Improving the performance of major equipment contracts

The Department is developing a programme of important reforms, some of which are at a relatively early stage. To support this agenda and to complement the recommendations in our recent report on the Department’s 2020–2030 Equipment Plan, we recommend that: a) Programme teams should state explicitly in their initial business cases how they have applied lessons learned from other programmes. To avoid repetition of past mistakes and embed learning from experience into the approvals processes, teams should demonstrate to the Investment Approvals Committee and the Department’s scrutiny teams how they have drawn on comparable programmes, including past experience of working with suppliers on other programmes.

b) While the Department has introduced initiatives to secure better value from its contracts, such as the Strategic Partnering Programme, it must ensure they become embedded in departmental practice. We support the enhanced approaches to joint working with suppliers but have seen previous efforts falter. To avoid this, the Department should ensure sufficient resources are available, and make use of existing governance arrangements to maintain a focus on progress and yielding anticipated benefits.

e) The Department should do more to keep key personnel in place on contracted programmes for as long as is needed to meet specific milestones. SROs and senior members of their team are crucial to the delivery of contracted programmes and strong supplier relationships, but there is evidence that they are insufficiently supported and too often move before key milestones have been achieved. The Department should examine how it can align movement of personnel more closely with programme progress.

f) The Department should pay greater consideration throughout a programme as to whether it remains value for money. Business cases set out whether the proposed option is VFM, but major changes in delivery dates, for example to make the portfolio more affordable in the short-term, and increases in forecast costs, can have a significant impact on whether a programme remains so. Currently, it is not clear that at this point there is appropriate reflection on options or remedial action. Each business case should include specific performance, cost and time criteria for when the programme ceases to be VFM, based on better baselines and benchmarks derived from improved programme evaluations. Breaching these criteria should require more rigorous and transparent consideration of how VFM can be achieved.