Defence Reform Bill

The Defence Reform Bill was introduced in the House of Commons on 3 July 2013. Second Reading has been tabled for 16 July 2013.

The intention of the Bill is to implement some of the proposals for reform that have been made in two recent White Papers: Better Defence Acquisition, Cm 8626 and Reserves in the Future Force 2020, Cm 8655.

Specifically, the Bill establishes the arrangements for reforming Defence Equipment and Support (DE&S) and turning it into a Government-Owned, Contractor-Operated (GOCO) organisation. It creates a statutory framework for the governance of MOD single source contracts and makes several amendments to the regulations governing the Reserve Forces.

The Government is currently assessing two options for the future operating model for DE&S: a Government-owned, contractor-operated entity (GOCO) or the public sector comparator which would see DE&S remain entirely within the public sector. In order to pursue the GOCO option legislation is required. Although a final decision on whether to pursue a GOCO is not expected until summer 2014, the relevant enabling legislation has been put forward as part of this Bill.

Part 1 of the Bill therefore makes provision for the Secretary of State to make arrangements for a company to provide defence procurement services under contract with the Secretary of State. Among other things, it covers the transfer of employees to that contractor, which will be done in accordance with TUPE regulations, financial claims against the contractor, the provision of financial assistance, the jurisdiction of the MOD police, and the disclosure and use of confidential information and intellectual property rights.

The proposal to transfer the whole of defence acquisition and support to a private contractor has provoked considerable debate. Several commentators have raised concerns over potential conflicts of interest, the length of the contract, how ministerial and parliamentary oversight will be provided, what financial risks the GOCO would bear and how a GOCO would make money whilst also saving the MOD money. The MOD itself has acknowledged that one of the biggest risks to the GOCO option is that international partners do not accept the proposed changes.

Part 2 of the Bill creates the new statutory framework for single source contracts. It creates a new Non-Departmental Public Body (the Single Source Regulations Office) to oversee that framework and a civil compliance regime. Part 2 also creates a new criminal offence relating to the unauthorised disclosure of information that may be obtained under this new framework.

Part 3 contains four measures to strengthen and support the Reserve forces. These include re-naming the Territorial Army; expanding the powers to call out the Reserve Forces, introducing new financial incentives to the employers of Reservists and exempting Reservists from the statutory two-year qualifying period required to bring a unfair dismissal case to an Employment Tribunal.

The proposals in this Bill will affect the Reserve Forces across all three services, although it is considered likely to have a greater impact on the Territorial Army because of the proposals for more integration with the Regular Army that have been made under Army 2020.