The union says changing the status of Defence Equipment and Support into a Government-owned, Contractor-operated entity (GOCO) will:
- cost more
- deliver a less effective service to the military
- introduce additional risks by over-complicating safety-critical decision-making.
"This would mean a private sector company being responsible for managing the UK's entire defence procurement programme. No other country has done this," said Steve Jary, National Secretary for Prospect, the union representing 6,000 civilian specialists in the Ministry of Defence and another 6,000 in defence companies.
"Nor are we convinced that setting up a new watchdog for sensitive defence contracts not currently put out to tender will deliver the savings Philip Hammond claims," Jary added.
Prospect believes the proposal to transfer the whole of defence acquisition and support to a private contractor raises questions about:
- potential conflicts of interest
- length of contracts
- ministerial and parliamentary oversight
- who would make the ultimate decisions
- what financial risks the GOCO would bear and how these would be assessed
- how would the GOCO make money while also saving the MOD money.
Jary pointed out that MOD's technical skills base has been seriously denuded through job cuts. In May 2013, MOD decided to stop asking staff to record their skills and qualifications on its systems. It also stopped requiring managers to record the skills requirements for particular jobs.
Jary said: "How can MOD lead a defence industrial strategy when it admits it cannot even audit the skills base for its own staff?
"MOD says a GOCO arrangement will give it the flexibility to pay its staff market rates. But the department already has many flexibilities available to it, yet it isn't using them.
"It would be better if DE&S was allowed to nurture its own talent and pay staff appropriately, rather than being instructed to cut its staff by 30%, which has been its main focus for the past two years."
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 defence equipment programme accounts for about 45% of the total defence budget and the Ministry of Defence has committed to a £160 billion ten year equipment and equipment support plan.