French lessons for UK defence procurement?
Richard Bonnar
Lawyer specialising in major projects for Government and former Professor, public procurement law and practice
Integrated Procurement Model
In a pre-war world[1], with highly pressured defence budgets, the operational and financial imperative to procure military capability effectively has never been greater.
The Government is therefore introducing an Integrated Procurement Model (IPM) for defence: https://assets.publishing.service.gov.uk/media/65e07110cf7eb16adff57ff4/Integrated_Procurement_Model.pdf (IPM Paper).
This is an implicit response to the most recent criticisms of defence procurement in the House of Commons Defence Committee Report "It's broke and it's time to fix it: the UK's defence procurement system" [2] (Committee Report) and an explicit acknowledgement of the findings of the Review by Clive Sheldon KC into the Ajax Armoured Carrier Programme[3] (Sheldon Review).
More context
If readers needed more context, the Minister himself provides it[4]: "Nimrod…snatch land rovers.…Ajax…Crowsnest…Morpheus. The narrative of our acquisition system has long been dogged by major programmes that were variously: over-complex; over-budget; over time.", acknowledging at the same time that it is hard to escape the Iron Law of Mega Projects: "over time, over budget, under benefit, over and over again"[5].
The Proposals
There are 5 key features to the IPM:
1. "A joined up approach":? This means taking a defence wide portfolio approach (avoiding the Services competing for a limited pot) and addressing historic behaviours of securing sanction for platforms with over optimistic budget, in the knowledge that programmes are unlikely to be cancelled once started.
2. "Checks and balances":? A new Integration Design Authority (IDA)[6] will offer "Integration as a service" to Defence, drawing on expert advice, assuring integration from the outset and provide a credible second opinion to Ministers and "include UK industrial capability and exportability considerations in procurement evaluation criteria, where appropriate and proportionate, based on Pathfinder procurements"[7].
3. "Prioritise Exportability": Considering export potential from the outset. Here is my French lesson, as the Select Committee Report[8] comments favourably on the role played by the French DGA[9] which has early engagement in requirement setting and ensures "that the French industrial base and exportability of equipment often take precedent over the requests of the Services."[10].
4. "Empowering industrial innovation": With a more strategic approach to industry, earlier engagement in pipeline, more transparency, reshaping the Defence Suppliers Forum and exploitation of opportunities presented by the Procurement Act 2023 to engage more strategically with the market.
5. "Spiral development by default to drive pace": much loved acronyms such as IOC may go, to be replaced by a new concept of MOC, Minimum Operating Capability.? In other words, MOD will move away from "exquisite procurement"[11] to a focus on delivering a minimum deployable capability quickly.? See below for further exploration of this topic.
Some general comments
On the face of it this is quite a step change in the way military capability is procured.
Scope. Whilst the key concern of the Committee Report, the Sheldon Review and the IPM Paper is the acquisition of military capability, it will be important to understand how far the remit of the IDA extends across the whole of defence procurement.? Reference is made to a 3-year target for digital programmes (five for platforms), so it certainly seems that the remit is wider than pure equipment acquisition.
Transition. In his Statement the Minister recognises that inflight programmes may be bound to continue under their current mode but holds out the prospect of extant programmes potentially adopting "spiral development" (see further below, if they want to, or can).? According to the IPA, the MOD has 45 military capability projects alone with a total whole life cost[12] of ￡231bn, so the challenge of working out which programmes fall under the new regime is significant. There's also a balance. As is recognised both in the IPA Paper and the Ministerial Statement, there are several Pathfinder Projects. It will clearly be important not to leap from one acquisition process to another without testing how new concepts and approaches will work in practice.
More red tape? A key criticism of the Committee Report was the lack of urgency in defence procurement, despite recent instance of highly effective urgent procurement, for example in relation to Ukraine.? There's clearly a concern that the IDA will become a further procedural hurdle, which is acknowledged in the Ministerial Statement. There is a wider reform/ streamlining of defence processes, Defence Design, and assurance is given that this reform will take place hand in hand with that.
Timing.? The IDA will be formally delivering its oversight function from April 2024. The effectiveness of the IDA will depend on how it navigates the seemingly tricky role of being situated in Strategic Command, accessing expert advice from organisations such as Defence Science and Technology Laboratory, working collaboratively with the defence enterprise and providing "independent advice" to Ministers.
Procurement and legal considerations
The IPM Paper is of course consistent with the priorities set out in the Defence and Security Industrial Strategy[13] and the move away from "competition by default".? However, the introduction of "exportability" as a priority is a further evolution and requires detailed consideration. The French defence industrial base is different from that of the UK and so, what this means in practice remains to be seen. According to the Ministerial Statement, the New Medium Helicopter procurement (currently under DSPCR) is to be used as a Pathfinder for a new approach with a reported 25% ?weighting of "social value, UK industrial capability and exportability contributions"[14].
The Committee Report has already commented that more work needs to be done to define social value in defence procurement. This clearly needs to be extended to newer factors such as exportability. What does it really mean? How is it to be weighed against the needs of service/equipment users?? Commercial Policy /guidance on the application of these factors in defence procurement is necessary quite quickly to ensure there is clarity as to how they will be applied.
