The pace of change in new and exquisite technologies brings new dangers – and opportunities. The UK’s Defence equipment programme needs to reflect the asymmetric nature of threats, the complexity of conflict and to take account of a range of new technologies. These include data exploitation, machine learning, artificial intelligence, cyber technology, virtual and enhanced reality, new biological advances and the expected effects of quantum computing on processing performance and encrypted systems.
In peacetime, defence procurement is a sluggish process. In war – and on operations – when lives are at stake and battles won and lost, bureaucracy is slashed and processes sharpened. But a range of factors, from Treasury caution and special pleading to service infighting, have left peacetime processes weakened by orthodoxy, a lack of intellectual agility, and above all an unwillingness to take risks.
Recent attempts to improve procurement have focused most heavily on the sharp end of negotiations, like driving down margins, but sometimes a step back can help. Talk of more competition can be naïve if the choice simply amounts to either buying from a national monopoly or making an off-the-shelf purchase from the USA – with implications for the permanent loss of domestic design capability. Adopting six principles would greatly improve performance.
(1) Decide what capabilities we wish to keep in Britain and how
This must involve relating defence to the much larger scale national investment in civil technology (private and public), ensuring that defence benefits from new ideas and that we don’t pay to reinvent the digital wheel. John Parker’s excellent National Shipbuilding Strategy in 2016 was a rare sectoral example but, how for example does the plan to replace Trident, involving a small nuclear power unit in each boat, relate to Britain’s glacial civil nuclear programme?
America, France and Sweden all have more developed strategies than us. Sweden with a population of just nine million has developed several generations of fast jet fighters without collaborating with other governments. Whether or not we need a seventh generation fighter, as drones become a larger part of the equation, the lessons for managing procurement are there.
(2) Readdress how capabilities are devised
The central structures which oversee and act as the “customer” for the procurement process are rightly held distinct from the procurement teams themselves to maintain a strategic view and accountability. When Britain was leading the world as a defence innovator, these staffs comprised a multi-disciplinary “project structure” led by military “operational requirements” specialists looking far ahead at future needs, with scientists and financiers working for them in their teams, and, crucially, holding the authority to spend.
Today the disciplines are stove-piped, so proposals crawl backward and forward between uniformed capability staff (as Operational requirements is now called) in each service, working at arms-length with separate teams of scientists – and the civil servants controlling the money. The problem of stove-piping by function (military, technical and financial) is arguably a much more serious problem than the oft-discussed issue of single service stove piping – the latter can lead to duplication but the former paralyses the process itself, leading to severe delay and cost overruns. It has recently been compounded by the Treasury decision to end all delegation of budgets for items of more than £50,000.
A series of innovation units has been set up in each of the four TLBs, starting with JHub in StratCom. These have succeeded in getting some small projects from conception to fruition with commendable speed. Helping to take forward their work, and innovation more generally, is the Defence and Security Accelerator. These innovation hubs seem to be structured, and to operate, in a remarkably similar fashion to the old cross-disciplinary operational requirements branches, but they are effectively working in parallel with the main capability departments. It would seem to make more sense to fix the main structures, instead of developing parallel ones, by reintegrating scientists and financiers into capability teams and restoring delegated budgets to them. The Treasury need to be persuaded that this approach - reinserting risk-taking into development – will greatly improve performance in the medium term.
(3) Rebuild the once world-leading scientific base
In 2020, the Ministry of Defence (MoD) published an imaginative paper on science and technology strategy, committing extra, welcome funding to this field.
For the first time, that paper identified both the critical capabilities we need to develop – and the underlying technology areas we will require in the UK to achieve that. This last is crucial both to allow UK participation in development, working with industry, universities (where the Chinese have not infiltrated) and allies. Having in-house experts with a full range of know-how also makes the MoD an intelligent customer when we are buying off the shelf. If you don’t understand – exactly – what you are buying, things are unlikely to turn out well when lives depend on it.
The central problem with the current system is illustrated by the brilliant precedent set by Lord Haldane a century ago, when he established a separate organisation for government-funded civilian research (now the Science Research Councils), and exempted it from Treasury micromanagement. This paved the way to breakthroughs, from computing to nuclear power, reflected in Britain’s astonishing number of Nobel prizes. It did not, however, embrace the necessary technological follow-through to ensure that Britain enjoyed the benefit.
