This chapter discusses the recent history of outsourcing and privatization in the provision of military support services in the United Kingdom, with an emphasis on top-down government initiatives that have provided the impetus for change. After a brief introduction, we describe three types of reforms delivered by the initiatives. Next we outline each of the initiatives in some detail. We examine some of the collective effects of the initiatives and, finally, we derive a set of general “lessons learned” from U.K. experience with outsourcing and privatization.
Over the past 20 years, the U.K. MoD has successfully incorporated competitive contracting and market forces into the provision of defense support services. In 1980, the government was the provider of most military support services. Today, a wide range of services—including logistics, real estate management, housing, procurement, and other functions—are performed by unified, cross-service agencies making substantial use of private suppliers and competitive mechanisms. The evolution to this market-based system was driven by reform initiatives undertaken by the governments of three Prime Ministers: Margaret Thatcher (Conservative Party, 1979–1990), John Major (Conservative Party, 1990–1997), and Tony Blair (Labour Party, 1997–present).3
Shortly after her election as Prime Minister in 1979, Thatcher conceived the Market Testing initiative, the first of the reforms discussed in this chapter. The motivation for involving the private sector and incorporating market mechanisms into public-sector activities was derived from a long history of public dissatisfaction with the economy, efficiency, and effectiveness of publicsector service provision. Thatcher's ideology reflected a widespread perception that private-sector organizations might be better placed than the public sector to accept and manage some kinds of risk, to respond quickly and efficiently to changes, to develop innovative solutions, and to offer the best value for money. These perceived private-sector advantages were based on confidence in the mediating role of markets and modern business practices with regard to contracting, accounting, workforce management, and business administration. At the same time, the Thatcher ideology recognized that involvement of private____________________