Report slams lengthening MoD purchasing delays

30 November 2000
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30 November 2000 | Cathy Hayward

Delays in defence procurement are getting worse at the Ministry of Defence, and some “smart procurement” practices remain to be implemented, according to the National Audit Office’s Major Projects Report 2000.

The report on the MoD’s £10 billion procurement budget revealed that, over the past year, project delays on the 25 largest projects had slipped to 28 months, three months longer than in 1999.

Tim Banfield, the NAO’s director of defence procurement, attributed this to technical factors, changes in budgetary priorities, collaboration difficulties and shifting customer requirements.

He said it was “disappointing” that the MoD had not put a timescale for in-service delivery on the beleaguered Bowman portable field radio communications system, already eight years behind schedule. “You would have thought the MoD would have put Bowman at the top of the priority list,” Banfield said.

However, the MoD said the projects examined in the report were started before its smart procurement programme was launched in 1997. “It will take time for our new working methods to be translated into improvement in the NAO’s headline figures,” said Baroness Symons, minister for defence procurement.

Symons stressed that improvements had been made since last year. “We are beginning to turn the corner in terms of cost control,” she said. Forecast costs, at £78 million, are 0.2 per cent lower than last year but still remain 5.7 per cent, or £2.4 billion, higher than at approval.

“The MoD is clearly moving in the right direction,” agreed Banfield. “Newer projects such as the airborne stand-off radar are showing less cost overrun per year and older projects managed by smart procurement, such as the Eurofighter, are also coming under control, which is an encouraging sign.”

But delays are having a serious impact on cost, he added. A five-year delay to the type 45 destroyer, set to replace the type 42 model in 2007, is costing the MoD £565 million to operate and support the old model. The type 45 model will also enter service with less defence capability against submarines than initially agreed.

Banfield said the MoD had yet to apply some of the principles of smart procurement to its contracts, including the Bowman.

The NAO’s report covers the year to 31 March and was published last week. The 1999 report was published last July, six months later than planned.

SMnov2000

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