Source · Select Committees · Public Accounts Committee
Recommendation 27
27
While pointing out that this was also a problem encountered by other countries, the Department...
Conclusion
While pointing out that this was also a problem encountered by other countries, the Department acknowledged that it did not have a good understanding of the unique factors that drive inflation on defence projects, and that there was work to be done to better understand whether there are better ways of managing or predicting it.77 Defence projects are often long-term, complex and involve new cutting-edge technologies. For example, it is likely to be buying Lightning II jets for another 20 years and will need to constantly 68 Qq 4, 74 69 Q 10 70 C&AG’s report, para 19 71 Qq 10, 13 72 C&AG’s report, para 16 73 C&AG’s report, para 1.35 74 Q 35 75 Q 38 76 Q 95 77 Qq 35, 37 16 Defence Equipment Plan 2020–2030 update the software in response to technological advances.78 The Department accepted it needed to understand and anticipate the factors that affect the cost of projects in order to retain flexibility to manage the delivery of capabilities on the scale of defence projects.79 78 Qq 34, 35 79 Q 35 Defence Equipment Plan 2020–2030 17
Government Response
Acknowledged
HM Government
Acknowledged
4.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 4.2 The department will write to the Committee alongside the department’s annual Equipment Plan report which will be published in Autumn 2021. 4.3 Understanding defence cost inflation is critical to enabling the department to make realistic and affordable plans. Defence’s economics and statistics teams routinely review evidence on Defence inflation. 4.4 The department is committed to changing attitudes and behaviours within the Defence acquisition system. The department has already upgraded our investment decision-making approach and its work on acquisition culture and behaviours focuses on setting programmes up for success from the outset. This encourages early consideration of the strategic factors that affect programme risk and complexity and could drive up costs. This work will continue as part of wider acquisition and approvals transformation. 4.5 In addition, the Defence and Security Industrial Strategy (DSIS) will inform and shape ongoing work to take a more strategic approach towards UK defence and security industries.