Def070226 - No.32

Session 2006-07, 26 February 2007

Publication of Special Report


Government admits risk to Defence Equipment targets in its response to the Defence Committee's report on Defence Procurement

The House of Commons Defence Committee today publishes the Government's Response to the Committee's report on Defence Procurement 2006 (Fifth Special Report of Session 2006-07, Defence Procurement 2006: Government Response to the Committee's First Report of Session 2006-07, HC 318).

The Defence Procurement Agency (DPA) met its Key Targets and the MoD's Public Service Agreement Target for Acquisition in 2005-06. However, in its Response, the Government says that there is "a degree of risk" that they will not achieve the 2006-07 Key Targets for Asset Deliveries and Cost Growth. The Response states that "the Astute [submarine] project faces significant financial challenges" and the MoD was also seeking to reduce "cost pressures" on the Type 45 Destroyer programme.

In its report the Committee examined the progress of the merger of the DPA and the Defence Logistics Organisation (DLO). The DPA and the DLO are to merge on the 1 April 2007 to become the Defence Equipment & Support (D&ES) organisation. The merger is being managed as a project with four phases. Phase 1 was completed at the end of September 2006 on time. The Government's Response provides a summary of Phase 2 which ran to the end of December 2006 and states that "all of the essential work planned for this Phase was achieved on time". The completion date for Phase 3 is the end of March 2007.

Commenting on the Government Response, Committee Chairman Rt Hon James Arbuthnot MP said "The Defence Procurement Agency met all its 2005-06 Key Targets, but this achievement may not be repeated for 2006-07 as the DPA is facing further cost increases on the Astute submarine and Type 45 Destroyer programmes. The DPA and its successor organisation will need to work closely with BAE Systems to limit the cost growth on these two programmes. We will be watching carefully to ensure that any overruns on the equipment budget do not lead to damaging cuts elsewhere".

NOTES TO EDITORS:

1. Committee Membership is as follows: Rt Hon James Arbuthnot MP (Chairman), Mr David S Borrow MP, Mr David Crausby MP, Linda Gilroy MP, Mr David Hamilton MP, Mr Mike Hancock MP, Mr Dai Havard MP, Mr Adam Holloway MP, Mr Bernard Jenkin MP, Mr Brian Jenkins MP, Mr Kevan Jones MP, Robert Key MP, Willie Rennie MP, John Smith MP

2. The Committee's report Defence Procurement 2006, First Report of Session 2006-07, HC 56 can be found at:

http://www.publications.parliament.uk/pa/cm200607/cmselect/cmdfence/56/56.pdf

3. News Release: No. 32

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