1 We reached our independent conclusions on the Ministry of Defence's (the Department's) progress in reforming defence acquisition at Defence Equipment and Support (DE&S) after analysing evidence collected between February and December 2014. Our audit approach is outlined in Appendix One.
2 We assessed the Department's approach to addressing systemic weaknesses in defence acquisition through the Materiel Strategy.
3 We reviewed reports commissioned by the Department, and those of the House of Commons' Committee of Public Accounts and Defence Committee, setting out the context for defence acquisition reform.
4 We conducted semi-structured interviews with the senior officials responsible for developing the Materiel Strategy, including private sector companies in support. We discussed how the evidence underpinning the Strategy was developed, including options appraisals for organisational change, cost-benefit analyses, and how the Department worked with the private sector to test its plans.
5 Where available, we reviewed official documents showing how the Department took key decisions and the information used to inform these decisions, including cross-government and ministerial correspondence. We also reviewed reports that the Department used to track its progress.
6 We reviewed official documents that set out the results of internal scrutiny of the Department's management of the Materiel Strategy, including internal audit, the Cabinet Office's major project review group and Departmental internal scrutiny reports.
7 To examine how robust and complete the baseline information for government-owned, contractor-operated organisation (GoCo) bidders was, we reviewed official documentation shared with the bidders.
8 We conducted semi-structured interviews to gather stakeholders' views from outside the Materiel Strategy, including the commands, Cabinet Office and HM Treasury, on the Department's engagement throughout the process.
9 We conducted semi-structured interviews with 10 of the 12 companies that formed into three consortia to bid to operate a GoCo, to gather perspectives on how the Department managed the competition. While we did not meet with the remaining two companies, we believe we have an adequate insight into the consortia's views. We also met two of the companies involved in the early stages of the Department's GoCo preparations, who ultimately did not take part in the GoCo bidding process, to understand their views on the GoCo proposition.
10 We reviewed official documents that summarised the Department's analysis of the 1,200-plus page GoCo bid received. We reviewed the in-house benchmark and back-up option (DE&S+) against which the Department had planned to compare a winning GoCo bid.
11 We conducted semi-structured interviews with senior DE&S officials responsible for change within DE&S to understand the incremental changes being pursued alongside the Materiel Strategy. We also met with the specialist private sector company leading on the work to identify savings from equipment support.
12 We conducted semi-structured interviews with senior Departmental officials responsible for overseeing DE&S and financial management within the Department.
13 We reviewed and analysed equipment project performance data to explore how DE&S's performance has changed.
14 Where available, we analysed DE&S's expenditure data to find out DE&S's operating costs since it was formed in 2007, including spend on consultancy support.
15 We examined the Department's rationale for changing DE&S into a bespoke trading entity and how it planned and managed processes to allow the entity to reach full operating capability.
16 We reviewed the limited official documents available, such as key planning materials, DE&S's Framework Document40 and Corporate Plan41 for the bespoke trading entity, to explore how the Department decided on a bespoke trading entity structure.
17 We reviewed official documentation available at the time of our review of the process to contract with managed service providers, including a statement of requirements and procurement strategy.
18 We supplemented this review and analysis with semi-structured interviews with senior officials who implemented the bespoke trading entity and wider change programmes across the Department.
______________________________________________________________________________
40 Defence Equipment and Support, Framework document, May 2014.
41 Defence Equipment and Support, Corporate Plan 2014-2017, May 2014.