3 Whether the latest reform programme
will succeed
19. The Defence Procurement Agency's programme of
reform to reinvigorate Smart Acquisition, DPA Forward, has been
rolling out since April 2004. The Chief of Defence procurement
acknowledged that none of the principles of Smart Acquisition
were intellectually difficult, but it was a "question of
leadership and consistency across a very wide community".[24]
DPA Forward is the latest of various attempts to improve defence
procurement. The Chief of Defence Procurement explained that he
was bringing pressure to bear in ensuring the consistent application
of Smart Acquisition through the mechanisms set out in Figure
4.[25] The Chief
of Defence Procurement has recognised that there is much to do
to achieve this change. As he put it, there is a need to "win
people's hearts and minds…and that is a major leadership
challenge".[26]Figure
4: Measures in the reform programme - DPA Forward
| Ensure that there is a Departmental-wide understanding of the importance of improving the procurement performance, and the importance of recommendations made by the Committee of Public Accounts
|
| Frame the Key Targets in a way to challenge and motivate project teams to improve and force continued improvement
|
| Measure Key Targets against the 'most likely' cost and time approvals from 2004-05, a more meaningful and challenging target
|
| Key Targets will cover all projects in the demonstration and manufacture phase with a procurement value over £20 million. Some 65 projects will be included, in contrast to the current 20 projects, giving a more accurate and meaningful picture of the Department's performance and a more challenging overall target
|
| Change the culture and behaviour in the Department by the establishment of a Ministerial group
|
| Create good working relationships with internal and external stakeholders
|
| Place greater emphasis on the need for realistic proposals and greater pragmatism
|
| Strengthen the level of financial expertise. Financial Controllers have been placed on some of the more complex project teams such as Typhoon, Astute Class submarine, Nimrod MRA4 aircraft, and the Type 45 destroyer. Some of the larger, more complex projects are the size of large business enterprises, and did not have the appropriate level of senior financial control
|
Source: Ministry of Defence
20. In addition, in Autumn 2004, the Department established
the Acquisition Policy Board to direct and drive forward acquisition
and industrial policy. It is chaired by the Minister for Defence
Procurement and includes the Vice Chief of the Defence Staff,
Permanent Under Secretary of State, Second Permanent Under Secretary
of State, Chief Scientific Advisor, Chief of Defence Logistics,
Chief of Defence Procurement and Deputy Chief of the Defence Staff
(Equipment Capability). The Board was established in recognition
of the need to change behaviour and culture not just in the Defence
Procurement Agency, but elsewhere in the Department.[27]
21. The Department considers that the Acquisition
Policy Board will ensure that there is more realism in forecasting.
There should be a better appreciation of the design and technical
difficulty involved, more realistic and informed estimates of
cost and time, and a better assessment of the competence, experience
and financial viability of the supplier. There is to be more pragmatism
in planning, and acceptance by the Department as a whole of not
wanting a whole range of capabilities to be delivered in an unrealistically
short timescale. The Board is currently redefining guidance on
what constitutes a mature business case prior to the main investment
decision.[28]
22. The Department has also changed the way in which
it measures project performance, which now aligns with the Office
of Government Commerce's guidelines. The Department and its project
teams have measured performance against the 'highest and latest
acceptable' parameters, rather than the 'most likely' targets.
As a result, many projects have been too ready to allow their
costs or in-service dates to slip towards the highest and latest
acceptable, sometimes in order to enhance the capability. The
Chief of Defence Procurement has now insisted that projects be
measured against their 'most likely' forecasts. Costs or in-service
dates should only move towards the upper limits if risks materialise.
23. In the past, project teams have placed emphasis
on providing the best capability to the capability customer, who
in turn has wanted to provide the best to the end user, often
at the expense of realism.[29]
For example, the Department was planning to bring into operational
use the Type 45 destroyer before industry was contracted to deliver
it. The original offer from industry had created an expectation
that the Navy would be able to take beneficial use from the warship
before it had completed all of the trials and testing of systems.
The Department has since revised the programme to provide increased
but more realistic estimates of time and cost.[30]
24. As part of a wider consideration of skills within
the Agency, it has placed an increased focus on the right skills
and training.[31] There
may still be an absence of other skills needed for the delivery
of successful procurement, especially with the use of innovative
procurement strategies. The Agency will need to monitor its skills
base to identify and fill gaps in areas such as project financing
and relationship management.
24 Qq 20, 72 Back
25
Qq 64, 89-93 Back
26
Qq 20, 65 Back
27
Qq 24-28; Ev 15 Back
28
Q 59 Back
29
Qq 89-92 Back
30
Q 14 Back
31
Qq 67-68; C&AG's Report, Box 2, p18 Back
|
