Title

Challenges and actions for UK Defence leaders: Strengthening commercial skills and structures

Section
Insight
Summary

Authors: Dave Hurst, Joseph Gross, Laura Marsden Payne, Andrew Black

The UK Ministry of Defence has faced challenges in consistently delivering complex defence procurements on time and within budget. A key factor behind this is the MOD’s commercial capabilities versus those of its suppliers – but what creates this gap, and how can Defence leaders address this to improve procurement outcomes?

This article is the last in a three-part series that analyses the challenges faced by UK Defence procurement and proposes solutions for policy and procurement leaders.
 

Disparate commercial capabilities put the MOD at a disadvantage

A significant challenge for the MOD is the gap between its commercial capability and that of its industry partners, particularly the Primes. Private sector organisations typically have larger negotiating teams, greater expertise and experience, and stronger commercial acumen. In contrast, the MOD commercial function is centred around risk mitigation and adherence to procedure, rather than delivering maximum value. In addition, private sector commercial teams are integrated with the design and engineering teams from the outset, ensuring the commercial viability of programmes; in the MOD, Commercial is instead seen as an enabling function rather than a leading one. This asymmetry gives industry partners an upper hand in negotiations with the MOD’s commercial teams.

Actions

To remedy this, the MOD should consider requiring senior commercial and programme leads to commit at least five years to a single post, seeing initiatives through to completion. This stability will facilitate greater accountability as well as stronger expertise and relationships to support project delivery.

Personnel changes compromise the MOD’s commercial position

Another issue undermining the MOD’s commercial position is the well-established “revolving door” of personnel moving between the MOD and industry. While this can help build up a stronger talent pool, it raises significant concerns about information leaks to industry partners, potentially compromising the MOD’s position in negotiations. It is all too common that the MOD – and particularly DE&S – attracts and trains ambitious graduates, only to then often lose these upskilled employees to other higher-paid jobs in the private sector.

Actions

To address this, the MOD must embed commercial thinking into all stages of the procurement cycle. One solution is to make a rotation within the commercial function a prerequisite for senior leadership roles. This will help ingrain commercial thinking from the outset of programmes, making them more cost-effective as a result.

Unstable leadership undermines results

Finally, the ‘posting cycle’ of team leaders creates disruptions in the MOD’s procurement programmes. Running a large procurement for a platform is equivalent to running a medium-sized organisation; changing the senior leadership team every two to three years is excessive. While new perspectives can be beneficial, the lack of long-term, stable leadership means responsibility for key programmes ends up being passed around different individuals across the years. These short-lived appointments mean senior leaders cannot sufficiently be held accountable for progress and results.

Actions

To address this, the MOD must embed commercial thinking into all stages of the procurement cycle. One solution is to make a rotation within the commercial function a prerequisite for senior leadership roles. This will help ingrain commercial thinking from the outset of programmes, making them more cost-effective as a result.

 

Rethinking commercial capability in Defence 

The challenges identified in this article reflect the need for a fundamental shift in how MOD approaches its commercial function. Adopting a stronger commercial mindset is critical to maximise value from investments, negotiate favourable terms with suppliers, and manage complex contracts more effectively. Without this, UK Defence will continue to face inconsistent results in delivering critical defence capabilities, risking falling exponentially behind at a time when the geopolitical landscape grows increasingly volatile and technology development accelerates. To futureproof its capabilities, the MOD must build a structure that doubles down on commercial thinking throughout the procurement lifecycle and safeguards the integrity and robustness of the procurement process.