3 In March 2021, the government published its Integrated Review of Security, Defence, Development and Foreign Policy, a defence command paper, and the Defence and Security Industrial Strategy. The command paper set out the ambition to build a more strategic relationship with industry and a more sustainable industrial base, by providing greater certainty about future workflow. The Department stated that competition will no longer be the "default" position and put a new emphasis on delivering with UK-based skills, technologies and capabilities. This stance sits alongside recent changes to government guidance that now encourages departments to think more broadly about the "social value" that can be generated from departmental interventions, such as defence equipment programmes. In recent years, the Department has been reforming its approach to equipment acquisition, management and oversight of programmes, and developing its staff to tackle ongoing challenges with delivery.
4 Our annual reports on the Department's 10-year budget for equipment procurement and support (the Equipment Plan) have highlighted the unaffordability of its forward programme, with an estimated affordability gap in the period 2020-2030 of at least £7.3 billion.2 Partly to address this gap, in November 2020, the Spending Review provided an additional £16.5 billion of capital funding over the next four years for the Department, including to modernise and invest in new technologies.
5 The Department's performance in delivering major defence programmes has been mixed. In 2020, we reported there was an average forecast delay of more than two years to achieve full operating capability for the most significant capabilities.3 Such problems are not unique to UK defence; other countries experience similar issues.
6 Against this background, we sought to identify the causes, and explain the consequences, of cost overruns and schedule delays in the contracts for some of the most significant equipment programmes and to examine how the Department is working to improve delivery. After setting out the policy and administrative context (Part One), this report examines:
• schedule delays and cost increases (Part Two);
• contract and programme management (Part Three);
• shortages of skilled staff (Part Four); and
• delivering value for money through the life of the contract (Part Five).
Appendix Two summarises our work, which focused on 20 major programmes (Figure 10) for the delivery of equipment for use in the air, on land and at sea, and in space. Together these programmes have a whole-life budgeted cost of more than £120 billion. For the purposes of this report, we did not consider whether individual programmes have achieved value for money.
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2 Comptroller and Auditor General, The Equipment Plan 2020–2030, Session 2019-2021, HC 1037, National Audit Office, January 2021.
3 Comptroller and Auditor General, Defence capabilities - delivering what was promised, Session 2019-2021, HC 106, National Audit Office, March 2020.