Government in U-turn on MoD outsource plan

Suzie Neuwirth
THE MINISTRY of Defence yesterday confirmed that it is shelving a scheme to privatise its equipment procurement arm, after it failed to attract enough interest.

The MoD had spent £7.4m so far on plans to replace its inefficient procurement arm with a GoCo scheme, creating a government-owned, contractor-operated body, which it said would create better value for money. But all private contractors dropped out of the bidding process, aside from one Bechtel-led consortium.

“[The Bechtel consortium has] presented us with a credible and detailed bid, but we do not have a competitive process,” defence secretary Philip Hammond told parliament. “I have therefore concluded that the risks of proceeding with a single bidder are too great to be acceptable.”

Hammond said that GoCo remains “a potential future solution” to reforming the procurement unit. In the meantime a new body will be created, headed up by former businessman and journalist Bernard Gray, which will bring in private-sector partners to assist with the programme.

“We were confident this would have generated billions of pounds of savings for the Armed Forces to invest in new equipment,” said a spokesperson for Bechtel.

“It is obviously disappointing that the other team’s withdrawal at this late stage has led to a collapse in the competition.”

Labour labelled the decision to shelve the scheme an “embarrassing U-turn” that “wasted millions of pounds of taxpayers’ money”.