Assessing the challenges in UK defence equipment acquisition

Three broad drivers of common defence programme cost and schedule problems could be mitigated by establishing effective challenge processes, professionalising certain job functions, driving a focus on risk management and understanding, and embedding clear lessons-learned processes.

What is the issue?

Equipping the Armed Forces is one of the most important, challenging and complex tasks faced by the UK Government. Defence equipment acquisition programmes often experience challenges such as cost growth, schedule slippage and performance shortfall. This affects value for money as well as the overall ability of the Ministry of Defence (MOD) and Armed Forces to achieve the UK’s National Security Objectives.

Over the years, the National Audit Office (NAO) has been monitoring and evaluating the performance of defence acquisition programmes and has reported on delays and cost overruns across significant MOD equipment procurement programmes.

How did we help?

The NAO commissioned RAND Europe to help shed light on the underlying causes of equipment procurement problems and the reasons why they persist, despite repeated efforts to learn from the past. The resulting discussion paper, based on decades of RAND research on these topics, focuses on three broad drivers of cost, schedule or other performance problems often encountered in defence programmes:

• Industrial and MoD capabilities

• Supplier performance, incentives and contracting

• Programme management approach

In addition, the paper also captures some overarching, cross-cutting factors and outlines measures and initiatives that will allow the MOD to improve programme delivery.

What did we find?

Industrial and MOD capabilities

• Overly prescriptive or ambitious capability requirements can set the scene for poor performance delivery down the track.
• Production efficiencies are hard to achieve, hampering industry’s ability to drive learning economies and maximise return on investment.
• Workforce and skills constitute critical enablers for effective programme delivery and conversely, insufficient availability of suitably qualified and experienced personnel (SQUEP) can undermine effective delivery.

Contracting, incentives and supplier performance

• While robust assumptions underpinning any capability delivery plan or acquisition strategy are inevitably difficult to get right, it is important that they shared by both the MOD and industry.
• Understanding sources of risk in defence equipment programmes is a prerequisite for effective risk management and division of responsibility for risk between customer and supplier, but this understanding is often lacking.

Programme management approach

• Imbalance and divergence between Services and domains when it comes to weapon system acquisition requirements and approaches undermines opportunities to use defence equipment budgets for modernisation across the Armed Forces and deliver on the overall Defence Equipment Plan.
• Frequent adjustments to programme delivery undermine its overall effectiveness.
• Budgeting sufficient contingency for risk is appreciated in theory but not implemented in practice.

Cross cutting issues

• A culture of optimism permeates defence equipment programme decision-making, distorting assumptions and planning outcomes.
• Lack of institutional memory means that lessons from the past are not learnt as quickly and efficiently as they could be – or not learnt at all.
• The UK defence acquisition system is prone to moral hazard whereby poor delivery results in only limited negative consequences.

What do we recommend?

• Establish and embed effective challenge, scrutiny and red-teaming processes
• Professionalise, reinforce and enable programme management and cost assurance functions
• Drive a focus on risk management and understanding
• Embed clear processes to capture, share and feed through lessons learned

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Read the full study

As seen in Spotlight 2021-2022

This was one of several research projects featured in RAND Europe's annual review.

Additional team member

Julia Muravska