For more than a decade, the British Ministry of Defence (MOD) has pioneered in the area of reducing defense costs by increasing its reliance on the private sector. In 2001, rather than trying to sustain an oversized and expensive public sector defense research enterprise, Tony Blair’s Labor government took the bold step of privatizing most of the Defence Engineering and Research Establishment. The private offshoot, called QinetiQ, is now a thriving $2 billion company providing a range of technology products and support services to global clients including the MOD and the U.S. Department of Defense. The MOD has increasingly turned its logistics, sustainment and support activities over to the private sector, often employing long-term performance-based agreements (PBAs) to drive down costs while improving overall platform and system availability. Since the early 2000s, companies such as BAE Systems, Goodrich and Northrop Grumman have been providing the kind of logistics, maintenance and repair services on major weapons platforms that were once done by public sector facilities. In 2006, the MOD signed a 34-year PBA with Boeing for full life cycle support of the British fleet of Chinook helicopters. Boeing has also been awarded PBAs to provide sustainment and maintenance support for the United Kingdom’s Harrier jets and Apache attack helicopters.
Now, the new British Government has pushed the envelope with respect to reliance on the private sector. Intensifying budget pressures have forced the MOD to take the bold step of expanding the role of contractors in order to maintain a credible combat capability. Defence Secretary Philip Hammond recently announced a radical reshaping of the British military intended to reduce costs and focus the active duty force more towards combat missions. Most support and sustainment functions will be shifted to reserve troops and the private sector. In essence, the MOD is choosing to fill the Active Component with “trigger pullers” and take additional risk in the areas of combat support and sustainment.
The British military is like the canary in the coal mine for the nations of the West, including the United States. For several decades now, the MOD has struggled to maintain the semblance of a credible military posture against the crushing pressures imposed by Great Britain’s entitlement culture and declining economic strength. The nation that only a few decades back sent an expeditionary fleet some 8,000 miles to liberate the Falklands and a few years ago deployed some 45,000 troops to Iraq will now be lucky if it can sustain more than two army brigades in the field or a handful of ships abroad.
The MOD’s problems mirror those confronting the Pentagon. Despite its sometimes adversarial posture vis-a-vis the private sector, DoD needs to confront the reality that it will have to rely more on the private sector for logistics, maintenance and sustainment in the future. Given the rising cost of uniformed personnel, the U.S. military will have to shrink the size of its Active Component and push more of the support and service functions onto the Guard, Reserves and private sector.
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