MoD criticised for £6bn deficit

18 November 2004
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18 November 2004 | Cara Whitehouse

The National Audit Office (NAO) has slammed procurement practices at the Ministry of Defence (MoD), whose costs on 20 major equipment projects slipped a further £1.7 billion to reach £6 billion over budget.

It found the Astute class submarine project was 35 per cent over budget, the Nimrod MRA4 reconnaissance aircraft 28 per cent and the joint strike fighter aircraft 26 per cent.

The total cost of these 20 projects is expected to be £50 billion, 14 per cent above the £44 billion anticipated at approval stage.

The report acknowledged that the MoD did better than in 2003, when it recorded a budget overrun of £3.1 billion.

Nonetheless, the NAO is concerned that inconsistent use of new "smart acquisition" procurement techniques is undermining expected improvements.

It concluded there were "worrying signs that the performance of newer projects begun since the introduction of smart acquisition was starting to deteriorate". Failure to spend sufficient time and resources at the assessment phase was cited as a major oversight, resulting in unrealistic expectations.

Sir John Bourn, head of the NAO, said: "There must be greater certainty as to when equipment will be ready for service and there must be greater control of costs."

Lord Bach, minister for defence procurement, said the MoD was "disappointed" by the findings of the report.



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