This is a long list of potential improvements. How might such a substantial further transformation of the DE&S be achieved? Programmes to improve defence acquisition are ongoing, and in recent times have included the Defence Acquisition Change Programme, and the PACE programme focused within DE&S. But these do seem incremental in approach, and in some cases, such as the Through Life Capability Management strand, risks making matters worse by blurring accountability.
Moreover, it is the contention of the Review team that any change needs to be system-wide and significant because trialling or small scale experimentation risks being strangled by the significant forces working to maintain the status quo. It is the Review team's eighth key recommendation that the mechanism most likely to achieve the required result in terms of professional skills, systems and accountability is the migration of the slimmed down DE&S entity into a Government Owned - Contractor Operated ("Go-Co") entity.
The introduction of an appropriate private sector management entity to be responsible for the execution of the DE&S's delivery tasks would have significant benefits. It could lead to the introduction of significant private sector management expertise, and the implementation of enterprise-wide management information and financial control tools that would help improve programme management.
It would also clarify the interfaces between DE&S, industry, the Requirements community and the Front Line Command military users. This arrangement would force each of the participants to formalise and cost significant changes to requirements or timescale.
Provided incentives were appropriately designed, the Go-Co DE&S structure could also create a significant incentive to ensure that the initial costings the DE&S proposed to the Requirements community were more accurate than at present. It could also be made in the contractor's interests to limit programme slippage or requirements change.
Properly empowered private sector management could also be at liberty to attract, retain and motivate the best possible staff to discharge these important responsibilities.
However, there are a number of significant issues that would need to be addressed. Firstly, the MoD would need to create and retain a significant "intelligent customer" entity, probably within a broadened, more widely skilled Requirements community, that would allow it to properly task, interrogate and control the Go-Co. The role and activities of this intelligent customer over the lifecycle of project would also need to be defined.
Secondly, the basis of migration of staff into the Go-Co, whether temporary or permanent, would need to be established. In particular, the incorporation of military personnel into the structure would require careful thought. It is possible to use a secondment mechanism to achieve these aims as happens now for military placement into private industry, as it would for permanent civil service staff, but the ramifications of this would need to be worked through.
The length of contract awarded to the bidder needs careful consideration, as do the incentives associated with the contract. Broadly speaking, a longer contract should incentivise the contractor to invest and populate the system with more of its own or externally hired staff to achieve aims, while at the same time a shorter contract allows greater competitive pressure to be applied by the MoD to the contractor.
At a high level, the initial objectives of incentives are likely to revolve around the introduction of additional skills, tools and disciplines into DE&S, and once these have been introduced, incentives might usefully be refocused on the reduction in the overhead costs of delivering DE&S outputs.
The infusion of sufficient external skills would be a high priority to any such Go-Co, but in some other examples where this remedy has been applied, the new management team does not extend significantly below Board level. Careful thought and discussion with potential contracting partners would be needed to ensure that this injection of management expertise went deep enough within the organisation to create change.
Finally, ensuring the impartiality of any contracting partner would be critical. Conflicts of interest in this area could not be effectively managed by "Chinese Walls" and the contracting partner would be effectively constrained out of bidding for other MoD contracts. There are a number of large scale programme management and project delivery organisations which could be capable of undertaking the task, but some of them are not UK-domiciled, and the security considerations relating to such potential suppliers would need to be thought through carefully.
All of these are significant hurdles, but the existing structure is also substantially flawed. Accordingly, it is the recommendation of the Review team that the Ministry of Defence should be given 12 months to consider whether any other mechanisms short of the construction of a Go-Co could meet the shortfalls identified in this report.
At a very minimum the Review team would suggest that such alternative structures would need to involve the migration of DE&S into a Trading Fund, but the recommendation of the Review team is that if the MoD cannot produce a structure that has been independently verified as addressing the concerns raised here about DE&S structure within a year, and satisfies Ministers that the alternative structure is viable, then the construction of a Go-Co should be undertaken.