On a broader note, a second set of guidance, replacing current very helpful MOD Guidance[15] on DSPCR, should explain how the exclusions for defence and security contracts under Procurement Act 2023 (which update the current exclusion/exemption regime under PCR/DSPCR) will work and be controlled from a practical perspective.
For the IPM, the Procurement Act is said to represent an opportunity to innovate defence procurement[16]. There is truth in this. To date complex acquisition programmes (if not benefitting from exemptions/exclusions) have had to shoehorn themselves into competitive dialogue or negotiated procedure[17]. These do not easily allow for more imaginative procurement models involving, for example, proofs of concept or multi-stage contracting. It's clear the competitive flexible procedure under the Procurement Act will do what it says on the tin and be more flexible.? Site visits, demos, proofs of concept will all be permissible parts of the procurement process and should ensure better outcomes in the acquisition of military capability.
"Spiral development by default"
Feature 5 of the IPM proposals is the introduction of "spiral development by default", which will undoubtedly be supported by the more free-flowing model of the Competitive Flexible Procedure.
Readers might wonder what spiral development means in the context of military acquisition.
In a software context "Spiral development" is the development of a complex system in a series of iterative cycles, with each cycle involving design/risk analysis/ engineering and testing/evaluation. It overcomes the fallacy that the customer can determine what it wants at the outset and allows collaboration and LFE as the product is developed.
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In a military context, it is said to involve going "for 70% and then "spiralling" once it is deployed on a minimum viable basis[18]. It's presented as an answer to two core issues highlighted in the Committee Report and the Ministerial Statement: the trend to "exquisite procurement" and the tendency for requirement creep. Where Spiral is adopted, IOC (initial operational capability) will be replaced by MOC (minimum operating capability), akin to the "minimum viable product" concept in software development.
Brand new default policies are always risky and so MOD wants to learn from current pathfinder projects such as the Uncrewed Systems Programme[19]. To be successful, the new approach will require a fully worked up model and acquisition teams with the skills to apply it. We are promised (in the Ministerial Statement) a Spiral Handbook by 8 April 2024, which will hopefully provide some answers to quite a few questions. ?For example: How will MVP/MOC be defined? What happens if FOC (full operating capability) is not reached? Given the amount of flexibility in the process, how will schedule/ cost risk be managed? The approach will involve quite a different way of work and high levels of collaboration: is MOD envisaging an alliance type model?
In the government technology acquisition world, we are long used to principles of COTS by default. In infrastructure[20] there is now a strong emphasis on modularity. ??It's important that the application of the principle of COTS/ modularity to military acquisition (as highlighted in the Committee Report) is embedded in the new spiral development approach.
No longer "broke"?
The IPM Paper claims to have addressed all 24 of the Sheldon Recommendations. It is an urgent and welcome response to the military demands of today and tomorrow. Like so many initiatives, it will stand or fall by the resource, capability, leadership and political willpower which are committed to it.
From a legal/ commercial point of view, further detailed guidance is required, and the key will be to learn quickly from pathfinder projects before wholesale application of a new approach. You'll hear from me when I get my hands on the Spiral Handbook!
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[1] Sir Jeremy Quin, Chair Defence Select Committee, Daily Telegraph , 4 February 2024.
[4] Oral statement of James Cartlidge MP, Defence Procurement Minister: https://www.gov.uk/government/speeches/defence-procurement-minister-oral-statement-on-the-integrated-procurement-model-28-february-2024 ( Ministerial Statement)
[5] Prof Bent Flyberg, the Iron Law of Megaproject Management and "How to Get Big Things Done".
[7] IPM Paper, page 2.
[8] Chapter 5.
[9] Directorate General of Armament, the French equivalent of DE&S.
[10] Defence acquisition systems in Israel and the US are also considered in the Report.
[11] Ministerial Statement and Committee Report, Chapter 7.
[12] IPA Annual Report, 2022/23, page 6.
[16] Ministerial Statement and IPM Paper.
[17] Reg 19 and 18 DSPCR
[18] Committee Report.
[20] Construction Playbook.
Professeur agrégé de droit public et Directeur de la Chaire de droit des contrats publics de Lyon 3 - Consultant
11 个月Thanks for sharing this. From a French perspective, two remarks: -athough the UK and France might differ on certain aspects of Defense procurement, there exists strong similarities, notably the existence of nuclear weapons which necessarily reduce the capacity to produce non nuclear weapons or buy them. As a reminder, they are the only European countries with nuclear weapons (290 for France and little less I.think for the UK) - as far as "The French defence industrial base" is concerned, it is relative : as for many other economic markets, France has faced desindustrialistion also in the defense sector and depends on foreign providers for many weapons, especially smaller ones (pistols guns etc) or components.of tanks and airplanes even if it produces the latters. The international context may pose the question of.the relevance of the EU directive on Defense procurement and possibly of its reform. It would be interesting to see how the UK regulation or.its policy evolves to this regard.
Professor of Public Procurement Law & Regulation; Director, Executive Programme in Public Procurement Law & Policy
11 个月Very interesting read, Richard. An important reminder of the centrality of policy above (albeit the need to be consistent with) the regulatory framework in defence procurement. I look forward to reading more.