1.1 The government disagrees with the Committee’s recommendations [for reviewing the department's delivery model]. 1.2 The Ministry of Defence (the department or MOD) recognises the challenges with delivering equipment capabilities, challenges which are not unique to UK Defence. The department is clear that there is no single over-arching solution to the challenges but continues driving improvements across many areas which specifically include those the Committee has highlighted. 1.3 There are comprehensive governance arrangements and robust measures in place to ensure that contractors meet their obligations. As standard, contracts contain management clauses which are constantly monitored to ensure compliance and enable corrective action if necessary. Reviews into the performance of the largest and most important projects are undertaken at senior level through multiple channels across the department, including the Strategic Partnering Team and the Sourcing Council. 3.1 The government agrees with the Committee’s recommendation [to ensure suppliers take on their fair share of the financial risk]. 3.2 Although the department agrees with the Committee’s recommendation, it does not agree with the Committee’s conclusion [that it does not make enough demands of its suppliers]. The department recognises the importance of managing supplier performance including the apportionment of financial and programme risk. 3.3 The department accepts that supplier underperformance has been a factor on some programmes, but the use of Firm Price contracts, Liquidated Damages, Single Source regulation reform and other measures have been effective in limiting exposure to cost increases. These measures have resulted in the financial liability for cost over-runs being borne by suppliers. The Department will write to the Committee by the end of May 2022 setting out evidence of how it holds its suppliers to account and fairly and responsibly apportions risk and reward across its contracts.