British Army Programmes – Are They Really Competed?

This guest article, written by Simon Jackson, looks at the role of competition in the British Army’s procurement programmes, and how it seems to have faded from view since 2019. It provide’s an industry insider’s view on business opportunities and challenges in the UK. Image credit: Ministry of Defence, OGL v1.0OGL v1.0, via Wikimedia Commons. 

Competition has been the untouchable bedrock for British Army equipment programmes for years – compete, compete, compete, even if the sensible option is to select the obvious supplier and even if non-UK companies are favoured over home-grown expertise and jobs.  An immovable policy.  But the reality of recent big contract awards suggests the opposite – no competition.  Let’s have a look.

We all understand the benefits of competition: best value for money, latest and best technology, fresh and innovative solutions etc.  On the other hand, a policy of competition is a cost to industry: business development and sales staff; demonstrators built for exhibitions; creation of supplier partnerships; stakeholder engagement.  Competition also drives costs in defence ministries: people; policymaking; oversight and governance.  And we accept that competition will add time to programmes.

But what’s the impact if the policy is competition but the reality is that planned competitions do not happen and contracts are awarded without competitive bids? Firstly, money spent by companies to compete for the contract, which usually comes from their profits, is ‘lost’ – funds which could have been used to develop new technology, support growth or to pursue other opportunities.  We could be talking about hundreds of thousands or even millions of pounds. Secondly, MoD and therefore government costs to support competitions are also lost – which could have been better used elsewhere. And finally, a more contentious impact is how industry views future UK MoD competitions: why should a company invest in an apparently competitive programme if the endgame is going to be no competition and a contract award to a single supplier?

A worrying trend

Let’s see how the competition policy has got on.  There are a number of significant British Army programmes where contracts have been awarded to a single supplier without a competitive tendering process: 

• 2019, Mechanised Infantry Vehicle, Boxer: Awarded to ARTEC and therefore KNDS Germany and Rheinmetall, after about 20 years of various attempts.  But 8×8 APCs are in effect commodity items – lots of off-the-shelf options, suggesting it would have been really beneficial to the MoD to seek competitive tenders/bids. Value: GBP2.3 billion. 

• 2021, Challenger 3: development and manufacturing contract awarded for the Rheinmetall solution (through RBSL (Rheinmetall BAE Systems Land)) without a competitive tendering process.  Yes, there was competition for the Assessment Phase, but the manufacturing contract was placed without comparing competitive bids – admittedly made more complex by Rheinmetall acquiring 55% of BAE’s UK vehicles business. Value: GBP800 million. 

• 2024, Mobile Fires Platform: Set out as a competition.  However, a contract was placed with BAE Systems for 14 x Archer as an interim capability with no competition, and the Boxer-based RCH155 from KNDS Germany has been selected as the final solution without competitive tendering.  There were competition options: more BAE Systems’ Archer, Elbit/Rheinmetall and Hanwha (K9) all invested considerably in the expected competition. Value: Potentially GBP3 billion as a joint programme with Germany.
• 2024, Logistic Vehicles: Contract awarded to Rheinmetall for 500 x trucks – not a programme of record and without, it would appear, publishing a requirement. Value: GBP282 million. 
• Est 2025, Short Range Air Defence (SHORAD): According to defence media reports in July 24, the UK MoD “intends to purchase [from Thales] VAMTAC Rapid Ranger 4×4 air defence vehicles” – only 12 systems as an interim capability, but, if the report is correct, without any competition. Value: Unknown. 

To be fair to the UK MoD and its Defence Equipment and Support procurement arm, there are many, many successful competitions that do deliver capability needs and with best value for money.  These do not attract headlines and generally are smaller programmes than those above.  And, let’s be clear, industry loves it if they are awarded a contract without any competition, but if you think you are in a competition and then there is no competition, this is a completely different matter.  

In addition, there are indications of a move away from the universal use of competition.  The 2022 Land Industrial Strategy stated a “shift in policy away from global competition by default… towards a more nuanced and flexible approach” – whatever that means.  And the Dec 24 Statement of Intent for a new Defence Industrial Strategy explicitly describes “scrapping” the policy of global competition and sending “a clear market signal to the private sector about our preference to grow onshore production capability… without losing the benefits that competitive markets bring.”

So, we have a recent history of awarding major capability contracts with no competition and an intent to move away from the stubborn compete policy.  But from industry’s perspective, there is uncertainty:

• What is the new policy going to be? 
• If the “preference [is] to grow onshore production capability”, what are the criteria, who will make that decision, and how do I know if I can or should compete?
• And what confidence can I have that MoD won’t just ignore policy as they appear to have done, and just give a contract to someone else? Is it worth my while competing for British Army programmes?

Compete, compete, compete

On top of these concerns, industry faces wider challenges with the UK MOD procurement system.  The House of Commons Defence Committee is particularly critical in its report of 15 July 2023 as demonstrated by its title: “It is broke – and it’s time to fix it.”  The MoD’s track record of large programmes that have been competed is also not great: the Warrior Capability Sustainment Programme was cancelled over 10 years after launch, and the challenges of the troubled AJAX programme are well-documented. These issues are beyond the scope of this article, but I suggest that the external view is that competing for MOD Army programmes is very difficult with complex processes, over-prescriptive and changing requirements, and the vagaries of Social Value assessment criteria. From an industry perspective, the UK market, I suggest, may become just too difficult to enter.  So there is, perhaps, a case to be made for moving away from competition. 

The evidence is clear: the untouchable bedrock of competition for British Army equipment programmes has, in reality, been built on sand.  Five major equipment contracts, with a potential value in excess of GBP6 billion, have been placed without any competitive tendering.  The new Government recognises that compete, compete, compete is not the best solution.  It will be interesting to see how this is transferred into policy in the new Defence Industrial Strategy.  But, once the policy around competition is in place, the MoD must apply it consistently and not randomly go another route – or there is a risk that the UK will not be an attractive market in which to invest effort, time and money. This is not a great position to be in.

Simon Jackson is a former British Army officer, serving on tanks and in the MoD and Army HQ in various future equipment and acquisition programmes.  He has since worked for BAE Systems Munitions and Vehicles and Rheinmetall BAE Systems Land (RBSL); he now runs his own defence consultancy business, providing independent advice on winning new business at https://simonjacksonconsulting.co.uk/