Annex C: Defence Agency Performance

1. Defence agencies made a major contribution to Departmental performance in 2002/03, employing some 56% of MOD's civilian employees and accounting for around 40% of the MOD's overall annual resource cost.

MOD Agencies and Their Performance

2. In 2002/03, of the 36 Defence agencies, 31 operated as 'On-vote' agencies and the remaining five as Trading Funds. An additional Trading Fund has been created since 2001/02 following the achievement of Trading Fund status by the Army Base and Repair Organisation on 1 April 2002 - subsequently renamed ABRO. At the close of 2002/03, two agencies (the Defence Secondary Care Agency and the Defence Medical Training Organisation) were merged to create a new Defence Medical Education and Training Agency.

3. During a year of exceptionally high operational tempo, MOD's Defence agencies generally performed well against their 2002/03 targets, as shown in Table 22. Nine agencies met all of their Key Targets, a significant increase over last year, and four others fell just short of achieving 100% of their targets. In addition, eight agencies met at least 75%, and twelve others met at least 50% of their targets. The average Key Target achievement level, however, was down 2% on last year to 70%.

4. Performance against an average of 34% of Key Targets showed improvement over the previous year, 17% of which were exceeded in the region of 5% or more. Examples of targets that were significantly exceeded included:

• The Disposal Services Agency achieved a gross cash receipt of £29M against a target of £25M from the sale of surplus Government owned equipment and stores.
   
•  In the first year of operation as a Trading Fund, ABRO was able to deliver over £9M of competed work against a target of £4M.
   
•  The Defence Housing Executive was able to upgrade a total of 1,440 Service family houses against a target of 1,200; an important contribution to Service personnel retention and morale.
   
•  The Defence Estates agency produced an agreed set of categorised core sites under the Core Sites initiative on schedule, giving the Department a comprehensive understanding of the nature, extent and value of its estate assets as well as its capacity for development. Disposal receipts exceeded the target of £185M by some 50%.
   
•  Both of the Defence schools significantly exceeded their targets relating to the generation of income.

5. Performance against Key Targets fell for a number of agencies in 2002/03. In several cases Key Target achievement suffered due to the high level of operational activity. The main areas of reduced performance relate to:

• The Army Training and Recruiting Agency experienced disruption to their training programmes. The agency is dependent on the Field Army making personnel available to attend courses. Events during the year led to a considerable number of individuals being withdrawn part way through courses, making attainment of a number of Key Targets impossible.
   
• The Defence Geographic and Imagery Intelligence Agency was heavily involved in the provision of imagery intelligence support of Operation TELIC. As a result, resources required to meet a number of the agency's Key Targets were diverted in support of operational requirements, leading to reduced performance against Key Targets.
   
• Performance of the Medical Supplies Agency fell in 2002/03. Despite not achieving all Key Targets, performance against targets relating to response times was high. In addition, the agency successfully met the demands placed by Operation TELIC with activity levels equating to some two years work at routine levels of production output.
   
• Fewer Key Targets were met by the Ministry of Defence Police in 2002/03. A number of new Key Targets were introduced this year. Although not all were met, performance was close to the desired levels and work is in hand to address shortfalls.
   
• The Defence Vetting Agency did well in meeting its quality and efficiency Key Targets but failed to meet its timeliness Key Targets. This was partly due to technical difficulties experienced following the introduction of a new IT system. The system is now on track and the agency is in a much stronger position to meet its timeliness targets in 2003/04.
   
• The number of Key Targets met for the Service Children's Education Agency fell in 2002/03. However, there was steady improvement in performance for a number of Key Targets over previous years and the majority of missed Key Targets were marginal misses.

6. There were areas of agency performance where significant improvement was demonstrated yet the relevant Key Target was marginally missed. Overall, 7% of targets were marginally missed.

•  Set against a target of 90%, the Defence Analytical Services Agency achieved a jump in customer satisfaction from 81% in 2001/02 to 87% in 2002/03. New products and services have recently been developed to meet the changing needs of customers.
   
• The Met Office improved its commercial activities contributions by over 10% compared to financial year 2002/03. Commercial activities represent the contribution made towards the Met Office's non-commercial operations as a result of the agency's participation in competitive markets.  

7. In some cases, achievements against agency targets have reached practical ceilings where it is not cost effective to improve performance further. These targets are retained to safeguard against possible future decline in performance. For example, the Naval Recruiting and Training Agency's target pass rate for career and pre-joining training remains at 95% and has been achieved for a number of years. It is not deemed cost-effective to attempt to further increase pass rates.

8. Agencies also contributed to wider MOD efficiency and 'joined up' Government, both nationally and internationally. For example:

• The Defence Transport and Movements Agency pursued an extensive programme of strategic efficiencies that delivered a total of £1.2M in direct benefits towards the achievement of the Defence Logistics Organisation's strategic goal.
   
• The Defence Communication Services Agency carried through the restructuring of the Restricted LAN Interconnect Services contract to deliver an approximate 40% reduction in annual tariffs from April 2003 to April 2007 (£54,000 in total). The restructuring has also improved the support to the Defence Information Infrastructure requirements.
   
• The Met Office provides assistance to the Department for International Development and aid agencies, as well as national meteorological services in the event of major natural disasters. The Met Office's Nimrod system, which provides a unique fully automated system for producing analyses and forecasts of rainfall, has recently been chosen by the Polish national meteorological service to assist in providing advance warning of severe flood events.

9. In striving for continuous improvement, a number of agencies are benchmarking their processes and performance against various standards and leading organisations in the public and private sector.
For example:

• The Pay and Personnel Agency had its ISO 9001 2000 certification successfully extended to include its pensions business area and parts of its information systems, bringing the total proportion of the agency to be covered by ISO certification to 87%.
   
• Independent global findings show that at £2.80 the Defence Bills Agency's average process cost per bill compares favourably with both public and private sector best practice. This has been a major factor in ensuring that the MOD is near the top of the Government payment performance benchmark tables (published annually in July by the Department of Trade and Industry).

10. The MOD is committed to the regular and rigorous review of all its activities, including its agencies. In line with the recommendations of the 2002 agency policy review, the MOD continues with work to conduct end-to-end business reviews, focused on processes rather than discrete organisations. In a number of cases this approach has subsumed previously planned quinquennial reviews of agencies. Business Reviews undertaken since the agency policy review include the vetting process and the Service personnel provision process.

11. Details of the aims, operating costs and manpower of the Defence agencies are available on the MOD website at http://www.mod.uk. This information also includes the names and addresses of the current chief executives, from whom copies of the agency framework document and annual reports may be obtained. The annual reports give more detail on the achievement of targets as well as other significant elements of performance for the year.

Non-Departmental Public Bodies

12. Details, including descriptions of the purpose and size of the MOD's Non-Departmental Public Bodies, their funding and the contact details of their Directors or General Managers can be found on the MOD website at http://www.mod.uk. Details of appointments to Non-Departmental Public Bodies are published by the Cabinet Office at http://www.cabinet-office.gov.uk/quango/index/pubapp.htm.

Last Updated: 3 Dec 03