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MOD in Hot Water

By 31st August 2011February 15th, 2022No Comments



Posted by:
Rhys Brennan

Now it is the turn of the Ministry of Defence to come under fire for its approach towards cost cutting in the recession. It was reported in The Times on August 18th that:

“Private consultants are being paid £4,000 a day by the Ministry of Defence to help it to cut the costs of its contracts…

Under an agreement described as “extraordinary” by one MP yesterday, eight consultants will also receive a 30 per cent “success fee”, pushing their daily pay to more than £5,000 each.

It is also understood that the MoD departed from normal practice in awarding the contract, worth up to £12 million, by failing to advertise it before recruiting Alix Partners, a US-based company with a London office.

Industry experts criticised the deal, saying that the fees were unusually high and that the failure to advertise the contract might have led to an unnecessarily high bill for the taxpayer. The details have come to light as the Armed Forces pension scheme is cut and hundreds of redundancies are made.”

You can go here to read more.

The irony is rich that in an attempt to reduce costs the Ministry of Defence have only managed to increase them. Another interesting subplot is that while unemployment levels increase in the UK, government departments appear to be giving contracts to foreign firms. Firms such as McKinsey, a London-based firm, ranked 42nd in The Times Top 100 Employers, and widely regarded as one of the top consultancy firms worldwide, must have been disappointed to not even get the chance to bid for the business.

I would surmise though that Auditel’s Total Cost of Purchase Business Model is exactly what the MOD could have done with. Based on a share of savings achieved, the offer is risk free and can only be cash-flow positive for the client. Egg-on-face could have been avoided.

Saying that if the Ministry of Defence want to pay me £1 million a year, I’m not going to get in their way…