DE&S charts progress with release of its Annual Report

Land February 4, 2020

Defence Equipment and Support (DE&S) has released its annual report and accounts for 2018 to 2019 analysing the Department’s performance as it progresses with the DE&S@21 Improvement Plan.

DE&S, now in its fifth year operating as a Bespoke Trading Entity (BTE) and Arm’s Length Body of the Ministry of Defence, manages a vast range of complex projects to buy, support and supply vital equipment and services that the Royal Navy, British Army and Royal Air Force need to operate effectively.

The MOD delegates the bulk of the equipment and support budget to the military commands, giving them responsibility for prioritising the most vital areas. As such, DE&S doesn’t hold the budget for the equipment procurement and equipment support plans, but has the responsibility is to deliver against these.

DE&S has undergone a period of change following the undertaking of the transformation programme, which ran from 2014 – 2018 that aimed to improve the efficiency and effectiveness of DE&S.

The report revealed that during the course of 2018-2019, DE&S spent £9,766 million on acquiring and supporting equipment for the armed forces, as well as a further £770 million on inventory items to support that equipment.

It delivered 916 new assets with a Gross Book Value of £9.5 billion, the largest being HMS Queen Elizabeth (£2.9 billion).

In terms of measuring DE&S’ performance over 2018-2019, the report delves into how well it fared in achieving its strategic objectives, namely:

We will continuously improve our DELIVERY
We will focus on our CUSTOMERS
We will understand our SUPPLY CHAIN
We will support our PEOPLE
We will continue to TRANSFORM

This also includes the DE&S@21 Improvement Plan set out in summer 2018, which aims to deliver upon the principals of Great People, Great Delivery, Great Place to Work.

The Department’s performance is measured through Command Acquisition Support Plans (CASPs) – individual formal agreements with customers that capture the outputs against which DE&S’ teams will deliver.

The CASPs provide metrics and targets which are used to measure delivery performance and feed into the corporate KPIs outlined in the DE&S 2018-21 Corporate Plan.

Writing in the report, Sir Simon Bollom, DE&S CEO and Accounting Officer, commented: “Alongside our delivery of equipment and support we have realised substantial benefits to the Equipment Plan through our transformation programme.

“We are now focussed on the continuous improvement of our business through the DE&S@21 Improvement Plan which aims to further improve our capability and build on our excellent achievements to date. The Plan contains deliverables that have clear measures of success around supporting our people, delivering quality outputs to our customers and making DE&S a great place to work.”

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For 2018-19, DE&S managed to achieve or exceed the majority of the CASP targets which were measured and monitored throughout the year including support targets for Availability, Reliability, Sustainability and Safety in three of the five Commands; Air, Joint Forces Command and Strategic Programmes.

There was a failure to achieve the Army Sustainability target during the year, with DE&S citing a ‘demanding operational tempo’ as a significant contributing factor for the Navy Command support targets not being met.

Plans to fix these issues have been put in place to improve performance outcomes over the next year.

In terms of targets to stay with budget and make expenditure efficiencies, the £9,766 million spend on equipment acquisition and support was £146 million (1.5%) under the budget of £9,912 million.

Inventory expenditure running at £770 million was £230 million (23%) under the Key Performance Indicator (KPI) budget of £1 billion for Raw Materials and Consumables (RMC), and the department also managed to see a reduction to the Gross Book Value of total inventory holdings by a further £233 million.

The report also revealed that the projected 10-year costs of the Equipment Plan fell by £1,579 million (1.5%) from £108,025 million to £106,446 million. The majority of the reduction – totalling around £1.4 billion – represented efficiencies such as the £146 million on the QinetiQ Long Term Partnering Agreement and £134 million on Apache Integrated Operational Support.

These savings brought the total Equipment Plan efficiencies delivered for the period 2019-20 to 2028-29 to about £4.5 billion.

In terms of operating expenditure, DE&S operating costs (excluding communicated costs) of £946 million were 0.7% under its budget of £953 million.

DE&S has been more focused in its use of Private Sector Support (PSS) by introducing new Industry Delivery Partner arrangements which procure engineering and programme services in a more cost-effective method.

It is envisaged these efficiency savings will contribute to meeting the operating efficiency targets in the Department’s transformation programme, which have cumulatively saved £185 million since 2015-16, of which £61 million was achieved in 2018-19.

Looking ahead, the report says that DE&S we will continue to deliver against the DE&S@21 Improvement Plan with a focus on supporting the Department and our customers and improving our capabilities and performance.

Writing in the report, Sir Simon Bollom, DE&S Accounting Officer, said: “During 2019-20 we will continue to deliver a complex and varied programme of work to our military customers, acquiring new equipment and capabilities and supporting those in-service to ensure the armed forces have what they need, when they need it.

“Our organisational structure is designed to support interaction and strong professional relationships with our customers; this enables us to deepen our understanding of their needs, whilst continuing to work with industry to deliver innovative solutions that ensure we are able to react to the evolving threats to our nation.”

To read the report in full, please click here.

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