Recommendations & Conclusions
24 items
2
Conclusion
Twenty-Second - Improving the performan…
We are deeply concerned about departmental witnesses’ inability or unwillingness to answer basic questions and give a frank assessment of the state of its major programmes. The Department is not sufficiently open about programme progress and risks. A few weeks before our evidence session it considered initial operating capability on …
Government response. agree with the Committee’s conclusion. The department assesses the value for money of all its investments. Value for money is evidenced and scrutinised at key approvals and assurance milestones and all programmes in the Government Major Programmes Portfolio must comply …
HM Treasury
3
Conclusion
Twenty-Second - Improving the performan…
The Department does not make enough demands of its suppliers to share the financial risks as well as the rewards of contracting for major equipment capabilities. The Department is dependent on a limited supplier base to deliver its major equipment programmes. Of the 20 programmes examined by the NAO, 14 …
Government response. agree with the Committee’s conclusion. The department recognises the importance of managing supplier performance including the apportionment of financial and programme risk. CAAS (Cost Assurance & Analysis Service) Approvals Team help define specific estimating and scheduling evidence requirements to underpin …
HM Treasury
4
Conclusion
Twenty-Second - Improving the performan…
The Department continually fails to learn from its mistakes. The Department has been delivering equipment programmes for decades and has overseen many expensive failures. There have been at least 13 formal reviews of defence procurement policy over the last 35 years which have provided the Department with opportunities to take …
Government response. agree with the Committee’s conclusion. The department has a track record of delivering savings; the underlying cost of the Defence Equipment & Support (DE&S) managed element of the Equipment Plan has reduced by £5.4 billion since 2015, excluding Foreign Exchange …
HM Treasury
5
Conclusion
Twenty-Second - Improving the performan…
The Department will not secure a step change in performance until it can recruit and retain the highly skilled staff that it requires. The Department continues to suffer from skills shortages in key areas critical to effective contract and programme management. It relies on expensive temporary contractors to deliver many …
Government response. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: Spring 2022 5.2 The department acknowledges that the there is a highly competitive UK market for project delivery skills ranging from experienced project managers, project controls, commercial, and engineers …
HM Treasury
6
Conclusion
Twenty-Second - Improving the performan…
The Department continues to be unclear about what additional capability the taxpayer will get from the extra £16.5 billion in the 2020 Spending Review. We remain to be convinced that the government’s substantial uplift to the Department’s budget will not simply be used to plug financial holes across its programmes. …
Government response. agree with the Committee’s conclusion. The £16.5 billion extra funding from Spending Review 2020 will support the aims and priorities outlined in the Integrated Review to better counter developing and future threats. Further detail and a breakdown of the £16.5 …
HM Treasury
1
Conclusion
Twenty-Second - Improving the performan…
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Ministry of Defence (the Department) and Defence Equipment & Support on improving the performance of major equipment contracts.1
Government response. On the basis of a report by the National Audit Office, the Committee took evidence on 12 July 2021 from the Ministry of Defence. The Committee published its report on 3 November 2021. This is the government’s response to the …
HM Treasury
7
Conclusion
Twenty-Second - Improving the performan…
Cost increases or cuts to funding on the Department’s programmes can have a profound impact on the level of military capability that can be achieved. For example, it is procuring considerably fewer Ajax armoured vehicles and Challenger 3 tanks than it identified it needed in earlier assessments, as well as …
HM Treasury
8
Conclusion
Twenty-Second - Improving the performan…
We questioned the Department in detail on the Ajax programme to procure armoured reconnaissance vehicles for the Army. In 2014, the Department agreed a deal with General Dynamics United Kingdom (GDUK) to procure 589 vehicles - down from an initial requirement of 761 vehicles. The Department decided to overlap the …
Government response. 2021. This is the government’s response to the Committee’s report. Relevant reports • NAO report: Investigation into the British Business Bank’s accreditation of Greensill capital – Session 2021-22 (HC 301) • PAC report: Lessons from Greensill Capital: accreditation to business …
HM Treasury
9
Conclusion
Twenty-Second - Improving the performan…
The Department had told the NAO that it considered initial operating capability achievable by the end of June 2021, but in our public evidence session, witnesses could not tell us when some sort of capability will be secured, even in broad terms.23 The Department told us it has commissioned an …
HM Treasury
10
Conclusion
Twenty-Second - Improving the performan…
The Department has spent nearly £4 billion of its budget by March 2021—including payments to GDUK of £3.1 billion—out of budgeted whole-life costs of £5.5 billion.26 It has so far received 14 vehicles, 2% of its contractual fleet requirement.27 Witnesses told us they were not prepared to outline the magnitude …
HM Treasury
11
Conclusion
Twenty-Second - Improving the performan…
HM Treasury directs that Accounting Officers should confirm to Parliament that procurements remain value for money (VFM) where there are significant changes to costs and schedules. The Accounting Officer had assessed eight of the projects examined by the NAO for this reason, yet did not find that VFM had been …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: Spring 2022 2.2 Although the department agrees with the Committee’s recommendation it does not agree with the Committee’s conclusion. The department assesses the value for money of all its investments. …
HM Treasury
12
Conclusion
Twenty-Second - Improving the performan…
We asked witnesses about the process for determining value for money and whether it monitors whether programmes remain so. The Department told us that there are routine ‘touchpoints’ through a capability’s life, but acknowledged that it does not routinely take a step back and evaluate whether VFM has been achieved. …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: Spring 2022 2.2 Although the department agrees with the Committee’s recommendation it does not agree with the Committee’s conclusion. The department assesses the value for money of all its investments. …
HM Treasury
13
Recommendation
Twenty-Second - Improving the performan…