In America, they have gone the whole way, through the Defence Advanced Projects Agency (DARPA), which enjoys similar freedoms but develops technology too: firstly, for defence but also generating massive civilian spin-offs. Britain’s Department for Business, Energy and Industrial Strategy has set up a civilian version of the US DARPA, The Advanced Research and Invention Agency (ARIA), with a declared purpose to develop key technologies at speed. It is doing so with the proviso that, like DARPA, it will be largely exempt from Treasury bureaucracy and enjoy an avowed “willingness to tolerate failure”. Both are essential to encourage creative risk-taking.
Yet, sadly, there seems to be no plan to give the MoD such freedom. The Treasury will continue to micromanage its projects and – no doubt – attack every attempt at risk-taking in technology which fails, killing off any entrepreneurial green shoots. Indeed, the new £50,000 limit on sign off will worsen the problem.
(4) Recruit from outside the traditional defence industry
There is a disappointing level of market engagement with companies outside the chosen circle of current suppliers. This is partly caused by strict rules around market engagement, many of them rolled over from EU regulations. However, efforts such as Digital Exploitation for Defence (DX4D) aim to increase the touchpoints with digital solution providers. This is important because the best solutions to a problem have often been identified outside the defence industry as Ukraine’s blossoming drone production – and innovation in many other areas – illustrate.
The Americans have been highly successful in harnessing SMEs 25% of prime contracting value for the US Department of Defence went to SMEs in 2022, a larger proportion than the entire spend with SMEs in the UK. Getting SMEs at the table, rather than feeding off scraps thrown to them by diners, is important for getting innovation forward fast. Speed, bidding cost and IPR protection are central to engaging SMEs with limited cash and an understandable unwillingness to put the hard-won fruits of their research at risk.
This is accentuated by the fact that requirements all too often focus on platforms rather than the weapons and capabilities they carry, making for overlarge programmes – often deemed too large to fail, until they do – and opportunities missed.
(5) More emphasis placed in through life costs
This brings in the cost of manning, maintenance, stocks and training. A positive example is that the heavy overruns in the capital costs of the carriers were partially offset by the astonishing savings achieved in expensive manpower which the radical design provides (1,500 against 5,000 for only slightly larger American counterparts). All too often, however, new equipments are introduced which prove costly to man and maintain.
Extensive testing with prototypes and technology demonstrators, can help to strike the right balance. The Army’s light recce vehicle, Jackal, was introduced in haste to save lives from IEDs in Afghanistan. A tragic fatality in 2019 showed, however, that it is unstable – and retro-redesign is expensive.
(6) Upskill the procurement teams
Bringing in expensive people who may not understand the complexities of military requirements is not always a good idea. We need to build the teams themselves. The biggest gap – repeatedly pointed to by the Defence Select Committee and National Audit Office reports – is in the contracts staff where underpaid and undertrained civil servants are negotiating with some of the best commercial lawyers in the UK. The humiliation of the failures in the Capita recruiting contract and the muddles in the maintenance of MoD housing both show that this problem, failing to pin down accountable milestones, extends beyond equipment purchase. Unless we do more to train and reward contract staff, other planned reforms are likely to fail; for example, sub-contracting practice will be driven by the small-print of the contract.
This area also requires some disentangling of EU regulations – including on recruiting. To take an example, if a uniformed expert with valuable knowledge in a particular technology, retires, and wishes to continue in the same role as a civil servant, he or she will have to reapply for their job. So, a process is triggered wasting several months.
Side by side with these policy and structural reforms is one wider issue. In the 2010 Defence and Security Review, a doctrine was emphasised called ‘Whole Force’ – meaning that defence should be agnostic as to whether capabilities were kept in regulars, reserves, civil servants or contractors. A failure to recognise that more capabilities can be held outside expensive regular units may leave us without enough money for the equipment our forces need, however efficient our procurement. Yet there are virtually no reserve officers in the capability departments of the three services. Occasionally, an enlightened manager asks for advice from a reservist officer, as to how to shape an equipment for use by reservists, with their limited time for training. Such advice is only likely to come in after the main outline has been determined by regulars, however. As Ukraine proves, citizens in uniform aften point to a completely different approach
Almost all those engaged in Defence believe that the UK defence budget will have to rise given the growing threats and state of our armed forces’ equipment. But, even with 2.5% of GDP whenever it comes, a large gap will remain between need and resource. Improving procurement, from capability conception through technology trials, development and into service is more important than ever.
