There are serious doubts about the affordability of the Ministry of Defence’s equipment plan, according to the Defence Committee report, Gambling on ‘Efficiency’: Defence Acquisition and Procurement.
Committee chairman, Dr Julian Lewis MP, says:
“It is extremely doubtful that the MoD can generate even more efficiencies from within its already stretched budget on the scale required to deliver its equipment plan. This will inevitably lead either to a reduction in the numbers of ships, aircraft and vehicles or to even greater delays in their acquisition.”
The affordability of the equipment plan (to design, build or buy new ships, aircraft and combat vehicles) rests on a presumption of £7.3 billion of ‘efficiency savings’ that have yet to be achieved say the Defence Select Committee.
In particular, the report expresses concerns that:
- While there is much talk of reform and transformation of defence acquisition and procurement, an explanation is required of the criteria for assessing such progress and a timetable is needed for the achievement of clearly specified goals.
- The affordability of the equipment plan rests on £7.3 billion of theoretical ‘efficiency savings’, in addition to the realisation of £7.1 billion of previously announced savings, but it is extremely doubtful that the MoD can generate efficiencies on the scale required to deliver the equipment plan or detail how it would proceed to do so;
- Though the SSRO has helped the MoD to realise some savings for the taxpayer, its limited scope and powers and the lack of clarity regarding its relationship with the MoD, all serve to restrict the SSRO’s ability to be an effective regulator. We recommend that the SSRO be given the ability to inspect all single source contracts, save for exceptional circumstances.
The report also calls for an emphasis on the importance of sustained production in UK defence manufacturing, in order to maintain a successful and high-skilled workforce and to preserve our sovereign defence manufacturing capabilities. The report goes on to recommend that a new defence industrial policy should be underpinned by the following:
- A broader definition of ‘value for money’ that incorporates the positive impact of major defence projects on local economies, skills and employment levels by adopting new Government procurement guidelines so that ‘local value’ can be taken into account;
- An emphasis on the importance of a regular drumbeat of activity [i.e. a sustained production line of defence manufacturing in the UK] to sustaining a successful and high-skilled workforce and to maintain the UK’s sovereign defence manufacturing capabilities; and
- Increased investment in research and development, with a commitment by the Government to spend at least 2% of the MoD’s budget on science and technology.
Read the full report here.