Baachu Summary : Public Accounts Committee report on defence equipment contracts 

Baskar Sundaram
Baskar Sundaram

​The Public Accounts Committee has today published its report, ‘Improving the performance of major defence equipment contracts’. Key points include:

  • “The Department’s system for delivering major equipment capabilities is broken and is repeatedly wasting taxpayers’ money”.
  • “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”.
  • There have been “significant net delays of 21 years across the programmes most recently examined by the National Audit Office”.
  • “DE&S’s failure to control its suppliers on many programmes means that the Department’s system for procuring equipment and managing suppliers needs an urgent rethink by the centre of government.”
  • “The Department is not sufficiently open about programme progress and risks.”
  • “The Department does not make enough demands of its suppliers to share the financial risks as well as the rewards of contracting for major equipment capabilities.”
  • The Committee is “concerned about the deliberate policy of regularly changing SROs and other senior staff working in programme teams, with individuals in post for a fraction of the contract lifecycle.”

Recommendations include:

  • HM Treasury and the Cabinet Office – with experienced external input – should review the Department’s model for delivering equipment capabilities, including assessing: how the Department holds suppliers to account for their performance; the culture and relationships between Senior Responsible Owners, endusers and delivery agents; and how the Department undertakes technical risk assessments to arrive at cost and schedule estimates.
  • The committee expects the Department to develop a more transparent approach to assessing value for money.
  • The Department should write to the Committee within six months with a clear plan on how it will ensure suppliers take on their fair share of the financial risk in contracts, and how it will take past performance into account when letting new contracts.
  • The Department and HM Treasury should write to the committee within the next six months setting out how together they will address the gap in skills that it needs for effective contract and supplier management; making the Department competitive in specialist labour markets; and improving retention.
  • The Committee expects to see absolute clarity in the Equipment Plan 2021–2031 about what additional capability the Armed Forces is getting for the additional £16.5 billion and how it has secured the long-term affordability of the Plan. It should clearly distinguish between new capabilities and those already in development

The full report is here

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