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DEVELOPMENTS in the RELIABILITY and MAINTAINABILITY of DEFENCE EQUIPMENT Report

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DEVELOPMENTS in the RELIABILITY and MAINTAINABILITY of DEFENCE EQUIPMENT Report NATIONAL AUDIT OFFICE REPORTBY THE COMPTROLLERAND AUDITORGENERAL Ministry of Defence: Developmentsin the Reliability and Maintainability of DefenceEquipment ORDEREDBY THEHOUSEOFCOMMONS TOBEPRINTED 28OCTOBER1994 LONDON:HMSO E8.15 NET 690 MINISTRY OF DEFENCE: DE”ELOPMENTS IN THE RELIABILrrY AND MAINTAINABlLrrY OF DEFENCE EQ”rPMENT 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. John Bourn National Audit Office Comptroller and Auditor General 14 October 1994 The Comptroller and Auditor General is the head of the National Audit Office employingsome 800 staff. He, and the NAO, are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies: and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources. Contents Page Introduction and background 1 Developments in the management of reliabiity and maintainability 1 Conclusions 22 Glossary of terms and abbreviations 25 Appendices 1. Main conclusions and recommendations of the PAc’s 31st Report 26 1988-89 - Reliability and Maintainability of Defence Equipment - and Departmental Response in Treasury Minute dated 18 October 1989 (Cm 831) 2. Case studies 30 3. Surveys by NAO consultants 38 MINISTRY OF DEFENCE: DEVELOPMENTS IN THE RELIABILITY AND MAINTAINABILITY OF DEFENCE EQUIPMENT Report Introduction 1 The Ministry of Defence (the Department) have long been concerned about the and reliability and maintainability (R&M) of equipment supplied to the Services for background two reasons. First, unreliability increases equipment support costs - by 21 billion a year according to the Department’s estimate in 1989 and improvements in reliability would therefore yield significant savings. Second, unreliability has adverse operational consequences by reducing the availability of equipment for training in peacetime; use in wartime; and through the effect on morale of loss of confidence in equipment 2 In February 1989, following a report by the National Audit Office (HC 173 of 1988-89) the Committee of Public Accounts examined the Department on the effectiveness of their management of R&M. In their Thirty-first Report, Session 1988-89 (HC 2061, the Committee noted that, despite a policy of treating R&M as an equal priority to performance, cost and time, the Department had often sacrificed R&M in order to achieve an early in-service date or to reduce initial procurement cost. The Committee were convinced, that if real achievements were to be made in realising the benefits of improved R&M, the Department must show a preparedness to delay or halt projects where R&M had not been fully considered or where evidence pointed to levels of R&M below those specified. The Committee also considered that it was in the field of contracting, particularly in regard to tighter specifications and greater use of incentives and warranties, that most scope existed for achieving an improvement in R&M. The Committee expressed a wish to return to this subject in the future. 3 The Treasury Minute of 18 October 1989 (Cm 8311 included a constructive response to the Committee’s specific conclusions and recommendations and reported on the wide range of action that was underway (see Appendix 11. The National Audit Office have examined the Department’s progress towards implementing the Committee’s recommendations. The expression “R&M” is generally used throughout the report as a generic term and is not intended to imply that considerations of both reliability and maintainability necessarily apply in each case. Developments Departmental Action in reliability 4 In 1990, the Department drew up an action plan for improving the R&M of and defence equipment. The plan was endorsed by the Department’s Procurement maintainability Executive Management Board and the Department’s Principal Administrative Officers’ Committee. The newly formed post of Director of Reliability was tasked with co-ordinating action and monitoring progress. The Director made his first progress report in February 1993 in which he indicated that substantial advances had been made. MINISTRY OF DEFENCE: DEVELOPMENTS IN THE RELIABILITY AND MAINTAlNABlLlTY OF DEFENCE EQUIPMENT 5 The following paragraphs consider the Department’s progress on the Committee’s recommendations under five headings: a) recommendations relating to the role of the Directorate of Reliability, the Committee for Defence Equipment Reliability and Maintainability (CODERM) and specialists in promoting improvements in R&M; b) recommendations relating to the contracting for, and project management of, R&M; c) the recommendation relating to the Department’s improvement of their Life Cycle Costing systems; d) the recommendation relating to the Department’s improvement of their defect reporting systems; and e) the impact of the action taken in reducing the cost of unreliability. Committee recommendations (iii), (vi), (vii) and (viii) relating to the role of the