Gray review savages MoD procurement

14 October 2009

15 October 2009 | Rebecca Ellinor

UK defence procurement projects suffer years of delay and millions of pounds in extra costs, according to a study out today.

Last year, the previous defence secretary commissioned Bernard Gray to assess what steps the department was making to reform buying and suggest recommendations to improve it.

His independent report - the publication of which had been delayed until today (Web news, 10 September) - said: "Across a large range of programmes, this study found that the average programme overruns by 80 per cent or around five years from the time specified at initial approval through to in-service dates. The average increase in cost of these programmes is 40 per cent or around £300 million. This study also estimates that the "frictional costs" to the department of this systematic delay are in the range £900 million - £2.2 billion per annum."

Gray described the equipment programme as "overheated" with "too many types being ordered, for too large a range of tasks, at too high a specification". He outlined systemic weaknesses with the armed forces competing for scarce funding which leads them to "quite naturally seek to secure the largest share of resources for their own needs" with a "systematic incentive to underestimate the likely cost of equipment".

He recommended government hold routine strategic defence reviews to allow for a periodic "resetting" of Ministry of Defence (MoD) plans and detailed a set of suggested changes to keep the equipment programme on track between reviews. It also said the MoD's delivery arm - Defence Equipment and Support (DE&S) - needs "significantly greater skills and tools in a number of areas". Gray contends the best way to create a "world-class programme management organisation in DE&S, would be through a partnership with a private sector programme management organisation, of the type operating in civil engineering and other complex engineering fields".

The MoD said today that it accepts the report's two main themes: a need to bring equipment plans into line with likely available resources; and a need to improve equipment programme planning, management and delivery.

Lord Drayson, minister for strategic defence acquisition reform, described it as "a strong package of measures to ensure the right equipment is delivered in the most efficient way".

"Quite simply, we accept most of his recommendations and are getting on with implementing them alongside broader work to develop a future strategy for defence acquisition, which will ensure we deliver as effectively as possible the equipment the armed forces need."

Gray will work with the MoD to develop an overall Strategy for Acquisition Reform to be published early next year.

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