News story: MOD sets out vision to diversify supply base

#1
The Defence Infrastructure Organisation’s (DIO) new procurement plan outlines a programme of major projects and contacts for the next five financial years.

This includes work to construct new buildings, such as housing and accommodation, the refurbishment of current facilities; as well as services such as catering, waste management and cleaning.

The plan also sets out ambitions to establish a broader and more diverse supply base, including doing more business with small and medium size enterprises (SMEs).

Currently, around 75% of spending on maintenance at defence sites goes directly or indirectly to SMEs, and further diversifying the supply base will help build resilience into projects and provide more opportunities for smaller companies to work on key defence projects.

By listing all the major projects and contracts, the procurement plan will make it easier for existing and potential suppliers to plan ahead, by offering advice on bidding for this work and greater transparency on working with the MOD. These measures will help in particular small businesses, who don’t always have the skills and prior experience of working with the MOD in such areas.

Minister for Defence People and Veterans Tobias Ellwood said:


The defence estate is where our brave armed forces live, work and train and so it’s crucial we give them the best supplies and facilities possible.

Working with industry is critical to delivering this, and our new Procurement Plan ensures the private sector has a head start in bidding for this crucial work.

Opportunities outlined in the Procurement Plan include the £4billion Defence Estate Optimisation Programme, the Future Defence Infrastructure Services contracts - which will provide facilities management across the UK’s military bases- and the £1.3bn Clyde Infrastructure Programme.

The plan also details several prominent works that demonstrate DIO’s key role in supporting defence throughout the UK. These include essential maintenance work worth £568 million to support nuclear infrastructure capability at HMNB Clyde, as well as a £58m investment in a modern submarine training facility at the base.

Alongside this, there are plans for an £8m investment in Bovington Camp to support the AJAX armoured vehicles which will enter service in 2020.

Jacqui Rock, DIO Commercial Director, said:


As DIO we recognise that our current and future suppliers are key to our success. We have worked with industry to produce the Procurement Plan and we are committed to building a broader, more diverse supplier base.

We believe in being as transparent as possible in our procurements and through this new approach we are encouraging new entrants, including small and medium sized enterprises, to consider the benefits and opportunities that working with DIO can deliver.

The Procurement Plan will help achieve the goals set out in our first ever Commercial Strategy. This set out our vision for how we do business and how we will work effectively with our suppliers.

The Procurement Plan also sets out how DIO can deliver social and economic benefits throughout its supply chain by working to contribute to the government’s aim of recruiting 20,000 apprentices through construction procurement and promoting sustainability through its supply chain.

By 2020, DIO has committed to a reduction of greenhouse gas emissions by 30%, a 30% reduction in domestic business flights, a 50% reduction in paper usage and reducing waste going to the landfill to less than 10%.

The full DIO Procurement Plan can be found here

The DIO Commercial Strategy sets the direction for future DIO Procurement Plans. The full DIO Commercial Strategy can be found here

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#2
Currently, around 75% of spending on maintenance at defence sites goes directly or indirectly to SMEs, and further diversifying the supply base will help build resilience into projects and provide more opportunities for smaller companies to work on key defence projects.
Great words, but by the time it gets down to these SME's from the likes of Carillion et al, the SME has been screwed down to the floor, and the difference in the bill from SME to "Contract" will undoubtedly be at least if not less than half of what MOD are paying for the work. Whilst it can make sense to centralize certain contracts, the awarding of local contracts to builders and handymen etc, could easily be achieved with "templated" contracts overseen by the local brigade. I suspect a "local" builder would want to take pride in his work and use it to advertise his business in and around the area he works.
 
#3
Currently, around 75% of spending on maintenance at defence sites goes directly or indirectly to SMEs, and further diversifying the supply base will help build resilience into projects and provide more opportunities for smaller companies to work on key defence projects.
Great words, but by the time it gets down to these SME's from the likes of Carillion et al, the SME has been screwed down to the floor, and the difference in the bill from SME to "Contract" will undoubtedly be at least if not less than half of what MOD are paying for the work. Whilst it can make sense to centralize certain contracts, the awarding of local contracts to builders and handymen etc, could easily be achieved with "templated" contracts overseen by the local brigade. I suspect a "local" builder would want to take pride in his work and use it to advertise his business in and around the area he works.
My experience (from running a very large defence establishment) was not that the actual cost was half of the eventual Carillion bill, but rather that it was, wait for it, a tenth. Yep. That's right. For every £1000 paid to them the estate gained work to the value of £100. In fact, in one case, they wanted £90 million for £3 millions worth of work. Eventually they settled for £30 million, again for £3 millions worth of work, but still a factor of 10.

I happened to mention this to a local council senior executive (whilst we were trying to shorten the planning process) who ruefully acknowledged that it was much the same sort of mark up on public projects.
 
#4
My experience (from running a very large defence establishment) was not that the actual cost was half of the eventual Carillion bill, but rather that it was, wait for it, a tenth. Yep. That's right. For every £1000 paid to them the estate gained work to the value of £100. In fact, in one case, they wanted £90 million for £3 millions worth of work. Eventually they settled for £30 million, again for £3 millions worth of work, but still a factor of 10.

I happened to mention this to a local council senior executive (whilst we were trying to shorten the planning process) who ruefully acknowledged that it was much the same sort of mark up on public projects.
I just can't fathom how that can happen?

Imagine paying £3000 to dig a hole in your garden that is actually only £30 worth of work.
 
#5
I just can't fathom how that can happen?

Imagine paying £3000 to dig a hole in your garden that is actually only £30 worth of work.
Actually one example was my COS who was chatting to a chap painting some lines on the road in camp. How much is that costing? He asked. £300 came the reply. When the COS followed up later with the budget manager the budget had been charged over £3000.

It, and many other examples were briefed to the then head of DIO, but the contracts were written in a way that meant the MOD were stuffed.
 
#6
Perhaps it is time to delegate certain items down to local level, and employ a Budget Manager. They did that in 7 Armd Bde back in the mid 90's.
The capitation cost of employing 2 or 3 staff would probably be recovered in the first 2 months. Everything after that would be a saving.
Sadly very unlikely to happen.
 
#7
Perhaps it is time to delegate certain items down to local level, and employ a Budget Manager. They did that in 7 Armd Bde back in the mid 90's.
The capitation cost of employing 2 or 3 staff would probably be recovered in the first 2 months. Everything after that would be a saving.
Sadly very unlikely to happen.
I had a budget, and a budget manager, and in every area other than propman I had a good deal of freedom. But the infrastructure stuff was out of bounds. I could flex money into and out of it (the latter was more tricky than the former) but I could not actually control costs or seek value for money (which I could elsewhere)

On the £90 Million debacle it got to the point where the regional 1 Star faced down the DIO with the direct question as to why the mark up was so huge. Because they can, came the reply.
 

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