Perspectives on non-competitive defence spending - September 2016

21 Sep 2016 11:35 AM

Single source defence procurement, where there is no competition, is an area of public spending which is not well understood or transparent.

The Single Source Regulations Office (SSRO) as the independent regulator of this type of procurement invited academics, defence experts, accountants and former members of the military to reflect on the aspects of single source procurement that work well and those where changes might be needed. International perspectives from Germany and Canada were also provided.

Single source procurement will remain an important feature of the UK defence industry for years to come so it is important to understand its costs and benefits and whether value for money is being achieved. The defence industry is a critical part of the UK economy and companies need to achieve a fair and reasonable return on this work.

Perspectives on non-competitive defence spending has drawn out six key themes from across the contributions. These are:

• Value for Money - a different type of assessment is needed when considering the value for money of procurement where there has been no competition.
• Innovation - it can be difficult to create the conditions where innovation can flourish in a single source environment but steps can be taken to promote it.
• Culture and behaviours - these are important factors in establishing a strong customer supplier relationship and ensuring value for money.
• Skills development - skills may be needed to ensure the Ministry of Defence understands the costs of suppliers and is able to negotiate the best deal.
• Strategic and economic benefits - single source procurement can generate wider benefits that need to be considered and assessed.
• The role of the SSRO and the single source regime - it is early days for the SSRO and the regime and our contributors offer their views on successes and areas that require a continuing focus.

Single source procurement can deliver savings if the objectives are clear, contracts are managed in the right way and the right culture exists between the customer and supplier. Use of single sourcing also needs to be more transparent. It is important that the public are able to understand when contracting with a single supplier is justified and why competition was not possible.

Clive Tucker, the SSRO’s acting chairman, concludes in Perspectives on non-competitive defence spending, that the regulator will continue working with others, as part of its collaborative approach to regulation and stakeholder engagement, to better understand the risks and benefits of single source contracts.

The SSRO will play its role in making information about single source procurement more publically available and transparent.

RUSI and the SSRO are holding an event, at which several of the contributors to the paper will speak, on 16 November 2016.