Reforming defence acquisition

MOD SignProgress has been made in improving the affordability of the Ministry of Defence’s equipment plan. However, improving the performance of Defence Equipment and Support (DE&S) remains the most challenging element in the Department’s strategy for reforming defence acquisition, according to the National Audit Office (NAO).

The spending watchdog examined the Department’s progress in tackling the accepted weaknesses within DE&S, the progress in implementing the change needed within the organisation, and the challenges that remain within DE&S. The Department’s objectives in its reform of DE&S include improving the capabilities and skills of DE&S staff, the systems and tools available within the organisation and the way DE&S interacts with the Royal Navy, the Army, the Royal Air Force, and Joint Forces (the Commands).

The report found that the Department has made progress in stabilising the equipment plan, and in clarifying the roles of Head Office, DE&S and the Commands. There is now a clearer separation of responsibilities between the Commands, which request equipment, and DE&S as the organisation responsible for delivering the equipment.

In April 2014 the Department changed DE&S into a bespoke trading entity. Under this concept, DE&S remains in the public sector but with freedoms from and flexibilities over civil service pay rules. The bespoke trading entity allows the Department to retain greater control over DE&S, but the Department needs to ensure it can track benefits to establish whether the bespoke trading entity is delivering acquisition reform – and if not, take action.

To assess whether the structure improves DE&S’s performance, the Department will need to set robust measures of success. Being able to track the benefits of investing over £250 million with private sector companies over the next three to four years will be essential to allow the Department to take any additional measures to improve performance, should it be necessary.

Amyas Morse, head of the NAO, said: “Halting the GoCo competition and shelving of that option has cost acquisition reform two and a half years of work and £33 million, but has yielded some useful learning.

“DE&S now needs to demonstrate how, as a bespoke trading entity, it will address systemic weaknesses in defence acquisition to ensure the Ministry of Defence can deliver an affordable equipment programme and sustain this over the longer term.”