9.5.6.  Transition of Go-Co over time

Recognition of the fact that improvements are likely to be delivered incrementally suggests that a series of phased incentive packages should be used to encourage investment in the required set of skills, structures and systems by the Go-Co operator. In this way, it would be possible to ensure that the desired outcomes are delivered at the different phases of contractorisation. One potential model for this incentivisation structure is shown in Figure 9-3.

* Based on ACR of COO's activities plus indicative share of Corporate Services

Figure 9-3: Potential evolution of Go-Co model within the MoD

The three-stage approach illustrated in Figure 9-3 is designed to encourage the Go-Co operator to address the problems that the Review has identified within DE&S in a logical sequence. Phase 1 would ensure that the operator is rewarded for ensuring that the right systems and skills are in put place to enable the necessary improvements to be made. The incentives put in place during Phase 2 would seek to reduce the cost of managing individual projects. Only in Phase 3 are the incentives structured so as to place the greatest emphasis on the efficient management of the total equipment programme expenditure.