Smart Procurement

A Personal View
OBJECTIVES:
•  To explain what smart procurement represents vis
-a-vis traditional methods.
•  To place smart procurement in the context of
defence procurement techniques.
•  To impart an understanding of what smart
procurement will mean for those involved.
•  The provision of a personal view of smart
procurement in the context of the political milieu.

Jeffrey Peter Bradford 1

10/14/08 Cranfield University
 Smart Procurement - I

•  Labour electoral victory 1997.

•  Strategic Defence Review to include ‘Smart

Procurement initiative’

•  The choice of title - sensitivity or realism ?

•  Administrative Jointery with Industry Council.

Jeffrey Peter Bradford 2

10/14/08 Cranfield University
 Smart Procurement - II
•  3 Main aims:

New approaches (e.g. through-life systems).

Single Integrated Project Teams.

Simplifying procedures and tailoring them to the

complexity of projects.

Jeffrey Peter Bradford 3

10/14/08 Cranfield University
 Smart Procurement - III

•  Now 3 Tiers for procurement.

1. Easily supplied items: Boots, cloth etc.
2. Defence specific: Rifles, Army rations etc.
3. Highly complex platforms: Combat Aircraft, Main
Battle Tanks, Ships etc.
•  7 Stage Downey cycle reviewed and replaced with 6
stage process.
•  Significant 2 EAC approvals instead of 3.
•  Single Integrated Project Teams. Partnering.
Jeffrey Peter Bradford 4
10/14/08 Cranfield University
 The environment - I

•  Why review Procurement practice ?

•  Objective: Reduce acquisition costs by £2 Bn over
next decade (Target: FY 2008). (3-4% procurement
budget).
•  Early 1990s restructuring of US DIB facilitated
competitive advantage in export markets.
•  Concerns regarding UK strategic production
capabilities.
•  1997 UK DIB = 23% World exports, 400000 Jobs,
11000 Companies, 10% UK manufacturing base.

Jeffrey Peter Bradford 5

10/14/08 Cranfield University
 The 100 largest defence firms by
nationality (1996).

55%
9%
Germany
Japan
United Kingdom
11% France
USA

11%
14%

Jeffrey Peter Bradford 6

10/14/08 Cranfield University
 Environment - II

•  Demand related: Cost-effectiveness initiatives

versus national industry size.
•  Supply related: Governments trying to open
markets ?
•  NATO, WEU & Standardisation.
•  OCCAR - Organisme Conjointte de Co-operation
en Materiere d’ARmament. (Fr, It, Gr, UK).
•  The threat of globalisation ?
•  Industry’s agenda - Mergers following other
industries - Oil & Banking.

Jeffrey Peter Bradford 7

10/14/08 Cranfield University
 The UK and Project slippage

•  90% by value of British equipment sourced

from British companies.

2000

1500

1000
Variance (£m)
500

0
1993 1994 1995 1996 1997

Jeffrey Peter Bradford 8

10/14/08 Cranfield University
 Trends in type of contract by
value Source: HCDC Eighth Report, 1998. Figure 18.

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1985-86

1986-87

1987-88

1988-89

1989-90

1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98
Competition Market forces Priced at Outset Cost-Plus

Jeffrey Peter Bradford 9

10/14/08 Cranfield University
 The Kincaid thesis (1997) - I

‘How can one reduce overhead significantly within

the procurement process without removing
essential checks and balances ?’
•  Lack of accountability.
•  Suffocating checks and balances in MoD.
•  Wide spread amateurism.
•  Consequence of above = Poor decision making.

Jeffrey Peter Bradford 10

10/14/08 Cranfield University
 The Kincaid thesis (1997) - II
(1994 survey of army projects (12) - Percentage ISD over-run).

0 100 200 300 400

Jeffrey Peter Bradford 11

10/14/08 Cranfield University
 The Kincaid thesis (1997) - III

•  Solutions:
•  Accountability & empowerment.
•  Effective Scrutiny: An audit team to PUS ?
•  Professionalism: Training, incentives & remuneration
(proportionate to authority)
The above lead to effective decision making.
Conclusion: Smart Procurement - Cultural change =
DUMB.

Jeffrey Peter Bradford 12

10/14/08 Cranfield University
 Conclusions

•  Threats for Smart Procurement.

•  Accountability & closer industry relations.
•  Status changes to DERA and its utility to
government = ‘what if GKN owns 50% ?’
•  PE as agency & its continued relevance ?
•  New cycle as tool for service agendas
•  UK economic performance
•  Continued politicisation of projects.

Jeffrey Peter Bradford 13

10/14/08 Cranfield University