Savings from Smart Acquisition
61. MoD's Annual Report and Accounts 2002/2003 states
that 'Smart Acquisition improvements are estimated to have produced
reductions of some £2bn in the cost of MoD's planned equipment
programme between 1998 and 2008. Smart Acquisition is now an integral
part of MoD business and it is no longer possible to attribute
savings directly to Smart Acquisition'.
No explanation of how this figure has been calculated is provided.
62. The fact that only one of the seven principles
of Smart Acquisition has been implemented in full, must cast doubt
on the scale of the savings which MoD have estimated Smart Acquisition
has delivered. We asked whether MoD had quantified the cost to
the taxpayer of the non-application of the other six principles.
Lord Bach told us that 'It would be impossible to quantify that
. Perhaps some of those 7 principles should have been
put into effect more clearly before Sir Peter arrived. I accept
that. Whether that has cost the taxpayer any quantifiable amount
of money I would somehow doubt'.
63. MoD estimates that Smart Acquisition has resulted
in savings of £2 billion. However, given that the Chief of
Defence Procurement has acknowledged that only one of the seven
principles of Smart Acquisition had been implemented, we have
no confidence in the reliability of this estimate. Indeed the
programme of Smart Acquisition was created and named by government,
but does not necessarily define the ultimate standards in defence
procurement. Success in defence procurement should be measured
by objective standards and not just by reference to the seven
principles that the MoD has itself adopted. In future, we expect
estimates of savings resulting from Smart Acquisition, or indeed
resulting from other MoD initiatives, to be independently validated.