Source · Select Committees · Public Accounts Committee
Recommendation 3
3
NHST&T has focussed on getting programmes up and running and paid less attention to ensuring...
Conclusion
NHST&T has focussed on getting programmes up and running and paid less attention to ensuring these programmes delivered the benefits they promised. NHST&T has distributed 691 million lateral flow device (LFD) tests but only 96 million of these have been registered. This represents only 14% of the total so it is not clear what benefit the remaining 595 million tests have secured. LFDs have been distributed since October 2020, but NHST&T has only recently started work in June 2021 to understand why test registrations was so low. In the business case for the funding it received in November 2020, one of the benefits NHST&T committed to deliver was that a £150 million investment in the laboratory network would provide NHS England with a legacy in terms of diagnostics capacity for future emergencies and for certain diseases such as cancer. But it has only recently began having detailed discussions with NHS England about these potential legacy opportunities and NHS England was unaware of this commitment at the time it was made. In the same business case NHST&T committed to drawing up a detailed benefits realisation strategy by December 2020, but this has still not been done. Recommendation: UKHSA should clearly set out how it plans to deliver the benefits expected from the funding it receives from the forthcoming spending review. This should be informed by an evidence-based understanding of the actual benefits delivered by its major areas of spending to date, as measured against the intended outcomes.
Government Response
Acknowledged
HM Government
Acknowledged
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 business cases in accordance with HMT Aqua Book Guidance2. This is delivered throughout the lifecycle of programmes continually developing and improving the accuracy of estimates as the project becomes more mature, and its risks fully identified. 3.3 The department accepts that supplier underperformance has been a factor on some programmes, but the use of Firm Price contracts, Liquidated Damages, Single Source regulation reform and other measures have been effective in limiting exposure to cost increases. These measures have resulted in the financial liability for cost over-runs being borne by suppliers. Industry has posted significant losses on contracts (for example the development and production contract for A400M aircraft) as a result of work delivered by MOD programme teams to best understand where financial risk and liabilities rightfully sits between the department and supplier. The practice of government funding the development costs of new capability is well-established across the world. Demanding that most of the upfront development costs are funded by industry before a commitment is made to buy equipment would reduce investment in cutting-edge capability, damage UK industry competitiveness, and runs counter to the policy set out in the DSIS. 3.4 In addition to delivering military capability to the Armed Forces, Equipment Plan investment brings economic benefit, supporting over 200 thousand UK jobs and generating intellectual property (IP) that can be exploited by UK industry in exports. The generation of HMT Accounting Officers Assessment Guidance (2021) page 8 cutting-edge IP naturally leads to technically challenging and higher risk programmes as the Department strives to maintain operational advantage, while industry also seeks to offer market-leading equipment both for domestic export use. 3.5 The Department will write to the Committee by the end of May 2022 setting out evidence of how it holds its suppliers to account and fairly and responsibly apportions risk and reward across its contracts.