HL Deb 13 May 2002 vol 635 cc4-6

2.45 p.m.

Lord Burnham

asked Her Majesty's Government:

What impact there has been on productivity in the Ministry of Defence, particularly in the department of Defence Logistics Organisation, following the ban on the use of external consultants required to achieve objectives.

The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach)

My Lords, there is no ban on the use of external consultants either in the department as a whole or in the Defence Logistics Organisation. The MoD remains committed to achieving improvements in productivity through a variety of methods. This includes the use of consultants, where appropriate and cost-effective.

Lord Burnham

My Lords, is it not the case that there been some restriction in the use of consultants? Is not the use of consultants largely a method of transferring costs from one budget to another?

Lord Bach

My Lords, there has been no ban. Some tighter controls are being introduced. The noble Lord may be referring to that. There are long-standing rules relating to the employment of external consultants by the MoD, which require the development of a robust business case that has been subject some sort of cost-benefit analysis. There should also be an evaluation after the event to learn lessons and ensure that the use of consultants represented value for money for the taxpayer. There are and always will be circumstances in which it is sensible to obtain external assistance.

Lord Roper

My Lords, does the Minister accept that there can be considerable rationalisation savings in defence logistics by looking at European solutions? In the context of the European security and defence policy and the rapid reaction force, is the Ministry of Defence looking at ways in which those savings could be made?

Lord Bach

Yes, my Lords, we are always looking at ways in which savings can be made in logistics, as in every other area covered by the MoD. The noble Lord will know that the Defence Logistics Organisation was set up in April 2000, two years ago, by combining the three service logistic arms with the Defence Communication Services Agency under a single organisation. The strategic goal is to reduce its cost of outputs by 20 per cent by 2005–06. There are already some good news stories on logistics savings. For example, the rationalisation of the supply of general stores, such as tools, has already generated savings in the region of £120 million.

Lord Berkeley

My Lords, does my noble friend agree that, while consultants are sometimes very useful, their use can be self-perpetuating, as most reports seem to end with a recommendation that further work needs to be done?

Lord Bach

My Lords, my noble friend is right. We try to use consultants—or external assistance, which covers much more than consultants—as seldom as possible. However, sometimes one does not have within the department people who are able to provide, for value, the information needed from external sources.

Lord Vivian

My Lords, what progress has been made in further integrating defence procurement and defence logistics? What progress has been made in developing a more cost-efficient repair and maintenance process within the DLO?

Lord Bach

My Lords, we are constantly looking at the DPA and the DLO, both of which are recent inventions of the past three or four years, to see whether the relationship between them is satisfactory. We believe that on balance it is satisfactory at the moment. As I have said, the aim in setting up these organisations is to save on costs, to ensure that delays are as short as possible and to improve performance. Those are the basic tenets of smart acquisition. They refer to both the DPA and the DLO. We have no plans at present to bring those two organisations together. All our efforts are aimed at trying to reduce maintenance costs.

Lord Wallace of Saltaire

My Lords, perhaps I may press the Minister on the question of the international integration of logistics chains. In ISAF, for example, there are some 1,600 British troops, 1,000 Germans, 600 French and contingents from another nine EU member states. I was told recently by a Czech civil servant that the overwhelmingly largest cost of maintaining a Czech contingent in Kosovo was the separate logistics chain. What efforts are the British Government making to ensure that, in the vast majority of external operations in which we are now engaged and which are co-operative with other countries, we rationalise our logistics chain?

Lord Bach

My Lords, I can only repeat that we make every effort to ensure that costs, whether at home or abroad, are met and that ISAF's are lowered. ISAF is a unique force. In the period in which it has been successfully in existence—as I am sure the noble Lord will agree—we have done our best to ensure that the costs in terms of logistics, which can be extremely high, are brought down and rationalised with our international partners.