Ministry of Defence Annual Report and Accounts 2007-08 - Defence Committee Contents

Conclusions and recommendations

The Joint Personnel Administration programme: the Qualified Audit Opinion

1.  It is difficult to exaggerate the magnitude of the failure of the Joint Personnel Administration programme. At a time when the Department is seeking, in many cases successfully, to deal with areas of dissatisfaction in service personnel life, this failure, which affects pay, entitlements and service records, is unacceptable. (Paragraph 10)

2.  We express our serious concern that the MoD's Resource Accounts for 2007-08 were qualified by the Comptroller and Auditor General, as a result of their lacking financial controls, arising from the recently introduced Joint Personnel Administration system. We are also concerned by the number of weaknesses in financial control identified by the NAO. We look to the MoD to address these weaknesses as a matter of urgency. (Paragraph 15)

3.  In developing JPA, the MoD placed insufficient emphasis on financial reporting requirements or the requirements for management information. A system was put in place, presumably with the approval of the Department's Finance Officer, that provided insufficient evidence of payments and which could have such adverse impacts upon Departmental Accounts. We consider this to be a basic and fundamental error which is unacceptable on a project of this scale and importance. (Paragraph 16)

4.   It remains unclear whether the ability of the MoD to recover such a small proportion of the monies it paid out to EDS for JPA reflects the nature of the contract, a just assessment of the proportion of responsibility for JPA's weaknesses or both. The decision to implement the JPA programme through an existing contract, which was clearly insufficient to deal with problems that might arise, was short sighted. The lack of clarity in the design in the system at the outset has led significant costs being incurred by the Department which ought to have been entirely avoidable. (Paragraph 19)

5.  We recognise that considerable work has been undertaken recently to enable JPA to support the MoD's financial performance. We note that more work will need to be done. We will return to this subject in our next inquiry on the MoD's Annual Report and Accounts. In its response to this Report the MoD should set out what the current state of JPA is, what current satisfaction levels within the service community are with regard to JPA, and what progress has been made in implementing the NAO's recommendations. (Paragraph 22)

Efficiency savings

6.  As we noted in our last Report, the MoD has exceeded its efficiency targets by a wide margin. We commend the MoD for its focus in maintaining its core programme. We must however express some concern that these cuts come at a time of considerable change in the MoD, and of continuing high operational commitments. Inevitably, such reductions in staff have placed greater burdens upon personnel and hindered performance. (Paragraph 27)

7.  We are concerned that there has been a significant cost to the achievement of the MoD's efficiency programme. We consider that the difficulties Service personnel experienced using the JPA system were in part due to the MoD's pursuit of its efficiency targets. The fact that the MoD has exceeded its efficiency targets while the JPA system has performed so badly raises questions about the management of the MoD's extensive change programme and about a possible conflict of priorities. (Paragraph 29)

8.  We are concerned that MoD's headcount reductions, office closures and consequent move towards contact centres have together proved a source of frustration to Service personnel. We note that the MoD has no method of measuring whether the quality of the service it provides to Armed Forces personnel has deteriorated as a result of the efficiency programme. We recommend that the MoD develop a system to monitor the effect of its efficiency programme so as better to enable it to manage its impacts on Service personnel. (Paragraph 30)

Capability Review

9.  It is probably too early to determine the success of these changes. We hope that the MoD will, in its next Annual Report and Accounts, describe in some detail the positive impact of the programme stemming from the Capability Review. We do remain concerned, however, that the Streamlining Programme, coming on top of the efficiency programme and accompanied by changes to processes and structures, may inadvertently affect the quality of performance within the MoD. (Paragraph 34)

Data security

10.  We are concerned to learn that the MoD has been involved in separate incidents where significant amounts of personal data have been lost. We are pleased that the MoD has since then put in place firm measures markedly to reduce if not prevent similar incidents happening the future. While we agree with Sir Bill Jeffrey that preventing any reoccurrence of data loss is impossible, we emphasise that the MoD must show no complacency in this area. We are pleased to see that the matter is being overseen by the Defence Board, at the very highest level within the Department, and we expect clear and full information on progress to date in limiting or preventing such incidents in the next Annual Report and Accounts. (Paragraph 41)

