitewash the issue.
Fair point. However, if I'm honest, I'm still a fan of Gray. Ultimately it was he, in his original report, who pointed out that the Emperor had no clothes. I had some involvement in this area and saw the appalling head-in-the-sand attitude to the unaffordable bow-wave of committed expenditure by all at the top.
Gray wasn't a genius to see it - we all knew about it, But at least he brought it to a head with a report that did not whitewash the issue.