Winging it? Defence Procurement as Risk Management

• Author: Rebecca Boden,John Louth
• DOI: http://doi.org/10.1111/faam.12040
• Published date: 01 August 2014
• Date: 01 August 2014

Financial Accountability & Management, 30(3), August 2014, 0267-4424

Winging it? Defence Procurement

as Risk Management

JOHN LOUTH AND REBECCA BODEN∗

Abstract: In this paper, war is characterised as a risk management strategy,

with defence procurement as a risk mitigating activity. Risk management within

the defence procurement context is explored by way of a detailed case study of a

UK procurement team from within what was the Defence Logistics Organisation

(a Tri-Service/Civil Service central organisation) with the Royal Air Force as its

customer. In this paper risk management is conceptualised theoretically as an aspect

of governmentality. The analysis of the case study organisation demonstrates that

it has become devoted to managing risk. The operation of governmental power

within the organisation is analysed using Lukes’ (2005) three dimensions. The paper

demonstrates that risk management operates as a hegemonic discursive rationality

at a level where individuals become enfolded in these discourses, becoming economic

citizens and workers rather than military personnel. This, it is concluded, has grave

human consequences.

Keywords: risk, risk management, governmentality, defence procurement, power

WAR AS RISK MANAGEMENT

In early 21st Century Britain, the act of war has increasingly been framed as

a risk management strategy, and defence procurement policy and practices as

risk mitigation interventions (Yee-Kuang Heng, 2006). Westernised neoliberal

states now go to war, supposedly, to manage effectively identified risks in a

functional, calculative manner — albeit a manner that involves killing others and

endangering their own citizens. Conceptualising war as risk management and, it

follows, the defence industrial base as a risk mitigation construct has, we argue in

this paper, resulted in the military effort, and specifically the defence industrial

procurement process that sustains it, being enfolded in a risk management

∗The authors are respectively, Director, Defence, Industries and Society, Royal United

Services Institute for Defence and Security Studies, London; and Professor of Critical

Management, University of Roehampton Business School, London.

Address for correspondence: John Louth, Director, Defence, Industries and Society, Royal

United Services Institute for Defence and Security Studies, Whitehall, London SWIA 2ET.

e-mail: DrJohnL@RUSI.org

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304 LOUTH AND BODEN

narrative that blunts responses, dehumanizes actions and ensnares the self.

We further argue that defence as risk management is far from rational and

technocratic, but is rather the result of the ensnaring of thought and deeds in

an ideology.

A large national defence industrial base is a purposive and coveted enabler of

such risk management activities. In the UK, at least £34bn is spent annually on

national defence through the Ministry of Defence (MoD) budgets. This includes

£6.7bn on capital equipment and infrastructure, £4.3bn on equipment support

to the military and consumables, and £2.4bn on research and development

(Heidenkamp et al., 2011). The commercial equipment and service products of

defence and security companies equate to just over 1% of UK GDP (Chalmers,

2011).

The MoD defines risk as ‘the combination of the probability of an event

occurring and its consequences on objectives’ (MoD, 2004, p. 31) and articulates

and justifies its military procurement activities in terms of risk mitigation.

Through this lens, procurement is the development and insertion of a military

capability into the armed forces in order to manage the risk of ‘capability gaps’

occurring or of exposure to superior enemy equipment, doctrines or training

(MoD, 2002, p. 14). This notion of military and defence industry responsiveness

to risk is not new; at the beginning of the 20th century, the development of

Dreadnought battleships was the subject of fierce public argument between the

Royal Navy, politicians and industrialists over the perceived risk that, without

these capital weapons, the UK’s prestige would suffer and the country would be

exposed to superior, unanswerable, firepower from continental states. Similar

debates raged in the British press in 2007 over the replacement for Britain’s

Trident nuclear submarine fleet (Kincaid, 2008).

The National Audit Office (NAO, 2005) currently characterises defence as

posing both operational risk, which focuses on military outcomes, and financial

risk, which is associated primarily with input costs of projects and their value

for money. Under such a paradigm, effective risk management of defence is

characterised as an informed trade-off between these two risk elements. The

problems posed by such an approach are illustrated in the UK procurement of the

US-built Apache attack helicopter by the army – which it used most recently in

Libya in 2011. The £12m price tag of an Apache helicopter procured from the US

is discernible from the Israeli purchase of 24 aircraft in 1999 (Page, 2006). British

purchasing procedures identified a major operational risk: the associated lead

times on US factory lines might inhibit re-orders and the availability of spares.

The solution adopted was for Westland Helicopters, a UK firm, to manage this

risk on behalf of the MoD by establishing a UK production line to build 67

Apache helicopters under licence from the US. Managing operational risk this

way substantially increased costs: the overall cost of the programme was in the

region of £2.5bn, or £40m per aircraft – more than three times the price Israel

paid for what was, essentially, the same machine (NAO, 2005).

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