WW-JanFeb 2022 issue.qxp_Pages-12-40-JanFeb WPD 06/01/2022 12:17 Page 14
PARLIAMENTARY REPORT UK POLITICS Christopher Cope
Committee of Public Accounts/ Improving the Performance of Major Defence Equipment Contracts/October 2021 There have been numerous reviews of defence procurement over the past 35 years which have provided the MoD with opportunities to learn from experience. However, it was only in December 2020 that the MoD established a central register of Learning From Experience. The Committee is extremely disappointed by the continuing poor track record of the MoD and its suppliers. Of the 13 major equipment programmes examined by the National Audit Office, the average delay in delivering equipment was 19 months. The MoD is at a double disadvantage because it relies on a limited specialist supplier base and also lacks the in-house skills effectively to manage the performance of suppliers. The Committee concludes that the MoD’s broken system for acquiring military equipment needs an urgent rethink led by the Treasury and the Cabinet Office. The recent Integrated Defence Review highlighted growing conflict and instability in the world. During evidence, retired American Lieutenant General Ben Hodges said that he believed that the USA would be at war with China within five years. The MoD said that complexity in programmes was the reason for delays and cost increases. The forecast costs of nine out of 12 programmes increased, of which three increased by more than 50%. This was a failure by the MoD to control its suppliers.The Committee was deeply concerned about the MoD’s inability or unwillingness to answer basic questions and give a frank assessment of its major programmes.
Crown Copyright/MoD
14 Warship World January/February 2022
Witnesses had been reluctant to attribute problems with the Crowsnest AEW programme to suppliers’ poor performance. The MoD does not make enough demands of its suppliers to share financial risks. Of 20 programmes examined by the NAO, 14 were wholly or partly procured non-competitively. Suppliers know that poor performance will not stop them winning the next contract. Lack of ambition The Committee was disappointed with the MoD’s lack of ambition in saving money. The plan is to save £160m over ten years. However, this represents less than 0.1% of the equipment plan. The MoD continues to suffer from skills shortages in order to control programme management. It relies on expensive contractors. The Committee was surprised that the MoD is so relaxed about losing skilled personnel to the private sector. Senior Responsible Owners (SROs) must ensure that a programme meets its objectives. However, an SRO is typically only in post for 22 months, against the average programme length of 77 months. Many SROs felt less competent to manage suppliers. The MoD continues to be unclear about what additional defence capability will be secured from the extra £16.5bn announced by the government. The Committee believes that the uplift will simply be used to plug financial holes. There is a £7bn affordability gap in the 2020/2030 equipment plan. The MoD told the Committee that the new money would be used for both new and existing capabilities. However, witnesses were unable to say what additional capabilities would be delivered through additional funding. With regard to Crowsnest, there is a forecast delay of over two years. This programme is essential to the Navy’s Carrier Strike capability. The MoD conceded that an off-the-shelf acquisition with UK modifications may have been a better purchase.
Fewer frigates The Committee noted that the MoD was procuring fewer Type 26 frigates than it had previously identified. (Comment - It had originally been planned that the 13 Type 23 frigates would be replaced on a one-for-one basis. This was subsequently reduced to eight.) The delays in both the Type 26 and Type 31 frigate programmes mean that existing frigates had to be upgraded. With regard to the Type 31 programme, the MoD had not finalised weapons systems to be fitted 18 months after awarding the construction contract to Babcock. Between one sixth and one third of staff working on the Spearfish, Type 31 and Fleet Solid Support programmes are contractors. The MoD says this is due to several major programmes being launched concurrently. Sir Geoffrey Clifton-Brown MP suggested that the MoD should be moving towards the American system whereby SROs remain in post throughout the term of a contract and that their promotion is dependent upon a successful delivery. The MoD was not convinced that that was the way forward. Committee of Public Accounts/ Optimising the Defence Estate/ September 2021 In 2019/20, the MoD spent £4.6bn on its estate, about twice the annual cost of maintaining the UK’s nuclear deterrent. Retaining a large estate, which the MoD does not need, wastes resources that could develop military capabilities. The MoD’s estate is valued at £36bn. This includes the built estate with 96,000 buildings covering 75,000 hectares. In addition, there is the rural estate of 158,000 hectares (training/ranges) and 200,000 acres of land overseas.
