Prospect, the union representing over 1,100 members in defence equipment and support, said this was inevitable and had always warned that the idea was half-baked.
Prospect national secretary Steve Jary said: “It is truly astonishing that the Treasury would have preferred to contract out control of the UK’s defence procurement rather than give DE&S the flexibility to pay its highly-skilled staff properly and hire and retain people with the right skills and experience.”
The defence equipment programme accounts for about 45 per cent of the total defence budget. The organisation which does this work, Defence Equipment and Support, employs approximately 16,000 people – one third of them military officers – and is based in Abbey Wood, Bristol. It has an annual budget of approximately £14 billion.
The government considered two options for DE&S: a private sector led Government Owned, Contractor Operated ‘GOCO’ model; and a fully funded, restructured version of the current organisation, staying within the public sector, known as ‘DE&S+’.
A team led by Denver-based CH2M Hill, and including Serco, decided it could not reach the commercial targets that the government required. The Materiel Acquisition Partners consortium – led by another US engineer, Bechtel – was the only party interested in running DE&S.
Philip Hammond said the potential benefits of privatising DE&S in “one leap are now outweighed by the risks.”
Jary said while the decision is welcome, MOD must now ensure the introduction of pay and employment flexibilities and focus on staff skills and career development.
“The Treasury and the Cabinet Office need to take out their ear plugs and listen to what organisations across the civil service are saying: we can’t recruit and retain the specialists we need because of your inflexibility on how people are employed and managed.”
Just last week, Lord Levene said defence reform was held back by “civil service policies that inhibit the ability to pay the market rate for challenging jobs, and to 'hire and fire' flexibly.” http://bit.ly/defence_reform
MOD Chief of Defence Material Bernard Gray told the House of Commons public accounts committee earlier this year: “We cannot recruit or incentivise people in those kinds of specialist areas because the civil service structure is basically formulated around recruiting policy people.”