Articles
A 12-month review that will decide the future of the Ministry of Defence’s equipment organisation, which employs several hundred engineers, has begun.
The Defence Equipment and Support (DE&S) organisation, which is headquarted in Bristol, is responsible for buying and supporting all the equipment used by the armed forces, and has an annual budget of £14 billion. It is facing an uncertain future under the Transforming Defence programme – a major restructuring of operations including budget reform and security targets.
The MoD has faced criticism in the past for making short-term decisions to keep expenditure on major equipment projects within annual budgets, without understanding the longer-term cost implications of these actions. Such decisions increased the cost of the MoD’s major projects by £3.3 billion in 2009-10, for example.
Countless reviews and reorganisations from successive governments have failed to address the issue. The proposed reform of DE&S is one of the biggest and most significant business changes undertaken by any government. Officials are set to decide between two options for reforming the organisation.
The first option is a private-sector-led government-owned, contractor-operated model (GOCO) and the second is a restructured and fully-funded version of the existing organisation that stays within the public sector – known as DE&S+.
Defence secretary Philip Hammond favours the private-sector-led option. In a written statement to parliament, he said: “We have made no secret of our expectation that the GOCO is likely to prove better value for money, but we need to test this assumption with the market to see what can be delivered at what cost.”
He added that the review would allow officials to make a comparison between the two options. The department can now start discussions with potential industry partners about how a government-owned, contractor-operated organisation would work as part of a commercial competition. The ministry will also work with the Treasury and Cabinet Office on the DE&S+ option to explore the changes that could be made while keeping the organisation within the boundaries of the public sector.
A final decision on the future of the organisation is due in summer 2014.