New Opportunities for U.S. Defense Contractors as UK Looks to ‘Outsource’ Jobs to Private Sector
Two recent announcements indicate a desire by the UK’s Ministry of Defence (MOD) to rely more heavily on the private sector in the coming years — thus creating potential new markets for U.S. defense contractors.
First, on July 5, 2012, the MOD announced the creation of the “whole force concept” under which it plans to ax a substantial part of the British Army, cutting regular troop numbers from 102,000 to 82,000. In their place, support contractors would be tapped, most likely in the areas of logistics and mechanical engineering, among others. While it remains unclear when this move to incorporate more private sector contractors into the “whole force concept” will occur, major U.S. support providers are already lining up to participate.
Second, the MOD also recently announced that it is considering outsourcing its entire $22 billion annual procurement and support organization, as early as 2013. This effort would, at least, partially privatize the UK’s Defence Equipment and Support (DE&S) organization. The MOD has already selected 15 companies for market testing talks to determine the best way to implement this massive privatization. It is unclear what ultimate shape the new organization would take but this is clearly an opportunity for U.S. contractors.
And more is likely to come. These efforts are a part of a comprehensive reform effort within the UK defense sector as all structures — capabilities, personnel, processes and management — are being reviewed and modified in the face of declining defense spending.