Defence Committee publishes highly critical report on UK defence procurement

17 July 2023

Today the Defence Committee publishes its report: “It is broke – and it’s time to fix it”.

The six-month inquiry into Defence Equipment and Support (DE&S), led by Sub-Committee Chair Mark Francois MP, found that the UK’s defence procurement system is “broken” and that “multiple, successive reviews have not yet fixed it.”

The Sub-Committee discovered “a UK procurement system which is highly bureaucratic, overly stratified, far too ponderous, with an inconsistent approach to safety, very poor accountability and a culture which appears institutionally averse to individual responsibility.”

In consequence, despite Russia’s invasion of Ukraine, the UK has been left with “an extremely limited reserve of fighting equipment, including warships, modern armoured vehicles or combat aircraft.”

Rewarding failure

The report calls on the Ministry of Defence (MOD) to stop rewarding failure and take a more robust attitude towards contractors, if programmes get into serious difficulty. It underscores a reluctance throughout the procurement system to cancel failing programmes, calling on officials and Ministers to stop exercising constant “optimism bias” and cancel programmes when they are obviously failing.

The MOD should also be willing to learn from international best practice. In particular, Israel, which employs 300 staff in their Procurement Department, in comparison to the approximately 11,500 staff employed by DE&S.

Lack of urgency and slipping timelines

The Committee states that programmes are often delayed or “slipped to the right” to spread out cost due to the funding cycle and a lack of fixed long-term budget.

The MOD should make greater use of the Urgent Capability Requirements (UCR) method. The MOD should adopt a “UCR mindset” and ultimately review whether the barriers in the standard processes could be removed altogether from all defence procurements.

The report also calls for “the obsession with annuality” to change. The Committee urges the MOD to ensure that it uses funding flexibility offered by HM Treasury to the full extent necessary, highlighting that the Treasury has “grown weary” due to multiple, costly, high-profile procurement failures.

Aligning accountability and responsibility

The report calls for the Chief Executive Officer (CEO) of DE&S to be given a seat on the Defence Board, chaired by the Secretary of State. The CEO should also be made the Accounting Officer to Parliament on all equipment and support matters, rather than the Permanent Under-Secretary, as at present.

Senior Responsible Owners (SROs) are critical to the success of a procurement programme. However, the Committee found that high turnover, frequent multiple hatting and tension between SROs and DE&S can have a negative impact. The Committee calls for SROs to be given more power, including the ability to go straight to Ministers and the CEO of DE&S if programmes start to go badly wrong.

Procurement case studies

The report includes three specific case studies of highly troubled programmes, one for each of the Services, to illustrate the problems with our procurement system, in detail. These are: Type 26 ASW frigate (for the Royal Navy); E-7 Wedgetail AWACS aircraft (for the Royal Air Force) and the Ajax Armoured Fighting Vehicle (for the Army).

Each case study also highlights the adverse operational consequences of serious delays to the three multibillion-pound projects in question.

Safety system in need of overhaul

Following permanent injuries inflicted by the Ajax trials, the report recommends that the Army’s safety system should now be subject to a rigorous overhaul, incorporating the detailed lessons learned and evidence within the Sheldon Review.

Chair comment

Chair of the Defence Sub-Committee on Defence Equipment and Support, Mark Francois MP, 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.

“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. Today’s report outlines how to align accountability with responsibility, to prevent this in the future.

“Worst of all, this dysfunction has put Armed Forces personnel in harm’s way, with some Troops suffering permanent injuries. The Ajax trials are a black mark on the record of the Ministry of Defence. Concerns around safety should not be swept under the rug, and we are calling for the Army’s Safety System to be completely reviewed.

“Russia’s invasion of Ukraine has made the world a more dangerous place: this is now a matter of urgency. This report offers a roadmap for reform – including 22 practical recommendations for the Ministry of Defence to take forward. We need to act now.”