Monday, January 04, 2010

Defence Industrial Strategy

Douglas Carswell has a blog post about the "Defence Industrial Scam" which he concludes with the words
Getting better value from the procurement budget isn't just about dealing with inter service riviary or dozy officials. It means buying kit off-the-shelf and scapping the Defence Industrial Strategy.
I think this is flat-out wrong. A friend put it very succinctly: "DIS was about the only way of getting cheap kit anyone had ever come up with".

Below is a comment that I tried to post in reply to him last night, but which hasn't appeared for some reason:
Hi Douglas!
The DIS hasn't been implemented, which is part of the problem.

Instead there's a sham of competition where one or two bidders slug it out for months or even years to jump through DE&S hoops before the whole process is tossed aside and something is bought off-the-shelf from someone else, then scrapped after 18 months because otherwise the Urgent Operational Requirement would have to come out of MoD funds rather than from the Treasury as it's deemed to have been part of the Equipment Plan.

Naturally, after being jerked around like that, industry (located anywhere) starts charging more for the hassle of dealing with the UK MoD.

The main benefit to industry from the DIS is not the protectionism, it's the long-term strategy - as with the French 'Loi de Programmation' for the DGA.

Long-term contracts mean that investment can be made, costs cut and risk premiums slashed, lowering the price to the customer, while still being profitable for industry. Short-termism has the opposite effects.

It's either a virtuous or vicious circle, depending on how the hand is played, but the number of players is too small for it to be a free market.

Since the matter has been broached, I plan to write a full post about the DIS. Most likely focusing on the collapse of FRES and the wider AFV sector - a project I have had no direct involvement with, so do not have to worry about confidentiality, but one which I've followed the progress of nonetheless.

UPDATE: The comment has appeared now, must have done something wrong when trying to post it. Apologies all round.

- KoW

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