Select committee: Defence Committee
Conclusion 18
Ninth Report - It is broke — and it’s time to fix it: The UK’s defence procurement system
Published 16 Jul 2023
Paragraph 142
Defence Committee All items in this report Report on parliament.uk ↗
Conclusion (the committee's words)
The funding cycle and a lack of a fixed long-term budget exacerbates many of the issues that already exist. Programmes are often delayed (or ‘slipped to the right’ in Ministry of Defence parlance) in order to spread out the cost. However, this is frequently short-sighted as it generally leads to greater overall costs. This goes hand in hand with the issues posed by annuality. The Ministry of Defence should ensure that it is using the funding flexibilities offered by HM Treasury to the full extent necessary, such as through Budget Exchange mechanisms. If this remains insufficient, it should explore with Treasury what additional flexibilities may be permitted to ensure that major procurement programmes can be managed much more efficiently in the future. In short, the obsession with annuality has to change.
From: Defence Committee, Ninth Report - It is broke — and it’s time to fix it: The UK’s defence procurement system (HC 1099), paragraph 142, 16 July 2023
Government response
The government responded to the whole report on 20 September 2023 (deadline 16 September 2023).
Summary written by Accountability Index from the government's response. It is not the government's own words.The government does not agree that the procurement system is broken, but accepts "the need for reform" and sets out reform work already under way across Defence.
- On the Committee's P75 recommendation, it agrees there is "a strong argument" for higher probability figures for schedule approval of complex programmes, and has issued guidance making P70 "the norm on schedule" for Government Major Projects Portfolio programmes. It says approval at a higher P value "will not improve project performance".
- It agrees on the need for more consistent dialogue with industry and on "an increased emphasis on time", but says it "would therefore not be desirable" to use the Urgent Capability Requirements approach across the whole defence portfolio.
- On accountability, it "recognises the need to clarify internal accountabilities", and says this will be addressed in the Defence Operating Model review. It says "active consideration" is being given to the CEO of DE&S joining the Defence Board.
- On SRO tenure, it notes there is "no formal mechanism" to keep an individual in post for five years, but says it continues to explore how to use available levers such as performance pay and pivotal role allowances.