Directorate of Reliability, CODERM and specialists in promoting improvements in R&M Committee 6 (iii) The Committee stressed the importance of positive and effective action recommendations by the Department on the 1988 Report by PA Consultants on Contracting for Reliability. (vi) The Committee expressed surprise that there were only 30 R&M specialists and looked to early progress by the Department in fulfilling their commitment to increasing this number. (vii) The Committee welcomed the decision to appoint a Director of Reliability to provide a focus for R&M matters within the Department. (viii) The Committee were concerned that the effectiveness of CODERM as a forum for developing attitudes on R&M matters should be improved and steps taken to ensure that CODERM’sdecisions were implemented. Treasury Minute 7 The Department stated that they had taken positive and effective action on the 1988 PA Consultants’ report in the appointment of a Director of Reliability: and that the Director would be responsible for implementing those decisions taken by CODERM which did not naturally fall to any particular Controllerate or Service. The Department stated they had issued preliminary advice to Contracts Officers on contracting for reliability and were drafting guidance to Project Managers. The Department stressed the role already being played by seminars and publicity organised by CODERM in emphasising the importance of R&M. The Department also accepted the need for more R&M specialists and stated that steps were being taken to identify and provide the ex&a numbers needed. MINISTRYOFDEFENCE:DEVELOPMENTSINTHERELIABILlTY ANDMAINTAINABILITYOFDEFENCE EQUIPMENT Subsequent 8 The Director of Reliability was appointed in July 1989 and is accountable to the developments Chief of Defence Procurement. He leads the Department’s drive for improved R&M of defence equipment and is responsible for policy and the monitoring of its implementation through scrutiny of projects. The complement of the Directorate was increased by two to eight in 1992 and the number of R&M specialists within the Department has also been increased. 9 The drive for improved R&M is coordinated and controlled through the action plan drawn up by the Director of Reliability in 1990. The plan covered a range of activities including improving R&M procedures and guidance: improvements to project statements of requirement and their scrutiny by the Director of Reliability; the inclusion of provisions for R&M in contracts; improvements in data collection; and increasing the number of R&M specialist staff. The Director of Reliability monitors progress in implementing the action plan which was updated and reapproved by the Procurement Board in February 1993. 10 The National Audit Office assessed the Directorate in terms of how they had carried out their role of monitoring to ensure that projects had taken full account of R&M requirements and CODERM’sguidance: how they had improved the effectiveness of CODERM, particularly in issuing guidance and standards and increasing the awareness of R&M; and how they had provided R&M training. The National Audit Office also assessed the availability of specialist R&M staff and the role of the R&M cells. (a) Scrutiny of Project R&M by the Directorate 11 A significant new task given to the Directorate on its formation in 1989 was the scrutiny of projects for R&M at the approval stages. The Department’s 1990 Action Plan required the Directorate to increase to 100 per cent the proportion of relevant projects scrutinised and noted that additional staff would be required to do so. Two additional staff joined the Directorate for this purpose during 1992. In July 1992, new project sponsorship procedures were introduced which required staff to send to the Directorate all statements of requirements and procurement strategies for projects whose estimated development costs exceed E2 million or whose estimated production costs exceed E5 million. 12 The Department’s progress report on the Action Plan noted in February 1993 that whilst all such projects were being scrutinised for R&M, the depth of scrutiny needed to be increased. The Department told the National Audit Office that since then, R&M specialists in the Directorate had acquired greater experience and as a result the depth of scrutiny had improved. 13 The purpose of the Directorate’s scrutiny is to ensure that the R&M requirements for equipment projects are realistic, measurable, clearly specified and supported by an adequate contract strategy. The majority of project submissions for approval relate to the early stages of projects and so the Directorate of Reliability’s scrutiny is focused on the early stages when their advice can most easily and cost-effectively contribute to satisfactory R&M. In MINISTRY OF DEFENCE: DEVELOPMENTS IN THE RELIABlLlTY AND MAINTAINABILITY OF DEFENCE EOUIPMENT 1993 the Directorate had some 114 projects referred to them. Three of the Directorate’s staff were involved in assessing their R&M content and on average looked at each project about three times.
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