APPENDIX B.  PLANNING FRAMEWORK

The MoD financial planning framework is comprised of two distinct elements: the Short-Term Plan ("STP") and the Defence Programme.

The STP describes spending on operational costs. These are the responsibility of the Front Line Commands. A small portion of the spend included in the STP also relates to the operating costs associated with other Top Level Budget ("TLB") holders, for example the management of the procurement and infrastructure functions and to other central functions. The STP looks forwards four years. Beyond this horizon, spending plans are only made at a very high level, but are intended to reflect the impact of any significant changes that are envisaged.

For significant investment programmes, a four year planning horizon is too short: for instance, many individual equipment procurement projects last significantly longer than that. Investment programmes are therefore planned within the 'Defence Programme', which provides a ten year budget to balance capital spend priorities across equipment acquisition, equipment support and non-equipment investments156.

Figure B-1: MoD planning regimes

In principle, the planning process for the Defence Programme runs on a biennial cycle, which alternates between 'planning years' (in which resources are allocated between the various elements of the Defence Programme), and 'review years' (which allow for in-depth studies on particular aspects of the programme so as to enable more informed decision making). In practice, however, there has only been only one review cycle (in 2006) since this approach was introduced.

There are three main strands to the Defence Programme:

•  the procurement of new capability (whether new equipment or major upgrades) is managed through the Equipment Procurement Plan (EPP), which is 30 years long;

•  provision of equipment support, which is planned 10 years in advance through the Equipment Support Plan (ESP); and

•  planning for investment in equipment which are not for military use (predominantly IT projects and infrastructure) are made by the central Defence Resources team and are included in the Non-Equipment Investment Plan (NEIP), which is also 10 years long.

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156  Non-equipment investments are primarily in the MoD's property portfolio (through Defence Estates) and IT systems