Source · Select Committees · Public Accounts Committee
Recommendation 2
2
We are deeply concerned about departmental witnesses’ inability or unwillingness to answer basic questions and...
Conclusion
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 the Ajax programme achievable by the end of June 2021. That did not happen and now it has no timescale for when these armoured vehicles will be ready for service. While witnesses told us that investigations into noise and vibration issues are continuing, they could not explain the likely causes or remedial action necessary. So far, the Department plans to offer 310 service personnel hearing tests, but the potential long-term health implications of this failure remain unknown. In addition, the Department’s refusal to explain the magnitude of its financial exposure in the event of a contract termination demonstrates a disregard for Parliament and taxpayers. We were struck by witnesses’ reluctance to attribute problems with the Crowsnest and Ajax programmes to providers’ poor performance or project management, even though in both cases it is a matter of public record. In this situation it is essential to monitor robustly whether value for money is still 6 Improving the performance of major defence equipment contracts being achieved. But the Department admits that it does not routinely monitor value for money of programmes, nor have its Accounting Officer Assessments rendered sufficiently clear accounts of value for money. Recommendation: The committee expects the Department to develop a more transparent approach to assessing value for money. In particular, the Accounting Officer Assessments letters—which come to this committee when significant changes occur on major programmes—should include a more detailed and frank assessment of how the changes impact on the value for money case as defined at the start of the programme.
Government Response
Acknowledged
HM Government
Acknowledged
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 with HM Treasury’s Accounting Officer Assessments: guidance (2021). Programmes are also considered against the accounting officer tests where the programme is in breach, or potential breach, of the agreed performance, cost, and time envelope. 2.3 The department has a well-documented and embedded accounting officer assessment process, whereby assessments and their accompanying letters are generated by the relevant SRO, before being considered by the Director General Finance and finally decided on by the Permanent Secretary. All four standards - regularity, propriety, value for money, and feasibility - are carefully considered as part of this process. In considering value for money, all assessments are based on evidence and in line with HM Treasury guidance “…make the most plausible projection available”.1 2.4 To ensure continuous review and improvement of activities to drive value for money, the department will ensure that in the future, letters to the Committee contain more of the detailed evidence provided to the Permanent Secretary on which value for money is assessed. The Permanent Secretary writes annually to all SROs as a reminder of this obligation to the Accounting Officer and to ensure the transparency of this process and will do so again by 31 January 2022.