Value for Money
The Equipment Plan 2020-2030
Published 12 January 2021
8 recommendations
Ministry of Defence
Commercial and financial managementDefence and national securityEfficiency and savingsFinancial sustainabilityMilitary equipment, logistics and technology
nao.org.uk
This report reviews the robustness of assumptions underpinning the Ministry of Defence’s 2020–2030 Equipment Plan.
Recommendations (8)
Source: NAO Recommendations Tracker
Ministry of Defence
Rec 1
Accepted
Work in Progress
The Department needs to develop a comprehensive and realistic assessment of the affordability of its 10-year equipment and support programme. It should improve the consistency of judgements that underpin its budget and assessments of future costs. In doing so, it should:
• ensure all adjustments to cost forecasts are fully evidenced, transparent and supported by a clear rationale. Forecast savings and future efficiency initiatives should not be deducted from budgets until there is a high-quality audit trail to provide confidence in their deliverability;
Ministry of Defence
Rec 2
Accepted
Implemented
The Head Office team should review and define its role in producing the Equipment Plan, and ensure it is capable of delivering its remit. In doing so, it should determine its role and responsibilities, in terms of providing a reliable departmental statement on the affordability challenge and engaging with the TLBs to challenge the basis of their cost forecasts and manage funding challenges. At the very least, the central finance team should:
• provide robust quality assurance to ensure the Plan is based on reliable data, including consistent management adjustments and a sound evidential basis. It should provide meaningful challenge to the TLBs on the robustness and consistency of their costed plans and adjustments to forecast costs;
Ministry of Defence
Rec 3
Accepted
Work in Progress
The Department needs to focus on strengthening its analytical capacity. Continuing to develop staff with financial qualifications and improve its use of
data would help it more effectively produce and analyse the Equipment Plan. It should identify and exploit opportunities for more effective data analysis and sharing. It should make its data – such as records of reasons for project cost changes, detailed outturn data and breakdowns of forecast efficiencies – more accessible to finance and planning staff throughout the Department, reducing the need for Head Office to commission bespoke reports.
Ministry of Defence
Rec 4
Accepted
Implemented
The Department needs to develop a comprehensive and realistic assessment of the affordability of its 10-year equipment and support programme. It should improve the consistency of judgements that underpin its budget and assessments of future costs. In doing so, it should:
• include funding provision across the later years of the Plan to make it more adaptable to future needs to develop new military capabilities. This would allow more flexibility to adapt the equipment programme to changes in the strategic environment and make it less vulnerable to repeated short-notice exercises to reduce investment in existing projects;
Ministry of Defence
Rec 5
Accepted
Work in Progress
The Department needs to develop a comprehensive and realistic assessment of the affordability of its 10-year equipment and support programme. It should improve the consistency of judgements that underpin its budget and assessments of future costs. In doing so, it should:
• re-assess its approach to assessing risk and how this affects future costs. It should consider how to improve the quality of risk analysis, including whether strategic risks are fully assessed in the Plan's affordability analysis; and
Ministry of Defence
Rec 6
Accepted
Work in Progress
The Department needs to develop a comprehensive and realistic assessment of the affordability of its 10-year equipment and support programme. It should improve the consistency of judgements that underpin its budget and assessments of future costs. In doing so, it should:
• explore a more complete range of outcomes in its affordability analysis by improving its understanding of uncertainty in project costs, reflecting the potential additional cost pressure of new capabilities, undertaking more detailed testing of project cost forecasts and considering the level of certainty in its budget over the 10-year period.
Ministry of Defence
Rec 7
Accepted
Implemented
The Head Office team should review and define its role in producing the Equipment Plan, and ensure it is capable of delivering its remit. In doing so, it should determine its role and responsibilities, in terms of providing a reliable departmental statement on the affordability challenge and engaging with the TLBs to challenge the basis of their cost forecasts and manage funding challenges. At the very least, the central finance team should:
• better understand past performance, undertaking detailed reviews of outturn against forecasts to improve the rigour of cost forecasting. For example, conducting analysis on its efficiencies programme would give a more realistic view on what is achievable and the future cost of the Plan; and
Ministry of Defence
Rec 8
Accepted
Work in Progress
The Head Office team should review and define its role in producing the Equipment Plan, and ensure it is capable of delivering its remit. In doing so, it should determine its role and responsibilities, in terms of providing a reliable departmental statement on the affordability challenge and engaging with the TLBs to challenge the basis of their cost forecasts and manage funding challenges. At the very least, the central finance team should:
• continue to improve the integrity of the cost forecasts and establish consistency between TLBs’ plans. Building on its recent reviews of
realism and risk, it should use the lessons it has learned to ensure all parts of the Department apply best practice.