16 November 2011 by Beth Stevenson – Shepard Group
London, UK - The UK MoD is accused of being ‘hampered by a legacy of poor planning’ which has led to a £500 million in-year cost increase in the 15 largest defence projects, the National Audit Office (NAO) stated on 16 November.
Amyas Morse, head of the NAO, said that poor performance on some past projects, and the resulting cuts and delays ‘are not value for money’. The statement provided the back drop to the release of the Major Projects Report 2011 detailing the top 15 Ministry of Defence procurement programmes.
The increase has resulted from the MoD trying to cut costs and balance the budget in the short term following the Strategic Defence and Security Review (SDSR) last year.
‘When coupled with previous cost growth, these projects are now £6 billion above forecasts made when the main investment decisions were taken,’ the statement read.
Programme delays, including the Astute submarine project, now estimated to take a decade per unit to produce, and the most significant 12 month delay on the Watchkeeper UAV programme, have led to the 15 major projects being delayed by a total of 26.8 years, with 30 months of this time frame having been added in 2010-11.
This is the third successive year that central planning has resulted in a big impact on cost growth, however macro-economic factors such as exchange rates accounted for £176 million of the additional cost.
‘But it is welcome news that the Department has finally accepted that the financial position it is in is serious and is actively working towards balancing its books in the longer term,’ Amyas added.
This follows results from the Major Projects Report 2010 released in February, which accused the MoD of having ‘squandered’ billions of pounds thorough the defence budget. Release of the 2010 report was delayed as the government undertook a review of defence capability.
The report said that although out of the 15 largest military projects 13 of them performed well over the past year, the savings were minor in comparison to the cost increases from mistakes on such projects as the Queen Elizabeth Class aircraft carriers, and the third tranche of Eurofighter Typhoon combat aircraft.
The report said that some £5 billion was used to dispose of the Nimrod MRA4 and Sentinel capabilities in order to balance the defence budget.
Chair of the committee House of Commons Public Accounts Committee, Margaret Hodge, at the time reinforced the NAO’s recent sentiments by explaining that: ‘Any good progress being made on many individual defence equipment projects has again been overshadowed by the MoD's continuing failure on important major projects.'