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Major Projects Report 2015 and the Equipment Plan 2015 to 2025

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Report by the Comptroller and Auditor General Ministry of Defence Major Projects Report 2015 and the Equipment Plan 2015 to 2025 Appendices and project summary sheets HC 488-II SESSION 2015-16 22 OCTOBER 2015 Our vision is to help the nation spend wisely. Our public audit perspective helps Parliament hold government to account and improve public services. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Sir Amyas Morse KCB, is an Officer of the House of Commons and leads the NAO, which employs some 810 people. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of £1.15 billion in 2014. Ministry of Defence Major Projects Report 2015 and the Equipment Plan 2015 to 2025 Appendices and project summary sheets Report by the Comptroller and Auditor General Ordered by the House of Commons to be printed on 22 October 2015 This report has been prepared under Section 6 of the National Audit Act 1983 for presentation to the House of Commons in accordance with Section 9 of the Act Sir Amyas Morse KCB Comptroller and Auditor General National Audit Office 20 October 2015 This volume has been published alongside a first volume comprising of – Ministry of Defence: Major Projects Report 2015 and the Equipment Plan 2015 to 2024 HC 488-I HC 488-II | £10.00 © National Audit Office 2015 The material featured in this document is subject to National Audit Office (NAO) copyright. The material may be copied or reproduced for non-commercial purposes only, namely reproduction for research, private study or for limited internal circulation within an organisation for the purpose of review. Copying for non-commercial purposes is subject to the material being accompanied by a sufficient acknowledgement, reproduced accurately, and not being used in a misleading context. To reproduce NAO copyright material for any other use, you must contact [email protected]. Please tell us who you are, the organisation you represent (if any) and how and why you wish to use our material. Please include your full contact details: name, address, telephone number and email. Please note that the material featured in this document may not be reproduced for commercial gain without the NAO’s express and direct permission and that the NAO reserves its right to pursue copyright infringement proceedings against individuals or companies who reproduce material for commercial gain without our permission. Links to external websites were valid at the time of publication of this report. The National Audit Office is not responsible for the future validity of the links. 10814 10/15 NAO Contents Appendix Five Definitions and classifications of cost, time and performance causal factors 4 Appendix Six Project summary sheets 6 The National Audit Office study team consisted of: Alex Black, Jeremy Gostick, Matt Hemsley, Will Rollo, Michael Slater, Rohan Soni, Lee Staley, Daniel Vulkan and Tom White, under the direction of Lee Summerfield. This report can be found on the National Audit Office website at www.nao.org.uk For further information about the National Audit Office please contact: National Audit Office Press Office 157–197 Buckingham Palace Road Victoria London SW1W 9SP Tel: 020 7798 7400 Enquiries: www.nao.org.uk/contact-us Website: www.nao.org.uk Twitter: @NAOorguk 4 Appendix Five Major Projects Report 2015 and the Equipment Plan 2015 to 2025 Appendix Five Definitions and classifications of cost, time and performance causal factors 1 These classifications represent a broad categorisation of cost, time and performance variations in the project summary sheet. The Department attributes these categories to time, cost and performance variations in the project summary sheet. We validate the appropriate use of each category. These categories are grouped into three broad headings: • corporate decisions, that is decisions that are taken at the top of the Department by senior management or ministers; • project/technical issues reflect variations at a lower project level; and • macro-economic or accounting adjustments, mainly resulting from changes the Department makes in assumptions regarding exchange rates and inflation. 2 Three categories (receipts, changes in associated projects and HM Treasury reserve) do not fit within these classifications. Variations attributed to these are often relatively small. Major Projects Report 2015 and the Equipment Plan 2015 to 2025 Appendix Five 5 Corporate decisions Changed Capability Requirement Variations due to changes in the customer’s requirement for the equipment, flowing from operational reassessment rather than budgetary factors or because of support to current operations. Budgetary Factors Variations due to changes in the customer’s requirement for equipment, flowing from changed budgetary priorities. Project or technical issues Technical Factors Variations which are due to changes in technical ability to deliver the project. This includes additional requirements specified by safety regulators/inspectors. Procurement Processes Variations due to changes associated with the contractual process including time taken in contract negotiations and placing contracts, effect of comparing contractor bids to estimates and variations due to changes in overall procurement strategy, eg change to collaborative options, or from competitive to single source. Procurement Processes – As above, but relating to international contract negotiations. International Collaboration Contracting Process Variations due to changes associated with the contractual process, (not included from 2009 onwards) including time taken in contract negotiations and placing contracts, international contract negotiations and effect of comparing contractor bids with estimates. Macro-economic or accounting adjustments Inflation Variations due to changes in inflation assumptions. Exchange Rate Variations due to changes in exchange rate assumptions. Accounting Adjustments and Variations that do not reflect any substantive change, and result Redefinitions from changes to accounting rules, or adjustments to reflect changes in defining terms. Other (not classified into the three broad headings) Receipts Variations due to changes in expectation of receipts, eg liquidated damages, commercial exploitation levy. Change in Associated Project Variations due to changes in an associated project eg availability of equipment from another project for trials. HM Treasury Reserve Recovery of additional costs incurred in support of current operations. 6 Appendix Six Major Projects Report 2015 and the Equipment Plan 2015 to 2025 Appendix Six Project summary sheets Post-Main-Gate projects 7 A400M 8 Astute Class Submarines 26 Complex Weapons Pipeline 54 Core Production Capability 79 Lightning II 90 Marshall 108 Military Afloat Reach and Sustainability 116 Queen Elizabeth Class Aircraft Carriers 126 Scout Specialist Vehicles 143 Type 26 Global Combat Ship 154 Typhoon 162 Future Strategic Tanker Aircraft (Voyager) 189 Warrior Capability Sustainment Programme 201 Assessment phase projects 213 Apache Attack Helicopter Capability Sustainment Programme 214 Crowsnest 220 Morpheus 226 Successor 233 Post-Main-Gate projects 7 A400M Project Name A400M Team Responsible A400M Senior Responsible Owner Date Appointed Planned end date Air Commodore David Lee 20 July 2015 July 2018 Project/Increment Name Current Status of Projects / Increments A400M Post-Main Investment Decision Training Service Post-Main Investment Decision In Service Support Post-Main Investment Decision 8 A400M A. Section A: The Project A.1. The Requirement A400M is planned to provide tactical and strategic mobility to all three Services. The required capabilities include: operations from airfields and semi-prepared rough landing areas in extreme climates and all weather conditions by day and night; carrying a variety of equipment including vehicles and troops over extended ranges; air dropping paratroops and equipment; and being unloaded with the minimum of ground handling equipment. The 1998 Strategic Defence Review confirmed a requirement for an airlift capability to move large single items such as attack helicopters and some Royal Engineers' equipment and concluded that this would be met, in the latter part of the first decade of the 21st century by Future Transport Aircraft. The A400M was selected to meet this requirement. It will replace the remaining Hercules C-130K fleet. A400M is a collaborative programme involving seven European nations (Belgium, France, Germany, Luxemburg, Spain, Turkey and United Kingdom). The design phase is nearing completion and manufacture activities have commenced. Delivery of the first UK aircraft to the Royal Air Force occurred in November 2014. A.2. The Assessment Phase The Government announced in December 1994 that it would replace its aging C-130K Hercules fleet, in part by procuring 25 C-130J's from Lockheed Martin and in addition, subject to certain conditions, by re- joining the next phase of the collaborative Future Large Aircraft programme (now known as A400M). The Future Large Aircraft
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