MoD rapped over its handling of defence projects

The way in which the MoD buys and develops defence equipment has come under fire in a new National Audit Office (NAO) report published today.

The MoD came in for criticism after the NAO found that that, in the last year, costs on the MoD’s 20 biggest equipment projects had increased by £1.7 billion. The audit office also found that on average the projects were delayed by three months.

The total cost of the projects is now expected to reach £50 billion, which is 14% higher than originally planned.

The NAO said that historic problems with defence procurement were not being dealt with properly, and it expected to see further problems arising with these projects in the future.

Despite the development of a new procurement strategy, the Smart Acquisition system, the report found "little evidence that acquisition has been improving".

"Many problems can be traced to the fact that the MoD has not spent enough time and resources in the assessment phase. Projects less than halfway through their procurement are already expected to be delivered later or to cost more than approved. The 15 most recent projects are moving rapidly towards their ‘not to be exceeded’ approvals and six have already breached them," the report found.

As the £1.7 billion in overruns was less than the £3.1 billion reported by the NAO last year, Sir John offered his support to the MoD’s recent efforts to improve its performance – but he warned that all parts of the department needed to work together.

Sir John said: "There must be greater certainty as to when equipment will be ready for service and there must be greater control of costs. If not, some capabilities may have to be foregone or delayed to compensate for rising costs.

"It is of particular concern that newer projects are already showing increases. We are working with the MoD and industry to identify wider good practice, and I fully support the renewed efforts by the MoD to improve their performance. These efforts are as important as ever."

The MoD said today that while it was "disappointed" at the huge costs increases, a sizeable amount of the £1.7 billion overrun was down to problems associated with some older 'legacy' projects such as the Nimrod surveillance aircraft and the Brimstone anti-armour missile system.

The results also reflected the MoD's deliberate attempt to "flush out remaining problems," it said.

Lord Bach, Minister for Defence Procurement, said: "I am determined that the changes made as a result of the review of Smart Acquisition will make a significant impact on the performance of the DPA and the Department as a whole."

(gmcg/sp)