Cutting costs or cooking books?

Discussion in 'The Intelligence Cell' started by milsum, Jan 29, 2007.

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  1. I met a man the other day who works for a company that used to be part of the MoD. As part of the cutbacks, it was recently privatised. On the ledger, it looks like the MoD are saving £300 million by cutting workforce and infrastructure, but in fact it's costing £500 million hiring them back under contract.

    Did I miss something? I don't blame the MoD in the slightest. If they have to show the men with the purse strings that they've striped the organisation to the bone, and the audit trail can reflect this, then it's an act of desparation. But am I alone in thinking this is completely obsured?

    What I want to know is, if this is normal practice why there isn't uproar about it against the tight-arrsed Gov't? Clearly common sence is a sackable offense these days.
  2. I think it's a similarly stupid situation as PFI where we get the private sector to out some money in to the pot and build or run places, and then pay them double what it would have cost if it wasn't done with PFI, but over a longer term.

    If this system, as wrong as it is, gets the bean counters to back off, then so be it. Stupid isn't it?
  3. It’s long term costs. Pensions, sick pay, redundancy stuff like that. Also they can get rid of the contract at a later date and save money.
  4. Yes, but these people provide services that will always be required, and their knowledge base means they will never be subject to competition. The company pensions are part of the cost of the contract - it doesn't come out of profits!
  5. Never is a long time.

    I am sure that some one saw a saving in their pot of money, now the costs are coming from some one else pot so they have made a saving.

    I may not agree with it but it happens.
  6. Not good enough. No where near good enough.

    The Government are accountable to the British people in the way in which they spend tax payers money. By anyone's definition this is not good practice.

    As a side issue, if it were a company concerned with profit alone, the MoD would make sure it fines or fires contractors that fail to deliver on time, failure for equipment to act as promised (helecoptor software anyone?), shoddy workmanship and poor value for money.

    I consider any person who is in a position to highlight or monitor such absurdity to be morally deficient in not doing something to stop such practices. A £200 million annual deficeit may not mean much to some people, but when you think of all the body armour that would buy it becomes an issue.

    If it's bad, we acknowledge it happens, what's the sence in allowing it to continue? Makes be so fcuking angry that even a simpleton can see that and there's nothing said, nothing done, with a 'Not our problem mentality' that is so pervasive in Britain.
  7. Milsum,

    Agree in principle. However, if the knowledge base is so restricted, could there be pressure from the entity involved to be spun off? Better pay and conditions, and MOD can't "afford" to lose the knowledge, or have it on the open market should they leave en masse?
  8. Interesting thing that happens in commercial contracts (apart from competitive tendering) is Ye Olde Penalty Clause. Failure to deliver the goods or service within an agreed timescale or to an agreed standard results in MASSIVE penalties for the provider of said service.

    If gummint contracts ALL used this legal facility, we might be a lot better off in terms of finance. Imagine what the penalty would come to for the gummint computer systems, the Eurofighter, Bowman etc. The gummint (on the history of these projects) may have got them virtually for nothing.
  9. It's OPEX(operational expenditure) against CAPEX (capitol expenditure)
    I'm in the same at work been laid off so the bean counters can move you from one set of books to another. Although I'm still employed by the company I don't appear on this years numbers. Apart from money saved etc from holidays staff perks pensions etc they can also claim back tax relief for employing the contractors so technically yes its cooking the books. We argued this at work stating that the money still comes out of the company coffers regardless of what pot of money it comes from but up top don't give a toss.
  10. OldSnowy

    OldSnowy LE Moderator Book Reviewer

    Sadly, having worked (some years ago) in the contracts area, I can tell you that this idea - punitive penalty clauses in government contracts - does not really exist, nor can it. Under English Law, punitive penalty sections in contracts do not exist in any contrat - they are just not legal (there are good reasons for this, which I'm sure you can work out for yourselves). What does exist is an ability to make claims for actual losses incurred. Given that most MoD contracts involve the delivery of goos or services for MoD use, how do you prove a loss like that? Answer: you cannot, so the clause does not work.

    Example: you order 100 Eurofighters. They turn up two years late, and you sue; the maker asks you to quantify your losses - well, we were't invaded, haven't lost any wars, so it's pretty hard to prove.