11 The Department has made progress in stabilising the equipment programme, and in clarifying the roles and responsibilities of head office, DE&S and the commands. There are several positive features in the 2014-24 Equipment Plan, not least the relative stability of forecast project costs of core equipment. A new operating model came into effect in 2014, and the Department continues to embed this approach. Responsibilities and accountabilities for defence acquisition are clearer, with greater separation between those requesting equipment (the commands) and DE&S as deliverer of military equipment (paragraphs 1.6 to 1.11).
12 The Department's preferred option for securing change in DE&S through a government-owned, contractor-operated (GoCo) organisation proved undeliverable. The Department chose the higher-risk option of changing DE&S into a GoCo. It assessed that greater benefits would be secured through the direct involvement of the private sector, with mutual obligations defined by contracts, as well as the capacity to offer enhanced reward packages to attract and retain key skill groups. That proposal proved undeliverable and the Department halted it in late 2013. To the point the GoCo was terminated the Department had spent £33 million and two and a half years developing the Materiel Strategy (paragraphs 1.12 to 1.19).
13 Although the GoCo option was halted, the Department gained a better insight into its business needs within the context of an affordable equipment programme. The Department's experience of dealing with the private sector and its approach to transferring financial risk during the GoCo competition has given DE&S a better understanding of its business needs. For example, DE&S has a better understanding of how staff spend their time and where key skills are needed (paragraph 2.3).
14 The bespoke trading entity structure allows the Department to retain greater control of DE&S, while meeting the objectives of the reform. The Department changed DE&S into a bespoke trading entity in April 2014. DE&S remains in the public sector but has freedoms and flexibilities from civil service pay rules. Departmental and DE&S governance structures have been enhanced, with a new board structure and initial key performance targets for DE&S. The private sector has been engaged to support continued reform in several areas within DE&S. The Department has also set DE&S a target to make savings from operating costs (paragraphs 2.7 to 2.8, 2.14, 2.16 to 2.21).
15 To assess whether the bespoke trading entity is delivering improvements to DE&S's performance, it will be important for the Department to set robust measures of success. Being able to track benefits will be essential both to establish whether the bespoke trading entity is delivering acquisition reform at DE&S, and to allow the Department to take any additional measures to improve performance should it be necessary (paragraphs 2.22 to 2.26).