22 July 2008 | Paul Snell
The Ministry of Defence (MoD) has faced stinging criticism from the Public Accounts Committee (PAC) over a lack of improvement in its procurement processes.
The comments accompanied a report published today by PAC that found the MoD had reduced the cost of its 20 biggest equipment procurement projects, but only by reallocating £609 million of spend to others elsewhere.
The MoD also reclassified £448 million last year (Web news, 12 September 2007), bringing the total spend rearranged to more than £1 billion. The committee said this was not providing Parliament with the true cost of its procurement projects, and not reducing the cost of defence spending in total.
The current forecast of the cost of 19 procurement projects - excluding the Typhoon aircraft, excluded because of commercial sensitivities - is £28 billion. The report said the department needed to change its culture from a "conspiracy of optimism" to greater realism, making staff accountable for performance and providing incentives to staff for delivering "genuine savings".
Edward Leigh MP, chairman of the Public Accounts Committee, said: "In the light of a long line of critical reports by our committee, the MoD has made numerous reforms to its procurement working practices. Lasting improvements have not resulted. The department must address the systemic weaknesses underlying cost increases and time delays."
The MPs said the MoD needed to conduct an in-depth analysis of why previous procurement change plans had failed to deliver and how to secure improvements in the future. The department said it would respond to the committee's recommendations "in due course".