A comment from Major-General Nicholas Pope, Director of Capability for the British Army
There are no bounds to our level of ambition to look at the practicability of entering into a long-term financial contractual relationship in these kinds of areas
He was talking about long term partnering arrangements like the £3b MASS contract with BAE for munitions supply for example. I am left wondering though, what is left to outsource or partner?
Vehicle maintenance; DSG was sold to Babcock and now all Army vehicles will be maintained under a 10 year £900m contract. Heavy Equipment Tractors, C Vehicles, Watchkeeper maintenance, all of the Royal Engineer training syllabus, recruiting administration, catering, military pilot training, the various availability contracts on complex equipment, telecommunications, sealift, and when you think about it, a load more.
The problem with long term contracts is that industry is not going to accept a great deal of contract risk, knows full well that the MoD is the worst kind of customer and they have to be based on a predictable demand and stability in the wider defence environment. As an example, we will be paying for the GR4 Synthetic Training PFI out to 2031, because the MoD thought at the time of contract award, that would be the Tornado OSD. The RAF Lyneham sewage treatment PFI was predicated on RAF Lyneham staying a flying station and not an Army training establishment, the agreement runs to 2023.
The MoD cannot predict anything beyond the 5 year cycle so unless the contracts have significant capacity flexibility someone, somewhere, is carrying the risk.
Three guesses who that will be!
All that said, the MoD seems to have an unquenchable thirst for outsourcing and long term partnerships so we can only assume that the numbers add up (stop laughing at the back) but seriously, what is left to outsource?