Appendix One Our audit approach

1 This report examined the Ministry of Defence's (the Department's) progress in reforming Defence Equipment and Support (DE&S) to tackle the known systemic weaknesses in defence acquisition. We assessed:

• how the Department managed its key programme to improve DE&S performance - the Materiel Strategy - up to the point where it halted its preferred option of contracting for DE&S as a government-owned, contractor-operated organisation (GoCo) in December 2013;

• the Department's latest plan for reform through changing DE&S into a bespoke trading entity; and

• the main incremental improvements DE&S has made alongside pursuing the Materiel Strategy.

2 We applied an analytical framework to assess value for money. The framework considers whether reforms the Department said it requires at DE&S are being secured in a timely and efficient manner. During our review, implementation of the entity was at an early stage, and we did not draw a value-for-money conclusion here. However, we examined the Department's plans to change DE&S into a bespoke trading entity and the challenges in using the entity to improve DE&S's performance.

3 Our framework acknowledges expressed or implied restrictions or constraints. One constraint is DE&S's poor management information, including full operating cost data. Another is the lack of documentation supporting some key decisions taken while developing the Materiel Strategy.

4 Our audit approach is summarised in Figure 7 and our evidence base is outlined in Appendix Two.