A colleague just sent me a Sunday Times article that trails the damning report [called the Grey Report] and has some pretty harsh words about the UK MoD:
The Gray dossier says that nimble enemies such as the Taliban “are unlikely to wait for our sclerotic acquisition systems to catch up”.
“The problems, and the sums of money involved, have almost lost their power to shock, so endemic is the issue,” writes Gray. “It seems as though military equipment acquisition is vying in a technological race with the delivery of civilian software systems for the title of ‘world’s most delayed technical solution’. Even British trains cannot compete.”
In corporate life, no enterprise would persist with a 12-year-old strategy without at least reevaluating it fully on a regular basis,” he writes. “Few who would expect to prosper would even try to do so.”
The FT has two articles on the defence inudstry today, both of which tell two different stories about government industrial policy. But the two stories provide a key lesson for any government looking to take a more active role in supporting manufacturing.
The first article, U-turn on damning military report, tells of how the government has consented to publishing a report which lambasts the procurement practices of the MoD.
The second article, Defence industry welcomes anti-terror wishlist, has senior defence executives welcoming the long-term transparency from government about the counter-terrorism technoligies it wants developed in the next decade. Now industry knows what the officials want, and intelligence services will get the kit they need.
Where's the lesson?
Well, not too long ago, the MoD published the Defence Industrial Strategy. The DIS was regarded as a critical breakthrough in relations between the MoD and industry becuase it provided long-term transparency of the military's equipment needs. This long-term clarity was undermined by budgeting problems (e.g. assessing and manageing the cost of operations in Iraq and Afghanistan, the MoD's difficulty in accounting for equipment, poor procurement practices).
Yes industry needs clarity about what government will need in the long run. But industry also needs to be confident that the budgets will be there to back up its demand.
Uncertainty in the UK defence market pushed some companies to the relatively more stable and much larger US market (and competing in US military markets often requires a presence in the country anyway).
It's one of the reasons why the controversial report on the MoD suggests giving the military a 10 year budget. But as the FT suggests:
"The UK's security budget, running at about £3bn a year, has risen rapidly since 2001 though it could come under pressure as the Treasury looks for spending cuts across government. With the US spending about 10 times as much on homeland security, Whitehall says the potential for exports provides further incentive for British companies."
So, sure the US has export potential. But just like in the defence markets, that potential will evaporate if uncertainty about the UK security budget ultimately pushes companies abroad in search of more stable markets.
Acitivism requires governments to make decisions and commit to them with sufficient resources. Anything short of that damages industry and hurts the UK's competitiveness.