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The analysis in this report is based on an examination of a sample of 16 of the largest defence projects. This year the NAO used the same sample of projects for this report as for the Equipment Plan 2013 to 2023 (HC 816 ISBN 9780102987591). The sample comprises 11 projects for which the Department has decided to invest. It confirms the findings of that report that the Department's work to address the affordability gap around the equipment budget and costs appears to have had a positive effect. However, there remain risks to affordability, most significantly around the half of the budget relating to equipment support costs which were not subjected these to the same level of detailed scrutiny as the procurement costs
The analysis in this report is based on an examination of a sample of 16 of the largest defence projects. This year the NAO used the same sample of projects for this report as for the Equipment Plan 2013 to 2023 (HC 816 ISBN 9780102987591). The sample comprises 11 projects for which the Department has decided to invest. It confirms the findings of that report that the Department's work to address the affordability gap around the equipment budget and costs appears to have had a positive effect. However, there remain risks to affordability, most significantly around the half of the budget relating to equipment support costs which were not subjected these to the same level of detailed scrutiny as the procurement costs
There are still concerns over whether the MoD's Equipment Plan is affordable. The Ministry underspent by a huge £1.2 billion on the Equipment Plan in 2012-13. Yet it has no idea whether this is because of genuine savings or whether costs are simply being stored up for later years because of delays on projects. This underspending makes it tempting for the Treasury to take them as savings at the expense of the defence equipment capabilities our armed services need. The MoD also does not properly understand the costs of maintenance and technical support, despite the fact that such support costs, £87 billion over ten years, and accounts for over half of the spend on the Equipment Plan budget. It also does not know whether its contingency of £4.7 billion is a sufficient buffer against risks to the Plan. The affordability of the Equipment Plan is heavily reliant on achieving significant savings in some of its major programmes. For example, the MoD has assumed savings of over £2 billion in two large programmes, the Complex Weapons and Submarine Enterprise Performance Programmes, but achieving these will be a challenge. Any changes to these two programmes could jeopardise the expected savings and so put affordability at risk. Project teams do not yet have enough staff with the right skills to employ proper cost and risk management techniques. Treasury and Cabinet Office should look across Government at skills shortages and go for solutions that do not require bureaucratic reorganisations to recruit skilled people at market rates.
In respect of its largest defence projects there are early signs that the Ministry of Defence has begun to make realistic trade-offs between cost, time, technical requirements and the amount of equipment to be purchased. Nevertheless, the continuing variances to cost and time show the MOD needs to do consistently better. This report, which gives a progress review of the 16 largest defence projects, shows that in the last year there has been a total forecast slippage of 139 months and increase in costs of £468 million. This means that, since the projects were approved, costs have increased by £6.6 billion (around 12 per cent more than the planned cost) and the projects have been delayed by 468 months, taking almost a third longer than originally expected. It would be unrealistic to expect MOD and industry to identify every risk at the start of technically challenging projects. However, the continuing problems indicate that MOD has more to learn from historic. The MOD is accepting the capability risk and some wider costs resulting from these project delays and is having to make difficult decisions about long-term capabilities. The MOD has made a significant investment in new and upgraded helicopters to address the shortfall identified in the NAO's 2004 report. The MOD has also spent £787 million on air transport and air-to-air refuelling aircraft to support current operations and address capability gaps, such as those caused by the previously reported delays to the A400M transport aircraft. However, capability gaps remain
This is a companion volume to the main report (HC 1520-I, ISBN 9780102976786)
The Department's work to address the affordability gap around the equipment budget and costs appears to have had a positive effect. However, there remain risks to affordability, most significantly around the half of the budget relating to equipment support costs which were not subjected these to the same level of detailed scrutiny as the procurement costs. The Department also does not understand the implications of its £1.2 billion underspend on the Equipment Plan in 2012-13. With the exception of the Queen Elizabeth Class aircraft carriers, there have been no significant cost increases and only minimal in-year delays. In the last year, there was a net increase in costs of £708 million in respect of the 11 projects in the review. The main contribution to this was a £754 million increase in the cost of carriers. Three of the projects the report examined experienced delays during the year, together amounting to 17 months. A third of projects this year reported delays compared to over half of the projects in last year's report. However, the NAO is unable to report on timings for two of the 11 projects - Lightning II and Specialist Vehicles -because the Department has not yet given final approval. This report also includes an examination of the MOD's Complex Weapons Programme, which aims to achieve net financial benefits of £1.2 billion over ten years. Noting that these benefits have already been 'banked', if there are delays or cancellations some of these benefits may be lost
This is a companion volume to the main report (HC 489-I, ISBN 9780102965506)
The work of the Major Projects Authority is supported but without stronger powers it is unlikely to achieve its aim of a systemic improvement in project delivery across government. The projects in the MPA's portfolio represent a huge and rising cost to the taxpayer. The MPA, however, only has informal influence over departments. It has no powers if a department decides to proceed with a project against MPA advice. It needs to have stronger, more formal mechanisms for driving change, and there should be transparency where ministers or officials have rejected its recommendations. The MPA also needs to focus its efforts more on the early stages of a project, working with departments to ensure that they have devoted sufficient attention to the concept, design and business case for projects before seeking approval. It could also improve its impact by prioritising its work more effectively. The creation of the Major Projects Leadership Academy is welcomed, but the MPA needs to target top decision-makers as well as managers. Nobody in central government is responsible for overseeing projects at a strategic whole-of-government level. The Treasury should take ownership and responsibility for overseeing the government portfolio. The MPA should also publish more information on each project, including the amount spent to date, even if this means reviewing the Government's transparency policy. There is also particular concern that the decision to award a 'reset' rating to the Universal Credit project may have been an attempt to keep information secret and prevent scrutiny
This is a companion volume to the main report (HCP 85-I, ISBN 9780102963342)