The Department does not make enough demands of its suppliers to share the financial risks as well as the rewards of contracting for major equipment capabilities. The Department is dependent on a limited supplier base to deliver its major equipment programmes. Of the 20 programmes examined by the NAO, 14 are being wholly or partly procured non-competitively, mainly through choice, rather than reasons of national security. Suppliers understand that poor performance on one contract will not stop them winning the next. We are concerned that the Department pours money into the developmental stages of programmes while suppliers are reluctant to accept more risk. Suppliers should contribute their fair share of development funding to equipment programmes so they are sufficiently incentivised to deliver. The Department told us that it has a range of contractual levers to encourage suppliers to deliver and that, for example, it was applying these in the case of the Ajax programme. Despite this, they are clearly not having the required effect. The Department has prioritised pursuing bespoke, ‘gold plated’ platforms—which are a source of considerable delay in the equipment portfolio— which then prove difficult and expensive to upgrade. It could reduce its exposure to risk and encourage more constructive attitudes from suppliers if it was more willing to buy proven equipment ‘off the shelf’, where the pain of development has already been borne by others. Recommendation: The Department should write to the Committee within six months with a clear plan on how it will ensure suppliers take on their fair share of the financial risk in contracts, and how it will take past performance into account when letting new contracts.