The Ministry of Defence spent £24.87bn with its suppliers in 2009-10 – and nearly £4bn went to 10 subsidiaries of BAE Systems, the UK's largest manufacturer, according to new data obtained by the Guardian. It's equivalent to £64 for every man, woman and child in the UK.
That means BAE received more than the entire budget of the Foreign and Commonwealth Office (£2.24bn), the Department of Energy and Climate Change (£2.52bn) or the Department for Environment, Food and Rural Affairs (£3.02bn).
Defence procurement tends to put other departments' spending in the shade. Kable, Guardian News & Media's government IT unit, has so far obtained last year's spending with top suppliers from 11 Whitehall departments: the largest non-MoD supplier among these is Telereal Trillium, the Department for Work and Pensions' property manager, which received £783m last year.
But Telereal Trillium would only be sixth on the MoD's list of suppliers, just behind HP Enterprise Services (previously known as EDS), which received £806m from the MoD for acting as its prime IT contractor. Its biggest task involves leading the Atlas consortium running the Defence Information Infrastructure, planned as a £7.1bn system to provide secure computing to 300,000 service personnel and MoD staff worldwide. That would work out at £23,700 per person, although the government has said it is trying to trim that cost: more on this at Kable.co.uk.
The biggest single MoD supplier was Nato's Eurofighter and Tornado agency, which received £1.77bn last year. The ministry has organised its data by subsidiary company or organisation: this can sometimes be revealing, showing that Devonport Royal Dockyard in Plymouth, the subsidiary of UK plc Babcock which maintains Britain's nuclear submarines, received £410m in 2009-10.
Babcock's subsidiaries in the MoD top 100 earned a total of £1.11bn, but the 10 subsidiaries of BAE Systems received £3.98bn from the MoD in 2009-10. This is equivalent to everyone resident in the UK being required to send the firm £64.41, and almost certainly makes it the largest commercial supplier to the government. (And its overall income from the government will be slightly higher, as there are other subsidiaries outside the top 100.)
In response to defence cuts, BAE Systems has cut around 9,000 jobs in Britain this year: despite having once been owned by the UK government, when it went under the name of British Aerospace, this country now provides just 18% of its business, while 50% comes from the US.
The US government itself features on the MoD's supplier list, with the separately listed US Treasury and government receiving a total of £330m, while Canada received £49m. It's also notable that the order of suppliers on this list differs significantly from the five months of MoD spending data released by the government in November, from which some items of spending were removed by the government. The ministry was not immediately able to comment on either point.
Responding to the question as to whether it is dependent on BAE, the ministry said: "The MoD is committed to providing our armed forces with the equipment they need to carry out their jobs. Contracts are awarded, in accordance with EU regulations, to companies who offer the best value for money to meet our requirements and fulfil our sovereign capability needs."
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SA Mathieson is news editor of Kable.co.uk
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Comments in chronological order (Total 6 comments)
1 December 2010 9:31AM
BAe Systems (and I should make it clear I do not work for this company of any of its subsidiaries) was not 'given' this money - the money was spent buying goods and services from BAe Systems.
It's entirely facetious to compare the budgets of government department with the money spent on BAe Systems. That's not to say that I think BAe Systems represents good value for money - I don't. But BAe Systems gets its contracts via a competitive tendering process, not via charity or government grants.
1 December 2010 9:39AM
BAe Sstems is our biggest defence company and so no surprise they sold the government a lot of stuff. Interesting information but silly comparisons.
1 December 2010 9:52AM
Good - great company and one of ours.
1 December 2010 2:48PM
@fkhblahblah
By 'good' you mean 'at being corrupt', right?
1 December 2010 6:03PM
Yes, you can compare this to other departments. Ridiculous to say you can't. The military is providing a service to the country, that's all of us. We have the right to know what they consider the 'defence' of our nation to be - and how much they get paid for it.
Considering our list of enemies (erm, terrorists) - it begs the question: what the hell? MI5 or MI6 is where our needed expertise is, intelligence is the key to successful defence as it has been shown since 9/11.
I think we could make efforts to reduce this expenditure across all suppliers by billions! Cut into our ability to create a knowledge economy, or shave off a few billion from this hefty bill. I know what makes more sense to me. If they're making competitive pitches, then they can be more competitive. That's what the capitalist economy is based on.
1 December 2010 9:29PM
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