Recommendation 14

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 that have encountered problems, better incentivisation of suppliers could be sought through securing more substantial private investment up-front. For example, on Ajax, the Department has paid out £3.1 billion to GDUK, while GDUK has told the Defence Committee that it has invested £40 million on manufacturing facilities and jobs: a ratio of 99:1.34 The Department has reduced its exposure to risk in some cases by buying proven equipment ‘off the shelf’, such as the Boxer armoured vehicle, Poseidon P8-A maritime patrol aircraft and Protector unmanned aerial vehicle.35 The Department told us that this approach is typically suitable for lower-value programmes but that from experience, off the shelf acquisitions with UK-specific modifications may be better than a full development programme, such as the Crowsnest radar system.36