UKNDA Defence Procurement Funding Article by Col Peter Walton

DefenceSynergia is most grateful to Colonel Peter Walton RAOC (Retd) for permission to reproduce his article on the United Kingdom National Defence Association (UKNDA) website – Defence Procurement Funding. Peter Walton has a unique professional insight into the historical background behind why today’s Armed Forces’ often find themselves having to sacrifice numbers (capability) to the ‘bean counter’s’ God, cost! Here is what Peter says:

In 1985 I was a Colonel (late Royal Army Ordnance Corps) stationed at Chilwell, Nottinghamshire and responsible for the provision and supply forward of parts for all tracked and wheeled vehicles in use by the Army, and to some extent by the other two Services. I was responsible to the Director General of Ordnance Services, a two-star officer on the staff of the Quartermaster General (a MOD appointment). The work of Provision and Procurement was carried out chiefly by civil servants under their own managers who reported to me. I had a very small military staff who assisted in various areas. I was fed information from a wide variety of sources and could communicate as necessary with Supply staff world-wide. This was particularly important in the case of BAOR where I visited several times taking other members of the Team with me. I had a Finance Officer who was a civil servant who supported our work though she answered to the Procurement Executive in MOD. The full wiring diagram was complicated but the function worked quite well though we had identified grounds for improvement.

Then, in 1987, I was informed that the MOD had decided to commission a two-year review of its “Materials Management strategy”. The research was to be carried out by officers of the rank of Colonel (or equivalent in the other Services) and I was to be the Army member. The research team was to report via the Defence Supply Committee to the Principal Administrative Officers Committee (eg for the Army – the Quartermaster General). Two more individuals were added to the team: a senior Civil Servant representing the role of the Procurement Executive, and a team leader. This person was to be recruited from industry by or on behalf of the Permanent Under Secretary of the Ministry of Defence – and in due course turned up (from the Shell Company where his role had been in the “Materials” field). Naturally he knew nothing about Defence. The Team was required to travel widely in UK and abroad, and was to deliver its final report to the Permanent Under Secretary at the MOD.

The Team’s allotted two years expired in 1989. Its report was prepared and ready for delivery when the Team Leader was called in by the PUS to give a preliminary verbal indication of the direction the report was taking. The Team was later informed by the Team Leader that the PUS had announced that he did not need the Team’s report as the Team’s work was to cease. He had already decided how to proceed. At about the same time the Team learned that this new “way forward” was based on the advice of the Lord Levene (whose procurement background and military knowledge were unknown). The team was given to understand at this time that the focus of the new Defence Materials procurement system was to be on costs. (Crucially there was no mention of the needs of the Services.) This information arrived verbally and no military member of the Team met the Permanent Under Secretary No further discussion involving the Team took place and we dispersed.

I suggest that the trials of the MOD where procurement is concerned stem largely from this point and the less than logical decisions communicated by the PUS. I at once applied for early retirement from the Army. An attempt was made to stop me which I was able to avoid. More recently I have learned that the work of the PUS has become closely linked to the Treasury.

The decisions of the PUS MOD to abandon logical and careful examination of in-house Defence Procurement costing some thousands of £, even if in the Motor Vehicle area only, will turn out to have been at the root of the perverse decision to spend an absolutely massive amount of money on the construction of the facility at Abbey Wood. It is of course a very long way from London and very much more posh than Bicester? Before it was abandoned, the old system of funding requirements involved them being proposed annually as Estimates to the House of Commons, examined there, and then (if approved) sent back down in the form of Allocations. From then on a spending department had to live within those means, although there were obtuse ways of varying or extending them. Even though those of us who had an allocation on which to manage hated their inflexibility, the system worked and had done so in principle for hundreds of years. Its particular merit was that it prevented cash raids elsewhere when the allocation ran out due to poor management.

“Defence funding and management” are there to ensure that planned Defence activity can continue as planned and approved. Defence funds are not a useful pool in which to fish at will but a vital resource enabling the planned defence of the country. For everything else there must be contingency funding – entirely separate.

Peter S Walton – Colonel retd late RAOC (3rd August 2018)

United Kingdom National Defence Association