I wish to inform the House that one element of the current Framework Agreement for Technical Support (FATS) contract signed in April 2012 will need to be re-competed.
The Ministry of Defence (MOD) uses FATS to procure specialist technical support to its defence equipment programmes and it is also used on a limited basis by other Government Departments. Suppliers compete to become members of the framework; users then place specific tasks through the framework, as and when they arise, preferably by running further competitions between member suppliers. The first iteration of FATS was instituted in 2006.
The fourth iteration of the framework, FATS4, was competed and companies selected to be members, with the framework commencing on 26 April 2012. The framework is broken into two lots. Lot one covers general support relating to materials, electrical/mechanical, power plants, IT, health, medical and transport requirements. Lot two relates to safety and duty of care areas such as airworthiness management, safety management, maritime safety, and technical support to platforms and weapons.
Technical deficiencies have been discovered in the way that lot two of FATS4 was awarded. Errors have been found in the way the assessment of suppliers’ technical capability, for lot two, was conducted and recorded. Some suppliers are therefore on the framework who should not have qualified and others, who should have qualified, were wrongly excluded from the process.
As a result, I have directed that MOD and other Government Departments must stop using lot two with immediate effect. The current situation is not fair and equitable to suppliers who bid to be included on this framework and, given that the areas affected relate to duty of care and safety, no risk can be taken over supplier capability. Contracts already placed under lot two will remain in place as none has been placed with a supplier in respect of whom any irregularity has occurred. Lot one is unaffected and will continue in use.
Despite this setback, FATS continues to represent a useful and efficient route for procuring specialist technical services and a replacement framework to cover these requirements will be put in place, which we estimate will take around six months. During this time, the MOD and other customers will place their own contracts individually for their specific needs following normal procurement process. This process will be managed so that it does not cause any delay in delivering equipment to our armed forces. The renewed competition and interim arrangements mean that the effect on any one supplier’s business is likely to be negligible.
The MOD has written to all affected suppliers to apologise for this failure of process and to inform them of the action being taken. I have asked the Director Commercial of the Department for Work and Pensions to conduct an external investigation to identify how and why this happened and to make recommendations as to how to prevent similar issues in the future. If evidence is brought to light that proper processes have not been followed, then disciplinary action will be taken as appropriate.