Levene throws wrong toys out of the pram!

I have great deal of respect for Lord Levene of Portsoken and to the extent that his work during 2010/11 together with a small part-time committee that included the now Chief of the Defence Staff, General Sir Nicholas Houghton GCB CBE ADC created the Defence Reform report that in turn would lead to the largest shake up that the Ministry of Defence has seen since its creation fifty years ago. To my mind the Defence Reform Report that was published by Levene in 2011 perfectly complimented the independent ‘Gray Report’ that had looked into potential reform of defence procurement and that was itself published in 2009.

Of the 53 recommendations that had been made within Lord Levene’s Defence Reform Report which were subsequently action-ed I would highlight: recommendations that led to the creation of a new Defence Board chaired by the Secretary of State for Defence; recommendations aimed at strengthening the process of decision making which helped clarify various responsibilities of the senior leaders and created better accountability along with reducing Main Building’s personnel in order to hold those with responsibility to better account; letting the service chiefs get on with running their services within a strengthened financial framework for which they themselves would now be accountable; the creation of a four-star-led Joint Forces Command to concentrate efforts on strengthening joint warfare development; and last but by no means least, the plan to create a single coherent Defence Infrastructure and Defence Business Services model designed to ensure that enabling services are delivered efficiently, effectively and professionally.

But while the recommendations of the Defence Reform Report proved to be a vital part of much needed change in how defence would be conducted, the Levene Report did not have a brief to engage in the method that procurement was conducted. The responsibility for that was to remain in the hands of Bernard Gray and through the recommendations made in his 2009 report would, in one way or another, lead to the biggest transformation in how defence procurement would in future be conducted.

For the past two years and as the appointed Head of Defence Materiel, Bernard Gray had been battling to change the process of defence procurement. To many this is a boring subject and I apologise for writing twice in one week on this. But, as you will see further down it is remarks made by Lord Levene in the House of Lords in the debate on Defence Reform that create doubt over the wisdom of the Secretary of State for Defence, Philip Hammond deciding to appoint Gray to lead the now chosen DE&S+ option for future defence procurement which make my blood boil.

Following his appointment as Head of Defence Materiel in early 2011 the concept models and choices for future ‘Materiel Strategy’ were launched by Bernard Gray in May of that year. The aim was simple – consider how the then DE&S procurement organisation that had been established in 2007 through the merger of the Defence Procurement Organisation and Defence Logistics could provide better value for the taxpayer, a balanced equipment and support programme, better accountability, skills and processes. Clearly this would involve more private sector involvement in one way or another but the final decision would be based on two possible option – one based on partial private sector control of a Government Owned Contractor Operated (GOCO) basis of future procurement operation; the other, remaining fully public sector controlled but with greater private sector involvement – what later when GOCO was being seriously questioned would evolve as the DE&S+ option and which the Government for good reason or bad has now decided upon.

It is worth noting though just how much DE&S has changed since it was founded in 2007. Under its first Chief of Defence Material, General Sir Kevin O’Donoghue, the Abbey Wood Bristol based DE&S had a mix of civilian and military personnel that numbered close to 29,000. Of these approximately 23% were military employees and the rest civil service posts. However, by 2008 the DE&S workforce had been slimmed down to 24,500 and by 2013 the number is probably down close to 17,000.

That the Coalition Government had been content to move forward with most of the recommendations put forward by a Labour Government-commissioned independent report done by Gray and published in 2009 was commendable in itself. In early 2011 upon the retirement of Sir Kevin O’Donoghue and after much persuasion Bernard Gray was appointed as Chief of Defence Materiel. Now as a member of the Defence Council and Levene’s own creation, the Defence Board, Gray was asked not only to work within the set of guiding principles laid down by Levene but to put his own blueprint for defence procurement through and assist the Secretary of State in deciding the best options for future defence procurement, the possible GOCO option or better refining the public sector option that would also aim to work more closely with the private sector. Clearly having put the idea forward in the first place Gray favored the GOCO option that would involve a deep seated partnership with the private sector. But as time went on and as the pressure from Treasury and Cabinet Office mounted against the notion of a GOCO and as the risks seemingly mounted and the private sector questioned the viability of making profits Gray had no choice but to put an equal amount of weight behind the idea of upgrading the present DE&S system to one that would be called DE&S+.

For Secretary of State Philip Hammond, who had backed Bernard Gray for a good part of the way, it is a shame that the end of GOCO came because the private sector saw too much risk. Nevertheless, as I said earlier this week, the private sector will get its chance and one day in the not too distant future what DE&S+ comes will I am sure be perfect for private sector involvement and management.

As I said earlier my own view is that Bernard Gray’s work in the Materiel Strategy Report can be seen as having perfectly complimented the much later work done by Peter Levene in his Defence Reform report. However one chose to look at the various options, change was on its way across all facets of defence and while the style, method and rather direct approach of Gray might not have been liked by that many I believe that his appointment as Chief of Defence Materiel with the brief of turning the report recommendations into actions was the right one.

So why am I grumbling? Given that neither Sir Kevin O’Donoghue or Bernard Gray had been forced to go through a competition for post I find it sad that in what I will describe as an outburst in the House of Lords yesterday Lord Levene should effectively attempt to question the decision of the Secretary of State for Defence to appoint Bernard Gray to lead the new upgraded option now decided for defence procurement and known as DE&S+.

Below is an extract of what Levene said yesterday in the debate over the Defence Reform Bill in the House of Lords: “The Statement (this refers to the statement made in the House of Commons by Secretary of State for Defence Philip Hammond scrapping the Government Owned Contractor Operated partnership with the private sector in favour of remaining with a public sector controlled procurement process that would work more closely with the private sector) speaks of the new organisation having a strong board and an independent chairman and chief executive, who, as I had strongly recommended, will be an accounting officer. Bearing in mind the Government’s total commitment to competition, where is the competition for the key post—that of the chief executive? We are told that the new chief executive has agreed to take up the post. Can we be sure that his track record qualifies him to be unquestionably the best head of this new organisation in the absence of any kind of competitive process? Somehow, that does not seem quite right to me.

Lord Levene is in my view clearly under some misapprehension if he believes that there are that many people out there that have sufficient experience and expertise to do such a responsible job managing such a large budget well. In fact I have never been that sure that back in early 2011 Bernard Gray wanted the job of Chief of Defence Materiel in the first place! Nevertheless, while I might question his style and the rather abrupt or brisk attitude I am hard pressed to imagine someone better to take DE&S+ forward than Bernard Gray albeit that when the transition from one system of procurement operation to another is complete in perhaps a couple of years time it may well be time to consider bringing someone else in to head it up. I agree though that the important role of Chairman should be through a competition for post.

Any organisation going through a period of turmoil needs consistency at the top. Gray has got some good people around him and his knowledge of the procurement system, and of how it should work, brings with it a mix of public and private sector experience and involvement. Yes, he is a difficult man and not everyone’s cup of tea to deal with but for now what is needed more than anything is stability mixed with flexibility and management consistency.

Whilst in the greater scheme of things Levene may well be right, occasionally common sense and good reasoning should be allowed to come above everything else – meaning consistency should be the order of the day for now.

Howard Wheeldon, FRAeS,
Wheeldon Strategic Advisory Ltd.
HWheeldon@wheeldonstrategic.com /chwheeldon@yahoo.co.uk
Tel: 07710779785

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