The Public Accounts Committee will examine the Non-competitive procurement of defence equipment on Wednesday 10 January 2018.
Scope of the inquiry
Much of what the Ministry of Defence buys for the armed forces is very specific, technical equipment that can only be acquired from one place. Normally it is better to conduct a competitive procurement to make sure the best possible value-for-money is received, but this is much harder to assure when you can only procure from a single source.
The Ministry of Defence currently tenders about 50% of its contracts under this single-source model, and has introduced Single Source Contract Regulations to ensure non-competitive procurements deliver value for the taxpayer. The Single Source Regulations Office is responsible for monitoring these but some suppliers are resisting how the Office interprets the regulations. A particular challenge has been agreeing to move existing contracts into the new regulations regime.
The Department estimates that the regulations have saved £313 million as of July 2017. However, the National Audit Office found that the Department lacked good data on its portfolio of non-competitive contracts, and that the proportion of total contracts tendered in this way had roughly stabilised. The NAO also found that the Department does not have the commercial staff it needs to make sure regulation of procurement continues to save money.
We will ask the Ministry of Defence how they are working to better understand their procurement portfolio, how much more money we can expect the regulations to save, and whether the Single Source Regulations Office is carrying out its duties in the most effective way possible.