‘Arbitrary’ equipment delays inflate defence costs

23 March 2010

23 March 2010 | Jake Kanter

Bloated costs and delayed procurement projects at the UK Ministry of Defence (MoD) have come under scrutiny again today.

A report by the Public Accounts Committee (PAC) said intentional and “arbitrary” decisions to delay major equipment programmes had increased costs and resulted in “poor value for money”.

It follows a report by the National Audit Office last year, which criticised the MoD’s “save now, pay later” approach. The review showed that 15 major defence projects were running 24 months late and 8 per cent over expected cost.

The PAC accused the MoD of being “overly optimistic” about the defence budget deficit, which the MPs believe could be as high as £36 billion. A similar review by the Commons Defence Committee earlier this month slammed the department for being “disingenuous” about its equipment budget shortfall.

“That the MoD has got itself into such a mess is an indictment of its current governance and budgetary arrangements,” said PAC chairman Edward Leigh.

The MoD should develop common measures for the cost and risks of equipment programmes, including assessments of commercial skills and the maturity of new technology, the PAC report said.

It added: “In future the department must ensure that decisions to accelerate or slow down projects, or change the numbers or capabilities of equipment, are supported by quantified operational and financial analyses to enable the full costs and benefits to be identified and compared on a like-for-like basis.”

Shadow defence secretary Liam Fox said the report had a “weary familiarity” and called for a “root and branch” procurement overhaul.

Quentin Davies, minister for Defence Equipment and Support, said: “The MoD currently manages some 2,000 projects and over the past two years, 90 per cent have been delivered to cost and 80 per cent have been delivered to time.

“The government is taking the tough decisions necessary to ensure that a strong equipment programme stays within the parameters of a rising MoD budget.”

The review follows the MoD’s decision yesterday to award a contract for light tanks to US defence supplier General Dynamics. The company beat UK competitor BAE Systems to the contract.

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