Across the 20 projects and programmes examined by the NAO, 14 are being procured partly or wholly non-competitively, despite the fact that ‘competition by default’ has been departmental policy for nearly a decade. In only four of these cases was this due to ‘sovereignty capability’ requirements, whereby the government must …
HM Treasury
14
Conclusion
Twenty-Second - Improving the performan…
The Department spends significant sums on the developmental stages of programmes while suppliers may not be paying their fair share. The Department argued that it is standard practice to pay for work against agreed milestones across areas such as development, demonstration, training and manufacture.33 However, given the number of programmes …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: Spring 2022 3.2 Although the department agrees with the Committee’s recommendation, it does not agree with the Committee’s conclusion. The department recognises the importance of managing supplier performance including the …
HM Treasury
15
Conclusion
Twenty-Second - Improving the performan…
Problems with supplier performance include their inability to undertake complex design work within agreed timetables, difficulties in satisfying safety regulators’ requirements, and their inability to project management effectively due to under- resourcing.37 However, the Department has also contributed to problems, in particular it has managed the integration of different elements …
HM Treasury
16
Conclusion
Twenty-Second - Improving the performan…
The Department has ambitions to improve delivery performance through use of ‘agile’ procurement—delivery methods where the requirement and solutions are developed collaboratively in discrete steps with flexibility around requirements, cost and schedule. However, delivery teams found that agile approaches were incompatible with the Department’s emphasis on certainty of output and …
HM Treasury
17
Conclusion
Twenty-Second - Improving the performan…
The Department’s willingness and ability to systematically record its learning from existing programmes is critical to securing improvements in the future. There have been at least 13 formal reviews of defence procurement policy over the last 35 years, which have provided the Department with opportunities to take stock and learn …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: Summer 2022 4.2 Although the department agrees with the Committee’s recommendation it does not agree with the Committee’s conclusion. The department has a track record of delivering savings; the underlying …
HM Treasury
18
Conclusion
Twenty-Second - Improving the performan…
The same lessons have been identified again and again across programmes, including underestimation of programme complexity at the design stage, users being unclear about their requirements, the need to have sufficient resources and skills in place, and shortcomings in delivering GFA.43 The Department only established a central register of LFE …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: Summer 2022 4.2 Although the department agrees with the Committee’s recommendation it does not agree with the Committee’s conclusion. The department has a track record of delivering savings; the underlying …
HM Treasury
19
Conclusion
Twenty-Second - Improving the performan…
In 2018, the Department established a Strategic Partnering Programme (SPP) to maximise commercial leverage with its 19 most important suppliers by improving contract performance and managing strategic risks.45 The Department told us that the 38 C&AG’s report, para 3.16 39 C&AG’s report, para 3.8 40 C&AG’s report, paras 3.4–3.5 41 …
Government response. 4.5 In 2018, the department established a Strategic Partnering Programme (SPP) which is based on good practice principles, transparency and sharing of data and lessons between supplier and commissioner. Category management, also mentioned positively in the NAO report, is in …
HM Treasury
20
Conclusion
Twenty-Second - Improving the performan…
The Department has relatively more ambitious savings targets of £628 million over the next 10 years for its ‘category management’ programme. Category management involves grouping together related products and services into market ‘segments’ to generate efficiencies. The Department’s earlier attempt at introducing the practice in 2004 achieved significant efficiencies, but …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: Summer 2022 4.2 Although the department agrees with the Committee’s recommendation it does not agree with the Committee’s conclusion. The department has a track record of delivering savings; the underlying …
HM Treasury
21
Conclusion
Twenty-Second - Improving the performan…
Having the right people in place to manage suppliers is essential to ensure programme progress and to hold suppliers to account. However, many of the Department’s programmes were reliant on temporary contractors to fill these roles, especially in the Department’s digital projects and programmes. In two of these—New Style of …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: Spring 2022 5.2 The department acknowledges that the there is a highly competitive UK market for project delivery skills ranging from experienced project managers, project controls, commercial, and engineers and …
HM Treasury
22
Conclusion
Twenty-Second - Improving the performan…
The Department is also reliant on contractors on some of its maritime programmes, where between one sixth and one third of staff working on the Spearfish, Type 31e frigate and Fleet Solid Support programme teams are contractors. The Department puts this down to the burden of several major programmes being …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: Spring 2022 5.2 The department acknowledges that the there is a highly competitive UK market for project delivery skills ranging from experienced project managers, project controls, commercial, and engineers and …
HM Treasury
23
Conclusion
Twenty-Second - Improving the performan…
Senior responsible owners (SROs) have responsibility for ensuring a programme meets its objectives. SROs oversee governance of programmes and steer them through key decision points, assisted by a delivery team. The NAO’s analysis showed that the median time in post for an SRO was 22 months, against median programme length …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: Spring 2022 5.2 The department acknowledges that the there is a highly competitive UK market for project delivery skills ranging from experienced project managers, project controls, commercial, and engineers and …
HM Treasury
24
Conclusion
Twenty-Second - Improving the performan…
The Department secured an additional £16.5 billion in funding over the next four years in the 2020 Spending Review. Given the Department’s track record of short-term financial management, and schedule delays and cost growth across its programmes, we asked the Department whether it is certain that the additional money will …
Government response. 6.2 Although the department agrees with the Committee’s recommendation, it does not agree with the Committee’s conclusion. The £16.5 billion extra funding from Spending Review 2020 will support the aims and priorities outlined in the Integrated Review to better counter …
HM Treasury