Reforms to the way the MoD buys equipment are not about letting the private sector decide how to supply British armed forces.
Defence Secretary Philip Hammond moved to ease worries about proposed legislation to overhaul procurement rules, which paves the way for an arms reach body – known as a GoCo (government owned, contractor operated) – to run purchases on behalf of the Secretary of State.
He said the changes are not about handing billions of pounds to the private sector and that safeguards would be provided to protect government and taxpayer interests and would allow the Secretary of State to transfer business to another contractor or bring it back in house at the MoD.
He told MPs yesterday: "I can assure the House this is absolutely not about handing over billions of pounds of taxpayers' money to a private company and leaving it to decide to buy for our armed forces."
As debated earlier this year, Hammond said before a GoCo is agreed upon, it will be tested to ensure it will offer better value for money. He reiterated to MPs that a final decision has not been taken.
He said: "If at the end of this process the GoCo is indeed the chosen model, legislation needs to be in place so we can move quickly to sign a contract with the successful bidder once a final decision is made."
Hammond added: "I am determined to drive a step change in the way the MoD carries out its procurement business and to do so rapidly. The gradual erosion of skills and capability in the organisation, which we have seen over recent years, cannot be allowed to continue if we are to assure the MoD's ability to deliver equipment to the front line."
The Defence Reform Bill also changes the way contracts with single source suppliers, for technology such as nuclear propulsion in submarines and other highly specified equipment, work.
It will continue to allow single source suppliers to make profit but add incentives to the process to help ensure better value for money.
Hammond said: "The driver for change running through this Bill is the requirement to deliver the capabilities our armed forces need while ensuring value for money for taxpayers – whether that is through better procurement or through more efficient and effective use of reserves.
"The measures contained within it allow fundamental change to the way in which we procure our military equipment and they ensure we will be able to make full use of our reserve forces in the future.
"Whatever else we may disagree on, all of us in this House place the utmost importance on properly equipping and supporting our armed forces. This Bill will ensure we can be confident of our ability to do so in the future."
Shadow Defence secretary Jim Murphy said the principles driving the government's reforms have the potential to unite all sides of the House of Commons.
He said: "Reform to defence procurement is vital to ensure value for money while upholding the highest possible standards in tying the delivery of world-class equipment to our personnel.
"It's essential increasing the number and enhancing the role of the reserve force is a success to strengthen our frontline army capability at a time when this has been subject to cutbacks."
Murphy said remarks from Danny Alexander, Chief Secretary to the Treasury, on Trident could complicate procurement in the future.
A review of Trident, released yesterday, was ordered by the government as part of the coalition agreement – reflecting the Liberal Democrats' wish to find a cheaper alternative to the continuous at-sea nuclear deterrent.
It concluded that all the available alternatives, including the Lib Dems' favoured option of replacing the Trident ballistic missiles with supposedly cheaper cruise missiles, would actually be more expensive.
And while it accepted it was possible to maintain a credible deterrent without continuous-at-sea patrols, it cautioned that this would entail a lower degree of assurance against an enemy threat.
Alexander, who led the final stages of the review for the Lib Dems, acknowledged it would mean accepting a "different calculation of risk" but said he believed such a change was now justified.
The Lib Dems favour moving to three submarines instead of four, which would mean that while the UK would no longer continuously have a nuclear-armed submarine at sea the Government would save £4bn in cash over the project’s 50 year lifetime.
But Murphy rejected the plan saying that Labour was committed to a minimum credible nuclear deterrent, which they believe is best delivered through a continuous at-sea deterrent.
The final decision on whether to approve a like-for-like Trident replacement must be taken by 2016.