Improving the performance of major defence equipment contracts – Report Summary

Summary

The Ministry of Defence (the Department) has been managing suppliers and delivering military equipment programmes critical to our national security for decades. There have been numerous reviews of defence procurement over the past 35 years, which have provided the Department with opportunities to take stock and learn from experience. We are therefore extremely disappointed and frustrated by the continued poor track record of the Department and its suppliers—including significant net delays of 21 years across the programmes most recently examined by the National Audit Office—and by wastage of taxpayers’ money running into the billions. The Department is in a disadvantageous position because it relies on a limited specialist supplier base to meet its needs and at times lacks the skilled personnel to effectively manage the performance of these suppliers. Overall, we are very concerned that the Department—and ultimately the taxpayer—bears too much of the financial risks for failure.

In evidence to the Committee, the Department failed to assure us it is taking these matters sufficiently seriously or that it can quickly deliver a radical step-change in performance through its improvement plans. We recognise the Department’s strategic intent for its Strategic Partnering Programme, but its forecast savings from this Programme represent less than 0.1% of its forecast Equipment Plan spend. In monitoring these areas in the future, the Committee expects greater transparency around performance and more openness from the Department about the challenges it faces. Without this, the Department will not learn effectively from its experience. To meet the aspirations of the Integrated Review, the Department’s broken system for acquiring military equipment needs an urgent rethink, led by HM Treasury and the Cabinet Office.