Conclusions and recommendations
1. We hold departments to account for delivering
value for money by considering the reports of the Comptroller
and Auditor General. Our ability to do this was hampered in this
case by the fact that the National Audit Office did not have access
to all the information it needed when preparing its first report
to the House. Ultimately
access to the relevant material in the Cabinet Office was provided
after sustained pressure from this Committee and others in the
House of Commons. We welcome this decision. Government departments
must not hinder the Comptroller and Auditor General's ability
to report to Parliament by denying him prompt access to evidence
he considers necessary to conclude on value for money, and the
Treasury's guidance, Managing Public Money, should be revised
to make this clear.
2. To convert the ship has changed the profile
of risks and costs, and the costs are not yet fully understood.
The switch from the Short Take-Off and Vertical Landing (STOVL)
variant of the Joint Strike Fighter to the carrier variant has
reduced the technical risks associated with the STOVL aircraft.
But the costs of converting the carrier for the carrier variant
aircraft will not be known until December 2012, leaving the project
at risk of cost growth and slippage, and there are new technical
risks and challenges integrating the new aircraft with the carriers.
The Department should fully understand the risks and costs within
18 months and have appropriate mitigation plans in place.[3]
We will seek a further report from the National Audit Office on
the project in 18 months' time.
3. In the past the Department has entered
into commercial agreements without ensuring it has sufficient
budget to meet its commitments, leading to a shortfall of up to
£38 billion over the next ten years. Having
overcommitted its budget the Department has had to delay projects
resulting in increased costs over the longer term. We welcome
the assurance from the Accounting Officer that the Department
will only commit to the purchase of equipment/capability when
there is a confirmed allocated budget both in the short and long-term.
We will hold her to this promise.
4. In preparing options, the Department concentrated
on immediate cash savings and short-term affordability, and did
not focus strongly on long-term value for money.
The Department's strategic planning ahead of the next SDSR in
2015 should give more weight to through-life costs and long-term
value for money in evaluating procurement and delivery options.[4]
5. The decision to withdraw the current carriers
and Harrier aircraft has introduced a nine-year gap when the UK
will have no Carrier Strike capability.
While two carriers will be built, only one will be converted for
the new aircraft. The UK will therefore have one operational carrier
with a significantly reduced availability at sea. In future we
expect the Department to offer us a clear explanation as to why
it has reached judgements on which individual capabilities it
will procure, retain or delete and for these judgements to be
underpinned by robust cost and operational analyses.[5]
6. There is no one person responsible for
delivering the Carrier Strike project below the Accounting Officer.
The Senior Responsible Owner (SRO) has
a co-ordinating role, rather than real budgetary and implementation
authority. This Committee has consistently identified the Department's
weak SRO role as a systemic problem. The Department should give
SROs the authority and information they need to manage the delivery
of the equipment and capabilities for which they are in theory
accountable.[6]
1.
3 A similar recommendation was made in: The Major
Projects Report 2009, 23rd Report of Session 2009-10,
HC 338, paragraph 4. Back
4
A similar recommendation was made in: The Major Projects Report
2009, Twenty-third Report of Session 2009-10, HC 338, paragraph
6. Back
5
Similar recommendations were made in: Management of the Typhoon
Project, Thirtieth Report of Session 2010-12, HC 860, paragraphs
3 and 4. Back
6
Similar recommendations were made in: Management of the Typhoon
Project, Thirtieth Report of Session 2010-12, HC 860, paragraph
8, and Accountability for Public Money, Twenty-eighth Report
of Session 2010-11, HC 740, paragraph 6. Back
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