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Defence procurement reforms to save £200m


Posted on 12/06/2013 by Wayne Brophy FCILT

The government will slash £200 million from its defence budget through a radical shake-up of single source procurement, ministers have said.

Single source procurement sees contracts awarded to a supplier without competition, either due to specialist Armed Forces requirements or national security reasons.

But the current system, which has been in place with the Ministry of Defence (MOD) since 1968, is no longer delivering good value for money.

In some circumstances, suppliers are enjoying "unreasonable" profits at the expense of the taxpayer, defence minister Phil Hammon explained as he announced the changes.

Under the plans, the government will establish a new, independent body that will oversee single source deals.

"For decades, MOD has been at a disadvantage in commercial negotiations and reforming single source procurement will radically change how MOD conducts a high proportion of its business," said Mr Hammond.

"The new independent body will deliver a more effective and efficient way of providing the specialist capabilities our Armed Forces need to keep the United Kingdom secure, and at the right price."

Labour backed the plans, with shadow defence secretary Jim Murphy saying he supported any move to ensure "world class equipment is delivered when and where our forces need it".

“For too long good intentions of successive administrations haven't delivered sufficient reform in defence procurement," he added, before cautioning that much wider reform across the entire MOD is required to end the cost creep that affects so many contracts.

Almost half of the money spent on defence equipment each year is awarded through single source procurement.

Astute and Successor submarines, Type 45 destroyers, the Queen Elizabeth Class carriers and Typhoon fast jet engines are just some of the equipment that is bought and maintained this way.

The head of defence equipment and support, chief of defence materiel Bernard Gray, said starting the legislative process now means the government will be able to implement the chosen model as "quickly as possible".

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