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Steve Morgan to lead £20bn MoD acquisition programme

Former BAA capital programmes director Steve Morgan has joined the Ministry of Defence, where he will oversee a £20 billion military hardware acquisition programme.

Mr Morgan, who oversaw major construction projects including Heathrow Terminal 2 during more than three years with BAA, started work with the MoD this week as its director of defence equipment and support commercial operations, based at Abbey Wood in Bristol.

He will be responsible for acquiring £20 billion of ships, airplanes, and other military hardware and its maintenance support contracts.

The change of role will take Mr Morgan away from construction and dealings with major UK contractors, but he said he will seek to implement ways of working in his new role on the high standards achieved in construction, on areas such as health and safety.

He paid tribute to the contractors he worked with at Heathrow, and said properly incentivised companies exceeded his expectations during his time with BAA.

He told CN: “Properly motivated contractors can exceed your expectations. When you have the right contractor, where incentives are clearly set out, you get a behaviour and a result that people do not expect.

“After we abandoned our reliance on framework contractors and went to incentive-based contracts, [schemes] were way under budget and time.

“The [construction] workforce was much more productive than I expected and there was a pride apparent in them at Heathrow.”

Mr Morgan said health and safety was his biggest source of pride from his work at Heathrow, and insisted that a strong health and safety culture helped to deliver savings on its budget, rather than providing an obstacle.

He said: “There was a direct correlation between health and safety and productivity. We set out a message that any accident was unacceptable and only had one serious accident while I was there.

“Incentives have to be about more than just cost. If you used fixed price tenders you tend to get people who do as little as possible. Some framework contractors had a complacent attitude so I got rid of them, and I’m talking about some very large contractors.

“I told them if you don’t give me your best team then you won’t win work.”

Mr Morgan said the word “partnership” is overused in construction, and insisted that partnership in construction is about collaboration.

“A partner can bankrupt you very easily and make decisions on your behalf,” he said. “Partnership in construction is about collaboration and making sure there are incentives that are aligned.

“I think the contractors we had at Heathrow, although historically there were adversarial relationships, it’s been very constructive. Companies such as Balfour Beatty, Laing O’Rourke and Mace are all very good companies.”

After starting work with BAA, Mr Morgan immediately set about breaking up existing geographically based frameworks and ensuring that all work was covered with a contract.

He said he would take lessons from his time working with the construction industry at Heathrow and with Sellafield into his new role at the MoD, with Defence Equipment and Support being considered for a government-owned, contractor-operated (Goco) model of working.

There are around 1,475 acquisition personnel at Abbey Wood, within a working team of more than 10,000.

Mr Morgan said a major challenge would be the need for greater hardware as army personnel are cut to 82,000.

He said it was “extraordinary to have someone like me” in the role, but pointed to work he had done both in the private sector for clients including Sellafield, and also as a civil servant including being responsible for Goco policy at the US Department of Energy as being of benefit to him in the new role.

He said he would “of course” be looking at recent problems with MoD acquisitions, after recent reports in the national media including The Guardian, which revealed a series of problems with the MoD’s £9.75bn ‘hunter killer’ submarines, including corrosion.

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