The United Kingdom's Future Nuclear Deterrent Capability - Public Accounts Committee Contents

Conclusions and recommendations

1.  The Department's existing cost estimates do not provide an accurate baseline against which to measure progress. The forthcoming revised cost estimates should distinguish between future deterrent costs and the general overheads of the submarine industrial base, and provide clarity as to how the Department intends to deal with VAT, inflation and contingency.

2.  In September 2009, the Department has to make key decisions about the submarine design which will have implications for the procurement and support costs of the programme for decades to come. Given the importance of these decisions, the Department should commission independent validation of the assumptions underpinning its cost models and assess the reasonableness of its estimates using historic trend analysis.

3.  Suppliers to the submarine industry constitute a highly specialised industry sector, with a number of monopoly suppliers. Given this imperfect market environment, value for money will be hard to achieve. The Department should specify exactly how it will ensure it obtains value for money from its suppliers and set out performance indicators for the programme, against which it will report to Parliament.

4.  The United Kingdom's new submarine will incorporate an American-supplied missile compartment. As the current Vanguard fleet will go out of service in the 2020s, the United Kingdom's programme is running ahead of the United States' programme. The United Kingdom will therefore have to make key design decisions on a replacement submarine before the United States. Given the unavoidable dependence on the American programme, the Department should analyse the lessons from other projects where the Department has been dependent on the United States for critical elements of technology. The Department should use this analysis to inform the development of its proposed communications plan.

5.  Given the lack of time contingency for the submarine construction programme, some overlap between the design and production phases of the programme is likely to be necessary. The Senior Responsible Owner needs to set out how he will trade between the risks and opportunities involved in managing overlaps, and agree an explicit change management mechanism with other departmental teams and commercial partners at the outset of the project to deal with emerging difficulties in a timely manner.

6.  The programme's Senior Responsible Owner role still does not conform to Office of Government Commerce guidance. The Department should review what prevents it moving to an arrangement which conforms more closely to Office of Government Commerce guidance and set out ways to redress the current shortfall as part of its Initial Gate submission.

7.  The Senior Responsible Owner does not have direct line management responsibility for some Programme Board members and must therefore work in part by influence and consensus. The Department is confident that it can align incentives and reward good behaviour when individual Programme Board members have conflicting priorities. However, it did not explain persuasively how it would achieve this goal and should clearly set out how this can be done.

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Prepared 19 March 2009