The UK defence procurement system is highly bureaucratic and has a culture "averse to individual responsibility", MPs have warned in a scathing report.
Programmes are often delayed for budget reasons, the approach to safety is inconsistent, and there is a lack of accountability when things go wrong, the Defence Committee has found.
The report, titled ‘It is broke – and it’s time to fix it: The UK’s defence procurement system’, follows a six-month inquiry into Defence Equipment and Support, the Ministry of Defence’s arms-length body for procurement.
The committee discovered a "ponderous" UK procurement system in need of urgent overhaul.
Mark Francois, who led the inquiry, said: “Our report finds that the Ministry of Defence’s approach to procurement is well and truly broken. Bureaucratic, siloed and slow-moving – this is a dysfunctional system that has left multiple programmes floundering in its wake. This urgently needs to change.”
As a consequence, the UK has been left with “an extremely limited reserve of fighting equipment, including warships, modern armoured vehicles or combat aircraft”, the report said.
“Worst of all, this dysfunction has put Armed Forces personnel in harm’s way, with some troops suffering permanent injuries,” Francois added in reference to the Ajax armoured vehicle trials – which he described as a “black mark” on the record of the MoD.
The report follows findings from the Public Accounts Committee in April that defence procurement is “broken” and needs “root and branch reform”, and an independent review into the Ajax procurement programme which found “fractious” relations between defence bodies had exacerbated safety issues.
The Defence Committee looked in detail at three specific multi-billion pound case studies of highly-troubled programmes, one for each of the armed services: Type 26 ASW frigate (for the Royal Navy); E-7 Wedgetail AWACS aircraft (for the Royal Air Force) and Ajax (for the Army).
One of the main criticisms in the report is the lack of accountability and personal responsibility for procurement failures.
Francois said “bureaucratic buck-passing and the shirking of responsibility” has meant that there is “all too often no one to hold personally accountable when highly expensive programmes fail”.
To address this, report calls for accountability to be aligned with responsibility. It says the chief exec of DE&S should be made the accounting officer to parliament on all equipment and support matters, rather than the permanent secretary. They should also be given a seat on the Defence Board – which is chaired by the defence secretary and is responsible for top level strategic leadership of the department – the committee added.
The committee also raised concerns about the role of senior responsible officers, calling for them to be given more power.
SROs often have “no formal levers of power”, the MPs said. As an example, they pointed to a report into the controversial Ajax procurement programme, published in May, which found “significant concerns and issues were discussed and decided within the DE&S chain of command without input from the SRO”.
New powers should include the ability to go straight to ministers and the CEO of DE&S if programmes start to go badly wrong, the report said.
High turnover and “frequent multiple-hatting” among SROs has also hindered success, the report found. The Ministry of Defence should try to keep SROs in post for a minimum of five years to ensure continuity, the committee said. Those working on Category A programmes – projects worth over £400m – should spend 100% of their time doing that specific job, rather than balancing a number of programmes or other roles in one appointment, the report added.
Learning from France and Israel
The committee also calls for the UK to learn from international best practice. It said briefings from international comparators in France and Israel showed that procurement “can be done differently and successfully”.
The French system “is often able to procure more quickly and efficiently” by involving the procurement agency much earlier in the process, the report said.
In Israel, the equivalent procurement department employs 300 staff compared to the around 11,500 officials employed by DE&S. The committee said this system “manages to achieve similar outcomes to the UK’s DE&S, but with far fewer people” by focusing on “efficient use of manpower” and effective use of contractors.
Other recommendations in the report include taking a more robust attitude towards contractors if programmes get into serious difficulty and calls for ministers and senior officials to stop exercising constant “optimism bias” and cancel programmes when they are obviously failing.
The report also calls for an end to “the obsession” of working to tight one-year funding cycles, urging the MoD to use funding flexibility offered by HM Treasury and explore further opportunities for flexible budgeting. It said this causes delays and generally leads to greater overall costs.
An MoD spokesperson disputed MPs’ depiction of the defence-procurement system in the report’s headline and some of the report’s other findings.
“Defence procurement is not broken,” the spokesperson said. “There is no evidence to suggest poor oversight on the Type 26 programme, and through decisions on E-7 we have made savings of £720m.
“We are delivering next-generation capabilities on programmes across the defence portfolio, including Ajax which is now delivering vehicles for the British Army.
“With an uplift of £5bn over the next two years to improve readiness and resilience, we continue to ensure we deliver world-leading equipment and provide our people with the capabilities our Armed Forces need.”