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Tuesday, September 2, 2014

Brave New World? U.K. Government Weighs Procurement Privatization

Arthur Wellesley, 1st Duke of Wellington

Arthur Wellesley, 1st Duke of Wellington

Arthur Wellesley, better known as the 1st Duke of Wellington, victor over Napoleon and twice prime minister of England, never said, “The Battle of Waterloo was won on the playing fields of Eton.”* Nevertheless, this persistent misattribution has acquired the status of timeless observation and is regularly cited to validate established ways of doing things that make enterprises workable.

That is, until now. Fittingly, or perhaps ironically, the U.K. is considering a measure whereby Defense Equipment & Support (DES), a key agency in the Defense Ministry, would have procurement operations, along with its supply and maintenance of equipment, partially privatized.

As reported in The Guardian, DES would become a “GoCo,” a government-owned, contractor-operated entity. The reason, not surprisingly, is money — the government wants to save a lot of it, and believes private contractors could, with oversight, substantially reduce the cost of procurement and other operations.

If given a chance, the results might be enlightening, even revolutionary. Bringing in procurement professionals from the private sector to manage sourcing and acquisition could add new thinking and yield big savings.

It could also be a colossal mistake, especially, critics assert, in wartime, when economies of scale and the lowest competitive bid are irrelevant next to the need to rush materiel to troops.

Which is why a GoCo is controversial. The Guardian states that no other major power privatizes military procurement. Moreover, adding private-sector workers increases security risks and other concerns.

All workers would presumably be vetted — the Defense Ministry has a substantial civilian workforce, after all. But government-private enterprises occasionally come crashing down with disastrous results — think Fannie Mae and Freddie Mac in the U.S.

The latest report is that the Defense Ministry officially endorses the idea. And with two years until the U.K.’s next general election, there is time to develop a model of a viable GoCo partnership.

Time will tell if this initiative is doable, much less capable of substantive benefits. It could be a bold move by a government that wants fiscal responsibility, or like Wellington’s Eton quote, lack credibility.


*Editor’s Note: Wellesley spent three years at Eton and disliked every minute. His nephew, for one, said he couldn’t imagine the Iron Duke having nostalgia for the school, much less voicing such a tribute.



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