15 April 2005
Ministry of Defence outsourcing came under fire again this week when it emerged that three private consortiums had been shortlisted for £18bn in staff training contracts, while in-house bids were overlooked.
Civil service staff claimed the MoD might not get value for money because a small number of influential private contractors could dominate the supply of services.
The Public and Commercial Services union, which represents 15,000 MoD civil servants, claimed the bidding process for the contracts, which followed the Defence Training Review, was 'flawed'.
The size of DTR-linked contracts and the cash required to fund them has led to only three consortiums being shortlisted. PCS leaders have questioned the 'lack of competition', claiming that the MoD's refusal to entertain in-house bids placed taxpayers' cash at risk.
Paul Bemrose, the union's MoD negotiations officer, said the PCS did not oppose the rationalisation of MoD training, or the use of private contractors. But he warned: 'What we are seeing is the wholesale privatisation of crucial chunks of MoD work. The fear is that accountability will be lost and a private sector monopoly created.'
The union claims that the MoD's Joint Defence Change Working Group told staff last October that, by using private partners, new training contracts would be kept 'off balance sheet' and would not count against the MoD's capital expenditure limit, making the process more affordable. But that meant rejecting in-house specialists.
One MoD source said: 'Short-term financial gains from certain accounting procedures are being valued more than [staff] loyalty, commitment and hard work.'
The DTR aims to rationalise MoD staff training on a tri-service (army, navy and air force) basis across six UK sites, saving billions of pounds.
It will be covered by two of the largest public-private contracts in UK history.
The first includes aeronautical and mechanical engineering and communications. The second will supply training for logistics, police and personnel administration, and security, languages and intelligence staff.
Metrix (which includes Qinetiq Group, Sodexho, Nord Anglia Education and Halliburton subsidiary KBR) has bid for both deals. MC3 (led by BAE Systems, Carillion and Vosper) is competing for the engineering contract and Holdfast (including Babcock Support Services, Atkins and John Mowlem) wants the logistics and security deal. Contracts will be finalised in 2007 and many of the firms involved are already major MoD partners.
But the MoD's procurement history is chequered. In 2004, following a series of problematic private finance and public-private partnership deals, the National Audit Office warned that: 'It may be some years before any trend towards continuously improved performance on newer projects becomes apparent.'
An MoD spokesman said: 'We have noted the concerns over value for money. But the sheer size of these contracts means only a limited number of companies are capable of delivering the combination of high-quality training and value for money that the MoD requires.'
The department also confirmed that other bids had been lodged before the shortlisting process.
TUC attacks job cull plans
The Trades Union Congress has attacked politicians' plans to slash thousands of civil service management posts after the general election, claiming that Whitehall already operates with fewer managers than the private sector.
A report by the TUC, published on April 8, also claims that the government could save £18bn of its targeted £21.5bn Whitehall efficiency savings by 2008 through improved procurement – 'without cutting a single post'.
Bowler hats and bureaucrats – myths about the public sector workforce challenges politicians' claims that big savings can be made by axing thousands of jobs, without reducing the ability to deliver services.
The government wants to cut 84,000 posts by 2008, while the Conservative Party claims it could lose up to 235,000 (90,000 to the private sector) as part of a £35bn savings programme. Many of the posts involve 'back-office' management.
However, using figures from the Office for National Statistics' Labour force survey, the TUC points out that public sector managers are responsible for an average of 14 staff, compared with just six in the private sector.
TUC general secretary Brendan Barber said: '[Politicians] want us to believe two things about the public services that are both wrong: first, that you can make easy cuts to management and bureaucrats, without having any effect on public service delivery. Second, that there is an easy distinction between frontline staff, who are all wonderful, and backroom staff, who are a drag on the system.
'They tell us that teachers should be given the time to teach and police officers the time to catch criminals, which they couldn't do if they had to take
over the vital support tasks done by the so-called bureaucrats they want to sack.'
PFapr2005
