Recommendation 12

The Department’s adjustments to its cost estimates are still over-optimistic, including its assessment of the level of potential efficiency savings.26 We have previously raised our concerns that the Department was including efficiency savings that it was not confident of 17 Qq 10,11 18 Q 12 19 Q 26 20 Q 41; C&AG’s report, para 1.14 21 C&AG’s report, para 14 22 C&AG’s report, para 14, 1.16 23 C&AG’s report, Figure 7 24 Qq 26, 42 25 Q 27; C&AG’s Report, Carrier Strike – Preparing for deployment, Session 2019–21, HC 374, 26 June 2020 para 1.17 26 C&AG’s report, para 14 Defence Equipment Plan 2020–2030 11 achieving.27 This year, we again sought assurances that its forecast savings were achievable. The Department told us that it had modelled the maturity level of its forecast savings and had high confidence in its ability to achieve £8.2 billion of efficiencies included in the Equipment Plan, 66% of its £12.3 billion savings target for projects in the 2020–2030 Plan.28 However, despite our previous recommendations, the Department has again included £2.7 billion of efficiency savings for which it has not yet implemented delivery plans and £1.1 billion of savings with no delivery plans. It also needs to find another £0.4 billion of savings to achieve its savings target. If the Department fails to deliver these less mature efficiencies and find new efficiencies, then the Plan would be even less affordable.29