1. Outsourcing within the MoD Charlie Southgate Supply Chain Management 27/11/12

2. Definition of Outsourcing Outsourcing : the ability to obtain the supply of a product external to the organisation that has strategic significance Zineldin & Bredenlöw (2003) suggested that the failure rate with outsourcing projects may be 70%. The dangers of outsourcing the wrong items or outsourcing too much is that the firm enters a spiral of decline

3. What do the MoD outsource? IT repairs – HP. £17m over 5 years. Defence Information Infrastructure Programme – Atlas Consortium. £7bn over 10 years. Estate Management- Out to tender now. £400m over 10 years. Procurement – Out to tender now. £14bn a year. Pay and Pensions – CSC. £303m over 7 years.

4. History Began in 1983 “Competing for Quality” programme Cost yardsticks for assessment purposes Hard budget constraints

5. Defence Information Infrastructure Programme Replace legacy computer systems Save 20% off existing IT expenditure 150’000 computer terminals over 2000 sites It will also be able to handle Restricted and Top Secret material. Originally put to tender in 2004, the MoD reported cost projections to the government at £2.3bn

6. DII Issues Failed to meet delivery targets Hardware Software “Unacceptably high” number of defects within designs ATLAS was unable to deliver a system capable of handling Secret data for over two years.

7. Cause of issues The Public Accounts Select Committee investigated the programme in 2009 and found: “severe underperformance” ATLAS failed to understand the condition of the buildings An unsuitable, rigid implementation methodology was selected Contract Negotiations overran Cancelled trial period Serious underestimation of the complexity of the programme

8. Camp Bastion – Bid Process Home to 28’000 British military personnel Airport busier than Stansted. Maintenance and development is outsourced to a private sector ‘infrastructure support provider’. Different tender process Soft Issues Assessment Centre process

9. Procurement Should the MoD be looking to outsource procurement? Not just an issue of bottom-line Front Line operations, and even lives at stake

10. Improvements to the MoD outsourcing process Learn lessons for the tendering process SAIC assessments Better definition of project needs/specifications Competitive tendering against in-house operations runs the risk of losing the department Outsourcing of defence contracts only saves money when the contract is a success. Procurement!

11. References http://www.employabilitycoaching.co.uk/uploads/files/afghan -articlepdf.pdf http://www.employabilitycoaching.co.uk/uploads/files/afghan -articlepdf.pdf http://www.b2bppm.com/our-services/partner-evaluation- and-procurement/soft-issues-assessment-centre http://www.b2bppm.com/our-services/partner-evaluation- and-procurement/soft-issues-assessment-centre http://www.nao.org.uk/publications/0708/the_defence_infor mation_infras.aspx http://www.nao.org.uk/publications/0708/the_defence_infor mation_infras.aspx http://www.mindtools.com/pages/article/newSTR_45.htm

12. Thanks for listening Any Questions?