Defence Reform Bill — Second Reading

Part of the debate – in the House of Lords at 5:02 pm on 10th December 2013.

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Photo of Lord Lee of Trafford Lord Lee of Trafford Liberal Democrat 5:02 pm, 10th December 2013

My Lords, I want to focus my remarks on Part 1—the procurement aspects of the Bill. I could almost second the speech of the noble Lord, Lord Levene, on this subject. Let us be quite clear what has happened here. The GOCO horse, carrying the colours of Bernard Gray, has been pulled up. There was, frankly, little backing for this nag within either the civilian or the service sides of the MoD. Unfortunately, the Secretary of State decided to place his bet on GOCO and, frankly, faces some embarrassment today. I refer the House—this was mentioned earlier—to the ministerial Statement of 17 July 2012, which says:

In the meantime, as resources and commercial appetite constrain our ability to pursue these two options simultaneously to the next stage, we have decided that the Department should focus its effort on further developing and testing the GOCO option”.—[Hansard, Commons, 17/7/12; col. 845.]

So, clearly, the GOCO option was the department’s favourite.

GOCOs are fine in certain circumstances. The noble Lord, Lord Levene, and others referred to the contractorisation of the dockyards. I was involved in that process, and supported it, when I was a Minister at the MoD. However, no other country and, to my knowledge, no other major plc, has effectively thrown in the towel and said, “We cannot handle our buying ourselves”. Huge amounts of civilian, ministerial and service time and at least £12 million have been wasted on this GOCO option. However, in my judgment it is the Treasury that historically carries the prime responsibility for this procurement fiasco through its bone-headed, penny-wise, pound-foolish approach, which over the years has prevented DE&S recruiting top talent from the private sector. It has effectively been emasculated and has proved no match for hard-nosed defence contractors, as was referred to earlier. We were told this afternoon that at present DE&S has 800—I repeat, 800—vacancies. In recent years, it has had to employ very expensive consultants. Perhaps when my noble friend sums up he can indicate just how much the MoD is spending on consultants.

Thankfully the Treasury, under pressure, has now got real and has given certain new freedoms to DE&S-plus. I am sure that we all wish it well. Excellent personnel are already there, as a number of noble Lords mentioned

—in fact, all noble Lords who have spoken referred to that aspect. It will be strengthened and augmented, we hope, by top-drawer recruitment from the private sector. However, I must ask, first, whether we are giving DE&S-plus a chance. As the noble Baroness, Lady Dean, said, is it sensible or fair to retain the GOCO option in the Bill, almost as a sword of Damocles hanging over the future DE&S-plus? Is it going to encourage top personnel to give up their careers in the private sector and join this organisation if some future Government in a few years’ time are going to go back to the GOCO option and argument? Secondly, does it really make sense for the morale of this new organisation to have its new chief executive in Bernard Gray, the person who drove the alternative option that clearly has failed and fallen?

I should like to ask my noble friend three or four specific questions to which I should like him to refer in his wind-up speech, or, if not, perhaps he can write to me. First, can we have more details of the freedoms that the Treasury is going to give DE&S-plus? Will there be an additional block of money available to it or is there going to be some sort of limitation on the numbers employed? Is there going to be any maximum salary level? Secondly, what is the duration, if any, of Bernard Gray’s contract with the new organisation? What is his salary going to be? Will it increase or, bluntly, will it be a reward for failure? Thirdly, is the new chairman being brought in going to be an executive or non-executive chairman? Finally, on the question of the GOCO competition, what is the position regarding compensation for the remaining Bechtel-led consortium? Is there any likelihood of significant compensation having to be paid out?