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SDSR - Saving money at the MOD - 1

Published: 30 Oct 2011

From the Daily Telegraph 27 October 2011

MoD consultants make £5.5m from budget cuts.

Cost-cutting consultants employed by the Ministry of Defence to find budget savings are being paid £3,950 each a day, the Government has revealed.

Alix Partners has pulled in a total of £5.5 million so far, and 12 members of staff have qualified for additional "success fees" twice on top of the daily payment rate.

The company was drafted in last November following the strategic defence and security review that outlined plans to reduce the Army by 7,000 and the Royal Navy and RAF by 5,000, as well as the cancellation of equipment including Nimrod MRA4 reconnaissance planes and the early withdrawal of HMS Ark Royal and Harrier jump-jets.

The Government claims it needed to bring in an outside firm to find savings because the MoD did not have the right expertise to carry out the work.

Shadow defence secretary Jim Murphy said consultants were earning more in a week than soldiers took home in a year.

He said: "It seems truly shocking that the MoD is paying management consultants more in a week than many of our squaddies earn in a year. The new Defence Secretary has to sort this out.

"People will want answers, or they will conclude that this Government is out of touch with British people's priorities."

Defence minister Peter Luff refused to say how much money the department had saved as a result of the work but insisted it was "hundreds of millions of pounds".

He said: "Alix Partners were appointed on November 15 2010 to support the Ministry of Defence to renegotiate contracts in order to deliver savings as a result of decisions taken in the strategic defence and security review.

"The MoD did not have the highly specialised skills required to undertake this work in the timescales.

"The savings the department will accrue will depend on a number of issues, the detail of which I am withholding as their disclosure would prejudice commercial interests.

"The contract with Alix Partners has already proven its value and, without prejudice to our commercial negotiation, I can confirm that it has helped to save the department hundreds of millions of pounds."

(Members who raise this matter with their MPs are invited to keep the Association informed of any answers received).

The MOD response (to a similar aticle is): Cost of contract negotiators.

An article in The Sun criticises the amount the MOD has spent hiring consultancy firm Alix Partners to renegotiate a number of major defence contracts. The renegotiation of contracts as a result of decisions made in the Strategic Defence and Security Review required significant highly-skilled resources. Alix Partners were hired to provide specialist assistance, and overall these re-negotiations are expected to contribute to saving hundreds of millions of pounds. Overall, the MOD has delivered dramatic savings to its consultancy expenditure over the last five years, from £261m down to £26m.


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