by Richard Veryard
“The Ministry of Defence has a substantially overheated equipment programme, with too many types of equipment being ordered for too large a range of tasks at too high a specification. This programme is unaffordable on any likely projection of future budgets.”
That situation might sound familiar to a lot of managers, not just in the defence sector.
The report makes some favourable comments about the Through Life Capability Management (TLCM) programme, but indicates a lack of hard financial data that would be required to make quantitative decisions. As regular readers of this blog may recall, there has been some discussion along these lines published in the RUSI Journal, including Agility and Innovation in Acquistion (Feb 2008) and The Meaning of Value-for-Money (Feb 2009).
The explanation for the current crisis can be found in the essential multi-sidedness of the defence acquisition ecosystem. Traditional cost accounting approaches (such as activity-based costing) fail to address the complexity of this multi-sidedness, and researchers are urgently seeking alternative cost accounting methods appropriate for complex systems-of-systems.
One of the key issues for Through Life Capability Management is that any errors or omissions in the long-term equipment programme must be repaired through what are known as Urgent Operational Requirements (UOR), which over the long haul can prove far more expensive and inflexible than the planned equipment.
The report also praises the Smart Acquisition programme, and expresses regret that the disciplines of Smart Acquisition have been somewhat diluted by recent reorganization.