MoD needs procurement plan to tackle £7bn shortfall

Will Green is news editor of Supply Management
1 February 2019

The Ministry of Defence (MoD) should produce a procurement plan in the face of a budget shortfall of £7bn.

In a report the Public Accounts Committee (PAC) said the MoD “simply cannot afford everything it says it needs” and it has “made little progress” to tackle the problem.

“We recommend that the department work more closely with HM Treasury to produce a procurement plan, including realistic costing of ‘unknowns’ and support and logistics costs, which puts the department on the same realistic financial planning as all other government departments,” said the report.

The report, on the MoD’s Defence Equipment Plan 2018-28, said costs over the period were forecast by the MoD to be £193.3bn, compared to a budget of £186.4bn, leaving a shortfall of £7bn. This “affordability gap” could widen to £14.8bn, “although this could still be optimistic”, said the report.

The PAC said the plan “remains unaffordable as government continues to delay decisions on its priorities, and on whether to increase funding or stop, delay or scale back programmes”.

The report said the MoD “still lacks the capability to accurately cost programmes” and it was “assuming it will achieve significant efficiency savings, despite not having a coherent and credible plan for monitoring and delivering them”.

PAC chair Meg Hillier (Labour) said progress in addressing the committee’s previous concerns had been “woeful”.

“In terms of poor financial planning, the Ministry of Defence is a repeat offender,” she said.

“The MoD simply cannot afford everything it says it needs and it is not acceptable for officials to continue deferring decisions that have a bearing on its current affordability gap and longer-term risks.”

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