The Committee welcomes the progress made by the Ministry of Defence in getting to grips with its budget and military equipment costs. The affordability of the Department's 10-year plan for buying and supporting equipment is, however, dependent on it: continuing to control cost increases in existing equipment projects; delivering ambitious project cost savings over the next 10 years in order to balance its budget; and having the right skills in place to ensure that the assumptions made in its plans are robust and deliverable. Failure to improve the skills of Defence Equipment and Support (DEandS), which buys and maintains military equipment, will undermine the Department's efforts to improve control over its finances. The Department agrees that DEandS is over-reliant on expensive contractors and DEandS is spending a further £250 million on contractors over the next three and a half years to determine how it will address this and secure the skills needed to deliver the Equipment Plan within the assumed budget and to time. There remain risks to the success of the Department's Army 2020 programme designed to reduce the size of the regular Army and increase the number of trained Army reserves. The Department has not yet addressed the Committee's previous recommendations to develop credible contingency plans in the event that it cannot recruit the number of regular and reserve soldiers it requires. While the Department is reporting progress against its recruitment targets, it does acknowledge that targets beyond 2016 will be challenging and require significant improvements in performance.