Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Accepted
Provide Committee by June 2026 with evidence on defence procurement improvements and KPIs.
Conclusion
The Department’s defence reform programme sets out ambitious plans for improving defence procurement, but it is unclear how long it will take for these benefits to become fully embedded. In April 2025 the Department reorganised itself into four areas–the Department of State, a Military Strategic Headquarters, a National Armaments Director (NAD) Group and Defence Nuclear. The Department anticipates that the NAD will have significantly more control over the end-to-end acquisition process than the old structure provided. The Department is building on reforms begun under the previous government to speed up procurement: it aspires to reduce by two-thirds the time to award a contract to a two-year maximum, and to complete most programmes in under five years. The Department anticipates it can achieve this by involving industry in the process much earlier and reducing the overspecification of requirements. Instead of the Department developing a firm requirement then going to industry, it will state what the military capability problem is, and the NAD Group will seek solutions from industry. The Department expects this approach will increase defence exports, as industry will be able to design products that also work for the expanding international market. However, 2025–26 is a transitional year, and the new approach will take several years to reduce average times, primarily owing to legacy programmes which had started before April 2025. recommendation The Department should provide the Committee with an evidence-based update by the end of June 2026 which demonstrates how defence procurement has improved in the first year that the National Armaments Director Group has operated, including key performance indicators.
Government Response Summary
The government states it has brought teams together under the National Armaments Director (NAD) Group and implemented a new segmented approach to procurement. It is also developing key performance indicators and measures to track progress, with a target to agree these KPIs within the next three months.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. further. Teams delivering the national ‘arsenal’, the defence industrial strategy and end to end acquisition have been brought together as the National Armaments Director (NAD) Group, to enable better ways of working and empower greater collaboration across Defence. A new segmented approach to procurement will enable tailoring of procurement processes to the type of capability, supplier and risk involved, with timescale targets as key measures of progress. Portfolio-driven acquisition will optimise delivery, bringing together projects, programmes and services with a clearly defined purpose and measures of success that are linked to the department’s strategic objectives. This includes developing key performance indicators and measures to track progress effectively. Additionally, benefits realisation metrics during the implementation phase is being integrated into the reporting approach. Initial measures under consideration include output metrics, such as improved schedule adherence and cost control, and input metrics, such as enhanced productivity. In some cases, baseline data for these measures already exist, while in others, baselines will need to be established. A target has been set to agree the key performance indicators within the next three months. The department operates within an ever-evolving system, where significant procurement improvements will progressively emerge over time. While positive progress is expected by June 2026, it is acknowledged that achieving greater improvements will require sustained effort over a longer period. Work is underway to define a common performance reporting lexicon for the NAD Group. This will support clear and standardised reporting of progress against agreed measures and benefits realisation.