Op-Ed: MoD Over-Eggs Election Pudding
(Source: defense-aerospace.com; posted April 12, 2010)
By Giovanni de Briganti

PARIS --- In the four months leading up to its announcement that General Elections would take place on May 6, Britain’s Labour Party went on an unprecedented shopping spree intended to burnish its defense credentials.

Many orders were clearly overdue, coming as they did after several years of spending cuts, indifferent leadership and lacklustre management of defense procurement issues, and despite several reorganisations and the much-publicized return as procurement supremo of Lord Drayson, who is as close as a Labour grandee can come to being a capitalist icon and management guru, but whose results at MoD have never matched his billing.

Consider some facts about Labour’s handling of the defense portfolio.

In the past five years, for example, the British government has had five different Secretaries of State for Defence -- one of them a part-timer who also served as Secretary of State for Scotland --, three of which served for less than a year. This is hardly indicative of any great government interest in defense issues, nor in the two wars that British troops were fighting as ministers played musical chairs.

In terms of funding, the Ministry of Defence received budget increases in almost every year since 2003, but these were mostly small, and in any case miniscule compared to the explosion in government spending on the National Health Service or Education, where tens of billions of pounds were thrown at vaguely set targets which those departments have never even come close to hitting.

Despite extra-budgetary funding belatedly made available by the Treasury to pay for war-related procurement expenses, MoD spending was so mismanaged that soldiers were deployed with insufficient personal equipment; that the vehicles they used in combat were so ill-suited to the tactical environment that hundreds of soldiers were killed or badly injured while using them; and that in 2004 fully £1.45 billion was stripped from helicopter procurement to help reduce the government’s overall deficit.

All of this happened while British troops were fighting two wars for reasons the Labour government has never fully explained, except for the rather lame desire to be nice to Washington.

It is against this background that, with an eye on the General Elections, the British government decided to buy itself some military credibility by announcing a long series of defense contracts.

According to our calculations, since mid-December the Ministry of Defence has announced contracts worth in excess of £14.3 billion (see table below), most of them unconnected to ongoing operations.

This is far in excess of the normal annual rate of award, and is a clear example of over-egging the pudding, as in trying to chalk up large amounts of cash MoD cites headline amounts that will, in fact, be spent over ten or 15 years.

In fact, when computed on an annual basis, the value of these multi-year contracts works out to £1,133 million, a much less impressive amount by any measure, and one which would have no impact on voters.

MoD’s exaggeration does not stop there, however, as the new “Future Helicopter Strategy” announced to Parliament on December 15 by Defence Secretary Bob Ainsworth well illustrates.

Without any notice or preliminary debate, Ainsworth turned MoD’s previous helicopter plans upside down, said £ 6 billion would be spent on helicopters in the coming decade, and announced an order for 22 CH-47F Chinook transport helicopters. But, by the time the order was confirmed on March 29, the number of Chinooks had been reduced to ten, with no further mention of the other 12, which are nonetheless supposed to enter service by 2025.

A final example of MoD contract spin is the Terms of Business Agreement (TOBA) with Babcock Marine, covering surface ship and submarine support activities, that MoD said on March 25 “will generate financial benefits to the Department of over £1.2bn.”

In fact, the agreement covers two distinct deals (ships and naval bases), will last for 15 years and, according to Babcock, and will cost MoD a total of £5,000 million, while benefits are limited to 15% of the total -- or £750 million. MoD’s statement is, at the very least, misleading in terms of cost, benefits and duration.

The clear conclusion to be drawn from all this contract mania is that Labour has not done a good job of managing defense, and that it is no better at trying to “spin” the facts to make it seem that it did.

Caveat voters, in other words.


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