As the noble Baroness will be aware, the National Audit Office reports not to the MoD; it reports to Parliament. It is a very powerful line of accountability that introduces the legitimacy in any democratic society for elected parliamentarians—or Members of this House—to ask on the basis of a report what the department has been doing. It has never inhibited Members of the other place or Members of this House from doing just that, as your Lordships are very well aware.
The noble Lords, Lord Alton and Lord Coaker, raised particularly the very legitimate question of what we are doing within the MoD to try to improve our procurement performance. I think your Lordships will understand that, probably more than any other department, the Ministry of Defence carries out massive procurement contracts. Then again, that is a very justifiable reason for asking us to demonstrate that we are doing that effectively and efficiently, being fair to the taxpayer and to our industry partners.
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We recognise the challenges facing defence acquisition and are working hard to address them. We are setting new projects and programmes up for success by promoting a one-team approach that brings the right experts and stakeholders together at the start of a programme. We are also supporting our senior responsible owners. The senior responsible owner in any contract is a vital presence. One of the identified weaknesses that I think came to light in relation to the Ajax contract was that the senior responsible owner was constantly changing and there was therefore a lack of continuity of knowledge, experience and awareness. That has been recognised as a weakness and therefore very close attention is now being paid to ensure that these senior responsible owners are there for the long term and that they have project professionals with new tools to better understand and manage risk and complexity, and to enable early consideration of strategic factors.
If your Lordships think that is just a lot of comforting rhetoric, I say that I have seen at first hand how this technology is working. The effect is quite spectacular. It means that, at any time, the critical senior managers
of a contract in the MoD can ascertain in detail where it has got to and whether there are any areas of concern. That has been a major improvement. I will not deny that the Ajax contract has been a very difficult experience for the MoD, but we have learned a lot from it and are certainly applying those lessons. We are streamlining our processes and focusing expertise on areas of high risk and complexity—as the Committee will understand, this is a regular and recurring characteristic of defence contracts—so that we support robust, evidence-based investment decisions.
Noble Lords asked whether we were satisfied that relevant and appropriate checks are already in place. I have tried at some length to explain the procedures. We are satisfied. We are certainly anxious that placing a legal obligation for such an extensive and wide range of audits would have a detrimental effect on defence in the protection of our national security and might result in a reduction in risk-taking, which is key to driving forward innovation. We are anxious that this arrangement could cause an additional burden on defence resources.
Specifically on Ajax, which the noble Lord, Lord Alton, covered, we acknowledge the challenges, as I have already indicated, and are taking steps to put it back on a sound footing. The noble Lord will be aware that the MoD health and safety directorate carried out a very extensive investigation under the director-general of that department, David King. He produced a very useful and instructive report which has informed MoD thinking in relation not just to the Ajax contract but to how we address other contracts. It was a very analytical, forensic report. We are taking all necessary steps to secure our contractual and commercial rights under the Ajax contract with General Dynamics to deliver a value for money outcome. I am unable to say much more than that, but the recommendations contained in the report to which I referred have been given close attention. I can certainly make an inquiry and write to the noble Lord with a more up to date position.
I suggest that, with what I have been describing as already happening within the department, these initiatives are designed to create more realistically costed, affordable and agile acquisition plans, improving strategic relationships within the defence and security industries and improving tools and processes. The single-source contracts regulations, with which your Lordships are familiar, are there to help ensure value for money in non-competitive contracts.
As I said earlier in relation to this amendment, the NAO is set up under statute to be independent of the Executive, having complete discretion to decide which examinations to perform and how they are conducted, and the NAO is already able to report directly to Parliament. While I understand the intention behind the amendment, it conflicts with these principles on how and what to investigate, and I humbly submit that that should be left to the NAO to determine under its existing statutory powers. I hope that I have provided reassurance to noble Lords that steps have been and are being taken to address issues in defence procurement and I respectfully suggest that the amendment is withdrawn.