The Defence Secretary Liam Fox has warned British Defence companies that they will have to cut costs or face losing out on future business from the armed forces, BBC News reports. He was speaking at the Farnborough air show, a gathering of Defence industries, with a particular focus on aviation.
The issue of defence procurement is a tricky one. Undoubtedly, there are many examples of spending being badly handled from the MOD side, and this has driven up costs in many cases. But in a more competitive market, where the MOD will have to make every penny count more than ever, it is right for the Defence Secretary to warn companies to offer value for money. An uncompetitive company is unlikely to be an efficient one where its products are concerned.
No doubt Defence contractors will argue that they already do, and will point to the high costs of basing production in the UK – such as salaries and running costs. but they seem to have a choice – adapt to the changing economic situation, or risk going out of business if the MOD looks elsewhere for its equipment. Whilst its nice to provide work in Britain, in a time of collapsing budgets the priority has to be getting the best kit at the best price, regardless of where it comes from. Going back to competitiveness, is a company that knows its 99% likely to get a contract going to pull out the stops to put together a good product?
The question does need to be asked, why it is possible to buy more and better for less money than from a UK firm? Have companies cottoned onto the MOD’s lax spending controls, combined with the policy of buying British, and worked out that they can name their price? As I have previously mentioned, British Defence Companies have almost always been assured of gaining contracts, thanks to robust lobbying from MP’s over providing work for their constituencies.
Fox’s comments follow on from those made by General Sir David Richards, the Chief of Defence Staff designate. It makes a change to hear a Defence Secretary and the Chief of Defence Staff singing from the same hymm sheet. Whether thats down to teamwork or Richards’s political views remains to be seen. It might be a coincidence, but their comments are remarkably similar…