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14 May 2013 | Adam Leach
The Ministry of Defence (MoD) should insert performance metrics into contracts to incentivise suppliers to hit their delivery deadlines, according to MPs.
Ministry of Defence: Equipment Plan 2012-2022 and Major Projects Report 2012, published today by the Committee of Public Accounts (PAC), recommended the MoD take the action to better hold contractors to account. The recommendation was made in response to an admission from the department it sometimes struggles to act as an intelligent customer, particularly with software suppliers.
Margaret Hodge, chairwoman of the committee and Labour MP, said: “[The department] needs to act as a more intelligent customer, to ensure industry delivers projects to agreed timescales. Delay is particularly a problem in the case of software development, leading to higher costs in a number of projects this year.”
Giving evidence to the committee in February, Bernard Gray, chief of defence materiel, explained keeping track of progress on software projects proved particularly difficult. “If you are building a ship, you can go to a shipyard and look at it and say ‘is it there?’. If it is not there, the argument that someone is going to deliver it next week is pretty easy to knock over. It is much more difficult to challenge people on the maturity or otherwise of software programmes,” he said.
In relation to the MoD’s overall budget, the committee said it had made a “good start” to managing it , with £8 billion as yet unallocated and a £4.8 billion contingency. But the PAC said the department’s ability to keep within its equipment spending plan, covering £160 billion, will require the Treasury to deliver a promised annual budget increase of 1 per cent.
Responding to the report, Philip Dunne, minister for defence, equipment and support, said: “The PAC is right to acknowledge that it will take time to undo the consequences of years of over-promising and financial mismanagement by the last administration. We’ve already balanced the budget and are pressing ahead with plans to radically reform the way the MoD procures equipment for our armed forces.”