Memorandum from EDS an HP company
The Defence Committee has launched an inquiry
to examine the MOD's progress in improving the way it procures
and supports defence equipment, and issues about the future equipment
programme and the Defence Industrial Strategy. The Inquiry will
focus on four main areas, upon which we have given comment:
The progress made to date to develop DE&S
into a "fit for purpose" integrated procurement and
support organisation.
1. The inquiry should widen its remit to
include the wider Acquisition Process of planning, budgeting,
reporting, delivery, availability and so on. If this is too large
then the focus should be on the entire Through Life Capability
Management (TLCM); the cornerstone of the Defence Acquisition
Change Programme. This should also include the adverse impact
that efficiency measures such as Streamlining in MOD or PACE within
DE&S have had on the Departments ability to deliver an efficient
and effective programme. TLCM was primarily a cost saving measure
with the by-product of formally managing programmes across all
Defence Lines of development.
2. Whilst the theory and intent behind TLCM
are flawless; the aim to be cost effective and operationally effective
through life has been interpreted as saving costs now. Not in
future and certainly not across all Defence Lines of Development.
TLCM has yet to get off the ground because short term budgetary
expediencies have scuppered the intent to invest now, in order
to save on through life support costs.
3. TLCM has lead to a realignment of responsibilities
but without a single process owner; therefore decisions are still
based out with a single unifying policy. An option to make DCD
the Acquisition Process owner recently stalled; illustrating the
current lack of governance which works well at the Director level
but looses clarity as wider budgets are merged and harder priorities
determined.
4. The achievements made by DE&S have
been impressive and the TLCM initiative is to be applauded but
we have yet to see the necessary decisive shift in process, approvals,
risk, ownership and resources to make the Acquisition and support
fit for purpose. Progress on TLCM seems to be blighted by:
— A lack of a single process owner;
an approved and adequately funded Defence Planning Assumptions;
and a departmental risk register. Who has the lead—Main
Building or DE&S? Where does the power and decision making
heart lie—Programme Boards, Management Groups, the extended
JCB or DE&S Boards?
— The split of years 1-4 with 5-10
has reduced the ability for a more coherent approach. Perhaps
a better approach might be to split funds between support for
current systems and support for their replacements with a handover
at acceptance. Nevertheless all managed through Capability Management
Groups and the JCB; but this has been muddled by the unclear role
of Programme Boards.
— A Planning Round process which is
obstructive to uncommitted programmes, prevents action on many
projects for up to half the year and is more expensive in the
long run as both Industry and MOD have to keep teams employed
throughout the delays of the options process. In the current climate
of chronic under funding projects with uncommitted funds only
make around four months progress within the year, as their budgets
are frozen as monies are reallocated and re-justified during the
Planning Round.
— A reluctance to spend the recommended
10-15% of the project budget during the assessment phase. This
would encourage spiral acquisition, early engagement with industry
partners, reduce gold plating, minimise risk and speed up delivery.
It makes little sense to have an assessment phase often measured
in years within an IT sector that measures technological life
cycles in months. There is not enough demonstration, or developing
the capability in the hands of the operators, not enough commercial
solutions and too much tailoring and meddling.
— A reduction in IPT manpower has lead
to chronic shortfalls in specialist areas such as commercial and
scientific support. It widely acknowledged that there is an acute
shortage of project managers with wide industrial expertise; yet
there is still a reluctance to partner with industry or explore
fully the benefits of getting industry to run project teams, although
this is still a stated Treasury goal.
— A noticeable shortfall in intelligent
Customer Capability. IPTs may know a lot about IT but little about
the business it is supporting. There is still poor linkage between
the cost of a capability and the cost of the IT to support it.
— A lack of effective delegation to
the Capability Management Groups, which would enable innovation
and agility if empowered.
— Failure to accept risk in order to
exploit technology, react to operational demands and reduce assurance
overheads.
— A reluctance to partner routinely
with industry as opposed to areas where we have historically done
so. Industry has much to offer, particularly in research, innovation
and efficient outsourcing, and can help to improve the efficiency
and speed of the acquisition cycle.
— An increase in senior management
(an additional four 3* officers with 112 supporting staff) an
increase in the approvals process, a risk adverse culture, a cut
in and a reluctance to delegate. For example a recent approvals
process for a project required 76 different signatures.
— The increase in CLS/CfA and PFI contracts
has reduced the Departments ability to veer and haul and thus
projects with more traditional procurement strategies are hit
most.
The extent to which support to current operations
is impacting upon DE&S's performance relating to the procurement
of core defence equipment.
5. The division, and lack of money across
the process and the fissions within the procurement and programming
effort has lead to the same result; a lack of long term coherence
and readiness across all DPAs. Bereft of a single process owner
and a long term departmental plan it is likely that not only MOD
but also industry will be unable to met medium scale reconstitution
and large scale force elements at readiness timelines. Current
operations are the predominant force in a programme that should
be looking out to 10 years and beyond. Thus it has had a disproportionate
influence on PR09 with weighting given to current operations,
operational support for three years and focused on less than £10
million.
6. Routine procurement is being set aside
and although most projects have interdependencies there appears
to be no one championing programmes that are not linked to current
operations. Nearly all Urgent Operational Requirements(UOR) are
taken into core. This is a cost driver and by bringing forward
EP funding, runs the risk of creating an incoherent long term,
unfunded programme. The impact of the Future Rapid Effect System
(FRES) programme is evidence of this. It would appear that £500
million of assessment work is running the risk of being lost as
UORs are taken into core. Impact of current operations has lead
to a curtailing of the planning round process in order to inform
the Pre-Budget announcements in November.
The progress made relating to the "short
examination of the equipment programme" announced by the
MOD in June 2008.
7. In our view the process was flawed
from the outset as it only reviewed what was already in the programme
with no additional funding or no strategic direction from the
Defence Board. The examination only considered uncommitted resources
and some opportunity costs; not the total through life costs.
Whilst this work was being done there was established a commitment
control regime to stop projects spending and thereby delay delivery.
The equipment examination is far from complete and we understand
has been unable to realign with PR09.
The progress made to date in implementing the
Defence Industrial Strategy and the delay in publishing the updated
version.
8. The clarity of the first DIS is in danger
of being lost whilst MOD determines what should be in the affordable
equipment programme, and the realisation that there will have
to be a Defence Review, whatever government is in power in 2010.
It was fairly obvious that trying to publish the latest version
of the DIS within the midst of Planning Round 09 was always going
to be fraught whilst the major political and industrial decisions
of the options had yet to be determined. Furthermore the efficacy
of DIS was based on the personal commitment and drive of Lord
Drayson; and it will require the same from his successors. The
earliest publication date is post the current Planning Round (PR09)
in April 2009; but it is difficult to refute the logic that it
will be delayed until after the next election and post a possible
Defence Review in 2010.
Gap Analysis—Where is MOD Integrated CIS
Delivery today?
MOD currently has...
| Too Much: | Not Enough:
| Excellent: |
— Bureaucracy
— Procedures
— Rules & Regulations
— Roles
— Standards
— Documentation
— "Local" focus
— Repetition
— Churn
— Risk aversion
| — Unity of Effort
— Enterprise Planning
— Streamlined Governance
— Standard role descriptions
— Commercial standards
— Organisational Integration
— Industry collaboration
— Commercial knowledge
— Programme Managers
— Risk Management
| — Operational Staff
— Tools
— Operational Experience
— Localised Knowledge
|
6 November 2008
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