18 Our recommendations are designed to help the Department gain assurance that the bespoke trading entity will address systemic weaknesses in defence acquisition:
a The Department needs to show how the bespoke trading entity will address systemic weaknesses in defence acquisition. The affordability of the Equipment Plan critically relies on improving DE&S's performance to deliver equipment within existing budgets, including more than £6 billion of savings already factored into the Plan. The Department has agreed an overarching plan for DE&S and set out expectations for the organisation. However, it has not yet demonstrated the value-for-money case for the entity. Neither has it defined what becoming the leading defence acquisition organisation will look like. We would expect the Department to set out the value-for-money case once detailed plans are available in summer 2015.
b The Department should set realistic performance measures to ensure that the bespoke trading entity makes genuine improvements in acquisition. Having defined the characteristics of a leading defence acquisition organisation, the Department must have robust metrics to monitor DE&S's progress towards achieving this goal by 2017. DE&S's corporate plan includes initial high-level performance targets, and more detailed metrics should be set by summer 2015. Head office and the commands will need to be watchful and respond quickly if sufficient improvements do not materialise.
c DE&S should set metrics to ensure managed service providers are offering value for money by measuring their progress in enhancing skills and capabilities. DE&S is placing great reliance on managed service providers to define and make improvements in projects and programmes, human resources and management information systems. In return, DE&S expects to pay around a quarter of a billion pounds over three and a half years for this business support. DE&S has agreed contracts with the managed service providers whereby part of their fees are, in principle, linked to milestones and a set of metrics. It is essential, therefore, that DE&S establish these metrics and a baseline to track progress in implementing these reforms and transferring skills and capabilities to DE&S staff. This will help it keep on schedule to become the leading defence acquisition organisation by 2017.