Source · Select Committees · Public Accounts Committee
Recommendation 15
15
Accepted
Increased risk appetite facilitates faster procurement and streamlined decision-making processes.
Conclusion
The Department’s support for Ukraine has also led it to reconsider what level of financial and operational risk it is willing to tolerate. A higher risk appetite allows equipment to be delivered quicker as there is less checking for mistakes. Circumstances can affect the risk appetite – in a war situation, for example, the risk appetite is extraordinarily high. The Department is trying to streamline its procurement processes by pushing decision-making down the hierarchy as much as it can. To do this, the Department said it must gauge which of its regulations and procedures are sensible, and which are arcane.25 This includes ensuring that the approvals process strikes a better balance between assurance and pace.26
Government Response Summary
The government agrees that lessons from Ukraine have prompted a reconsideration of risk appetite and procurement processes, confirming its ongoing reforms aim to streamline acquisition, increase pace, and empower agile decision-making.
Government Response
Accepted
HM Government
Accepted
2.1 The government agrees with the Committee’s recommendation. Target implementation date: June 2026 2.2 As the report recognises, the government has identified and implemented numerous lessons learned from supplying Ukraine into how it is reforming the department’s procurement processes, and the department is committed to continuing to learn from this conflict. 2.3 The conflict in Ukraine has shown that the department must fundamentally change the way it procures. The rapidly changing threat and technology environment requires the department to increase the pace of military capability delivery, maximise the output from the defence budget, and ensure that the department can innovate at a wartime pace. 2.4 The Strategic Defence Review (SDR) recognised the complexity of the defence operating environment and the imperative to reflect national and industrial needs in the department’s procurement strategies. The department’s response to Ukraine has shown that the system can work in an agile and accelerated way, balancing risk to deliver capability at pace. The vision set out in the SDR is now being delivered through Defence Reform. 2.5 As such, the department is reforming its acquisition system to drive increased pace and agility in capability delivery. A new segmented approach to procurement will enable tailoring of acquisition processes to the type of capability, supplier and risk involved. The department will also engage with industry early, rewarding productivity and risk-taking and sharing risk with suppliers earlier in capability development to increase the speed of delivery whilst ensuring alignment. 2.6 The department will drive pace through approaches such as spiral acquisition to deliver a minimum deployable capability to the front line more rapidly and then iterate it to adapt quickly to a changing environment. 2.7 On 1 July 2025, the department stood up UK Defence Innovation (UKDI), a new organisation that draws on lessons learned from Ukraine, MOD’s own best practice and the experience of international partners. UKDI will ruthlessly prioritise to focus on the areas with most potential, with significant freedoms to contract with speed, simplicity, and flexibility, harnessing and bolstering the competitiveness of the UK’s tech sector, as well as further supporting UK SMEs.