Source · Select Committees · Public Accounts Committee
Recommendation 27
27
Accepted
Department's F-35 whole-life cost approach hinders sound long-term financial management
Recommendation
The Department told us that its approach to whole-life costs gave it the right cost information for the management decisions it needs to make. It argued that coming up with a whole life cost out to 2069 was not helpful for budgeting because the Defence budget deals with much shorter timeframes and planning assumptions such as the variant mix of future purchases are yet to be firmly decided upon. The Department acknowledged that the whole-life cost it has ultimately come up with does not include all costs associated with the F-35. It argued that this was reasonable, claiming that some costs, such as fuel, would be incurred regardless of the F-35 programme. We believe that the Department’s approach does not best support sound financial management over the long term. 52 Qq 68-69 53 Q 79 54 C&AG’s Report, para 3.15 55 Qq 69-70, 77 56 Letter from MoD to PAC, 25 September 2025 57 C&AG’s Report, para 3.29 58 Letter from MoD to PAC, 25 September 2025 59 Q 97; C&AG’s Report, para 3.34 15 Future procurement
Government Response Summary
The department will continue to strengthen its approach to whole life cost modelling as part of the work that is being taken forward under Defence Reform. The department already develops whole life cost models that extend beyond equipment costs, for example covering personnel and infrastructure costs too, but accepts that there is an opportunity to go further in developing and presenting a fuller and more complete view of through-life cost.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Target implementation date: November 2026 5.4 Whole life cost analysis is undertaken during a capability’s planning and delivery phase and is included as a mandated element of the capability’s investment case at the point of outline and full business case approval decisions. Whole life costs are used to inform both economic assessment of investment choices and financial planning. While the department already develops whole life cost models that extend beyond equipment costs, for example covering personnel and infrastructure costs too, the department accepts that there is an opportunity to go further in developing and presenting a fuller and more complete view of through-life cost. The department will continue to strengthen its approach to whole life cost modelling as part of the work that is being taken forward under Defence Reform.