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Smart Procurement

Dr. Stoate: To ask the Secretary of State for Defence if he will make a statement (a) on progress in implementing the Smart Procurement Initiative and (b) the Defence Logistics Organisation. [79889]

Mr. George Robertson: The Smart Procurement Initiative launched in our Strategic Defence Review offers major improvements in the way in which the Ministry of Defence buys and maintains equipment, and supports the Armed Forces. Smart Procurement encompasses the Defence Procurement Agency (DPA), the formation of which we are announcing separately today, and the new Defence Logistics Organisation (DLO), headed by the new Chief of Defence Logistics. Both of these new organisations will form on 1 April 1999.

We remain committed to deliver the £2 billion of savings over 10 years which we promised from Smart Procurement, and we have identified clear scope for further savings on top of that. The close working relationship between the DPA and DLO, needed to help deliver these savings, is being achieved in part through the creation of Integrated Project Teams or IPTs. These include staff from both the procurement and support organisations, as well as necessary contracts, finance, operational user and--in particular--industry expertise. We want to foster an enhanced partnership with industry, to reduce risk, encourage innovation and increase the competitiveness of defence industry.

The 10 pilot projects where we have been trialling Smart Procurement techniques and the IPT concept are already starting to indicate new savings running to several hundreds of millions of pounds over their life. They have also identified significant opportunities to get equipment

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into service faster, or--for equipment already in service--improve its availability and reliability. For example, the Type 23 frigate IPT is looking to reduce the length of an upgrade programme by 30 per cent. and the VC10 IPT has already identified initiatives to achieve a 10 per cent. increase in serviceability.

Soon after Easter we will launch the first wave of IPTs covering 23 projects or groups of projects in the DPA and DLO. Over the course of the coming year, the remainder of projects will migrate to this new structure, with a total of about 150 Teams forming in all, some 90 in the DPA and 60 in the DLO.

We have streamlined our internal procedures for taking decisions on equipment procurement, and will be reconfiguring MOD Headquarters to ensure that there is a clear central customer for equipment.

The Chief of Defence Logistics, General Sir Sam Cowan, will formally take up his post on 1 April 1999, bringing together the areas of the Chief of Fleet Support, the Quartermaster General and the Air Member for Logistics into a single Defence Logistics Organisation. This will be the largest Joint organisation in Defence, and accounts for some £4.6 billion of expenditure each year. The DLO will become a fully unified logistics structure in April 2000. This offers real prospects for delivering an improved service to the front line at lower cost. A significant proportion of the savings we foresee will come from the Defence Logistics Organisation applying Smart Procurement techniques. There will also be savings in downstream support costs, by ensuring that the whole life costs of equipment are properly considered when procurement decisions are taken.

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We expect the DLO to make significant improvements in our logistic support, for example: in the ways we procure, manage, repair and store defence munitions; in the procurement and management of fuel; and in the use of lean support techniques. We hope to be able to make further announcements here in the coming months. We are also committed to delivering major reductions in our current holdings of non-explosive stores and to rationalisation of our stock procurement, leading to reductions of £130 million a year from 2001-02 onwards.

Defence Transport and Movements Agency

Mr. Rapson: To ask the Secretary of State for Defence if he will make a statement on the formation of the Defence Transport and Movements Agency; and what key targets have been set for 1999-2000. [79897]

Mr. Doug Henderson: The formation of the new Defence Transport and Movements Agency (DTMA), providing defence-wide operational and administrative transport and movements services, was announced as part of the Strategic Defence Review. The DTMA will form on 1 April this year incorporating the Defence Transport and Movements Executive, the Defence Freight Distribution Group, the Joint Transport and Movements staff from Northwood, the Passengers Reservation Centre in London, and the Air Movements Executive from High Wycombe. The Chief Executive has been set the following Key Targets for 1999-2000:












I have endorsed the Framework Document and Corporate Plan for this new Agency and will place copies of these documents in the Library of the House.

Defence Estate Organisation

Mr. Jim Cunningham: To ask the Secretary of State for Defence if he will make a statement on the future of the Defence Estate Organisation. [79991]

Mr. Spellar: One of the major issues addressed during the Strategic Defence Review, was how to improve the overall management of the Defence Estate, an important strategic and national asset.

A number of key recommendations were made affecting the role of the Defence Estate Organisation (DEO), which was originally launched as a Defence Agency in 1997. These were, that the Chief Executive should be accountable for working to users to ensure that the Defence Estate is managed efficiently as a whole to support the deliver of Defence Capability, that the Agency

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should assume responsibility for all aspects of the surplus property disposal programme and that the Agency should develop a new model for construction procurement.

The effect of these recommendations has been to place major new responsibilities on the Agency and a fundamental review of the role, processes and organisation of the DEO was undertaken and a major change programme has been put in place.

A new Framework Document and Corporate Plan have been produced and copies will be placed in the Library of the House. Key Targets for the Agency, which will now be known as Defence Estates (DE), are being finalised and will be published shortly.

The work to be undertaken by DE, under the title SMART CONSTRUCTION, aims for the widest possible use of Prime Contracting. Whilst focusing on the MOD's estate requirements, it is also an integral part of the necessary reform of the UK Construction Industry which is a Government-wide initiative.

Logistics Support Services (RAF) Agency

Mr. Maxton: To ask the Secretary of State for Defence if he will make a statement on the future of the Logistics Support Services (RAF) Agency. [79896]

Mr. Doug Henderson: The roles and responsibilities of the organisations involved in the provision of integrated logistic support to new projects and in-service equipments in the RAF have been reviewed in order to streamline process, remove duplication and overlap and implement efficiencies.

Changes include:



    b. transferring related work form RAF Logistics Command at RAF Wyton to the new business unit in Glasgow;


    c. brigading all integrated logistic support activities within an enlarged Logistic Support Services (RAF) Agency but with constituent elements remaining at their current locations.


The net effect of these changes is to save 43 posts at a saving of just over £1m per year. In doing so, and from 1 April 1999, the Defence Codification Agency (DCA) in Glasgow will cease to be a separate Defence Agency and be absorbed into the Logistic Support Services Agency (RAF).

Key targets for the Logistic Support Services (RAF) Agency for the financial Year 1999-2000 are:



    To deliver 80 per. cent of all outputs at the cost agreed with the sponsor.


    To produce 90 per. cent of all deliverables to the sponsor's complete satisfaction.


    To achieve a 3 per. cent reduction in the cost of a productive hour.


Copies of the revised Framework Document and Corporate Plan for the Agency will be placed in the House Library.

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Defence Storage and Distribution Agency

Mr. Ernie Ross: To ask the Secretary of State for Defence if he will make a statement on the formation of the Defence Storage and Distribution Agency; and what key targets have been set for 1999-2000. [79894]

Mr. Doug Henderson: The formation of the new Defence Storage and Distribution (DSDA), for the storage and distribution of non-explosive stores, was announced as part of the Strategic Defence Review. The DSDA will form on 1 April this year incorporating the majority of the Army Base Storage and Distribution Agency, storage functions at RAF Stafford, the Central Services Establishment at Llangennech and the Procurement Executive Storage Depot at Aston Down. The Chief Executive has been set the following Key Targets for 1999-2000.














I have endorsed the Framework Document and Corporate Plan for this new Agency and will place copies of these documents in the Library of the House.


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