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U.K. Privatized Procurement Moves Forward

Apr. 2, 2013 - 10:27AM   |  
By ANDREW CHUTER   |   Comments
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LONDON — The British Defence Ministry’s push to privatize the management of its procurement and support arm will be aided by U.S.-based contractor Jacobs Engineering, officials have confirmed.

Government ministers recently approved a deal for Jacobs to take on the role of “delivery partner” to the MoD’s Defence Equipment & Support (DE&S) as it develops a business model for the handover of procurement activities to industry in a government-owned, contractor-operated (GOCO) arrangement.

The contract with Jacobs comes ahead of an expected government announcement to Parliament that it intends to proceed with the assessment phase of the controversial plan to hand over running the annual 13 billion pound ($19.6 billion) equipment and support operation to private industry.

MoD ministers are expected to outline their plans for the next phase of the GOCO work to Parliament in the two or three weeks after the House of Commons returns from its Easter recess on April 15.

Jacobs in the U.K. referred requests for comment to the U.S. office, which did not return a call. An MoD spokeswoman would not comment on the timing of the GOCO announcement but did confirm Jacobs had been selected to support DE&S in the upcoming competition to choose a contractor and help define the scope of its activities.

“We can confirm Jacobs Engineering has been selected as the delivery partner to help us develop an operating model for a reformed DE&S,” the spokeswoman said.

DE&S has been the subject of widespread criticism from politicians and others, not all of it justified, over its poor performance in procuring weapons for Britain’s armed forces.

Bernard Gray, the chief of defense materiel and the architect of the GOCO arrangement, reckons DE&S doesn’t have sufficient skills to negotiate and manage today’s often highly complex deals, whereas a contractor would be better able to squeeze a good deal from equipment and support suppliers.

Jacobs is best known in the defense sector here for its part in the Lockheed Martin-led GOCO, which runs the Atomic Weapons Establishment.

Bechtel, CH2 Hill and Fluor are widely expected to be among the front runners when a competition gets underway later this year.

One industry source said it looked as though the plan was to select a contractor during the second quarter of next year.

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