HC Deb 31 March 1999 vol 328 cc676-7W
Mr. Jim Cunningham

To ask the Secretary of State for Defence if he will make a statement on the formation of the Defence Procurement Agency; and what key targets have been set for 1999–2000. [79989]

Mr. George Robertson

As we announced following our Strategic Defence Review the Defence Procurement Agency, DPA, will be launched as a Vote funded agency on 1 April 1999. It will be an executive agency under the Chief of Defence Procurement, Sir Robert Walmsley. He will be the Chief Executive and will be directly accountable to Ministers. The aim of the DPA will be to procure new equipment for the Armed Forces in response to approved requirements and to provide other procurement related services to its customers in and beyond the Ministry of Defence.

The Agency's main presence will be at its headquarters at Abbey Wood, Bristol, as well as at other locations in the UK and overseas.

The Agency will be organised in accordance with the principles underlying the Strategic Defence Review and specifically the Smart Procurement Initiative. The majority of its people will belong to Integrated Project Teams arranged in groups and accountable to the Agency's executive board. The executive board will be collectively accountable through the Chief Executive for the aggregate performance of the agency.

We have established five Key Targets to determine the effectiveness of the Agency during its first year of operation. We shall report results in the summer of next

Key Targets
1. Predicted achievement of customers' core requirements for projects1 85%
2. Average cumulative slippage of in service dates2 at 31 March 2000 not to exceed 26 months
3. Average cumulative cost variation3 at 31 March 2000 not to exceed 4%
4. Obtain customers' assessments of standards of DPA performance4, to set a baseline for targets in subsequent years March 2000
5. While continuing to meet the demands of the procurement programme, reduce the operating costs of the DPA in relation to the 1997–98 costs of the Procurement Executive by 10%
1About ten core requirements per project will be agreed between the DPA and MOD headquarters, defining the essential characteristics of the equipment. This target has been pitched at a level consistent with achievement of a target of 97% by March 2002.
2Variation between in service date (ISD) approved at "Main Gate" (the major investment decision point) and currently predicted ISD.
3Variation between cost approved at Main Gate and current estimate.
4Assessments will be made in relation to agreed outputs specified in Customer Supplier Agreements relating to pre and post Main Gate project management, provision of technical, safety and other services and management of certain nuclear activities. The aggregated score will be used as the basis for progressively higher targets year by year.