Overall performance

11.  We commend the MoD for the efforts it clearly puts into supporting the Armed Forces and attempting to deliver its SR2004 PSA targets. However, we are disappointed by the quality of the MoD's forecasting during the 2004 Spending Review period. We are concerned that institutional over-optimism might in some areas significantly impact on efforts to improve performance. We look to the MoD to make improvements to the accuracy of its forecasting in future and to inject a greater sense of realism into how its personnel carry out forecasting in future, and to report progress on this in its next Annual Report. (Paragraph 44)

12.  We do not consider the MoD's current system of reporting its progress against its targets to be sufficiently transparent. The response we received from the MoD to our queries on this issue only emphasises the unsatisfactory way in which the headlines of the Annual Report were constructed. When targets comprise many sub-targets, when subjectivity is key to measurement, when no metrics are provided to assess what is meant when a sub-target is 'partly met', there is clearly insufficient transparency. We understand the need sensibly to balance clarity and accuracy with brevity. Nonetheless, we recommend that the MoD develop a more accurate method of measuring its progress against targets for next year's Annual Report and Accounts, and at the very least make performance against sub-targets a much more prominent part of that Report's headlines in future. (Paragraph 49)


13.  We encourage the MoD to look into making publicly available as many of the unclassified elements of assessment within this area as possible, but we understand the operational sensitivities will mean that this area of performance will necessarily remain less accessible to the public than other areas of the MoD's performance. (Paragraph 51)

Conflict prevention

14.   We accept that a number of the outcomes set out in the MoD's Public Service Agreements for the period from 2004 to 2008 and in its Departmental Strategic Objectives for the period from 2008 to 2011 are not subject to easy measurement. We also accept that the MoD's own direct influence in relation to some of its international objectives will be necessarily limited. However, we reiterate the need for the MoD to try to develop more rigorous and objective methods for assessing performance. (Paragraph 53)


15.  We find it perplexing that the MoD thought for so long that it would not fail against this readiness target, especially since it understood that the Armed Forces were "continuing to operate above the overall level of concurrent operations which they are resourced and structured to sustain over time" (Paragraph 55)

16.  We welcome the openness that the MoD has shown in explaining the complex metrics for measurement of performance with regard to readiness. We expect an assessment in the Spring Performance Report of how the MoD considers the new metrics to be working. (Paragraph 57)

17.  This continuing poor performance against readiness targets is serious. As the MoD's recent Autumn Performance Report accepts, it limits "the ability of force elements to engage in new contingent operations and military tasks". It also reveals the significant stresses which exist currently upon manpower, equipment, training and logistics. This puts into stark perspective the UK's capacity to sustain current operations into the medium term. (Paragraph 59)

18.  Restoring full contingent capability for our Armed Forces is one of the most pressing issue the MoD faces. It is essential that the MoD's programme of recuperation is effective and places no further strains upon our Armed Forces. We are particularly concerned that the programme is founded upon assumptions as to commitments which the UK Government may not be able to keep to over this period. We therefore stress to the Department the importance of this programme being able to take account of increased deployments in Afghanistan or new smaller operational commitments while still aiming to recuperate force elements to the required level in a reasonable time-scale. (Paragraph 62)

The European Security Agenda, NATO and ESDP

19.  Other departmental select committees have in the past expressed concern about targets shared between departments, on the grounds that each department involved is tempted to believe that principal responsibility for action or success lies elsewhere. This is clearly unsatisfactory, and it is vital that areas of responsibility and sub-targets within each target are formally assigned to particular government departments so that lines of activity and responsibility are clear. (Paragraph 63)

Armed Forces personnel

20.  Personnel and manning issues are clearly another area of the MoD's performance that needs addressing as a matter of urgency. The recuperation programme which the MoD is about to put in place to assist in improving readiness levels following the drawdown in Iraq will have to focus not just upon equipment and training issues but also upon manpower issues. (Paragraph 69)


21.  We are not satisfied with explanations that have been given by the MoD as to what it intends to do to rectify this decline in performance with regard to defence equipment, and we will be returning to this matter in the future. (Paragraph 70)

Future DSO targets

22.  We will monitor the MoD's reporting under this new system and call upon the MoD to include reporting on its work under the FCO-led PSA 30 in quarterly reports in future. (Paragraph 74)

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