Warning over MoD kit overspend
The Eurofighter is one of the projects affected by overspend
The Ministry of Defence is facing heavy criticism for overspending of more than £3bn on major projects last year.
A National Audit Office study points to mounting costs and late delivery for a number of programmes, including fighter planes, submarines and missiles.
Nearly 90% of the cost overrun was down to four delayed projects from the UK company, BAE Systems.
The report’s publication comes soon after the MoD faced criticism over equipment shortages in the Iraq war.
And in a further blow to BAE Systems, the Financial Times said the MoD was about to award a £13bn contract to replace the RAF’s refuelling aircraft, to a team led by Franco-German defence group EADS.
Defence procurement minister Lord Bach, speaking on BBC Radio 4’s Today programme, refused to comment on the report but said a decision was close.
I am disappointed by the large rises in costs and delays on four older projects in particular
Sir John Bourn
NAO
The paper quoted a unnamed senior MoD official as saying: “you don’t keep employing a plumber who continually floods your house.”
Lord Bach denied there was any effort to “punish” BAE but said the arms industry in general must “raise its game”.
The report also raises concerns over an average nine-month increase in forecast delays in getting equipment into service.
The worst affected projects are four older ones involving BAE, including the Eurofighter Typhoon warplane, Nimrod reconnaissance planes, Astute submarines and Brimstone air-launched anti-tank missiles.
Together the report says they account for 87% of the cost overrun and 79% of the total “slippage” in delivery times.
Conservative MPs described the situation as “a scandal” and urged ministers to “get a grip for the sake of our servicemen”.
Lord Bach said the department was conducting a “stock take” of the “smart acquisition” procedures it introduced six years ago to get costs under tighter control.
“Industry must recognise its share of responsibility for the serious difficulties that have been encountered,” he added.
“They must also raise their game to improve performance across acquisition and ensure that projects are delivered to cost and time.”
Improvements
Officials at the MoD said the minister’s comments referred to all contractors seeking defence work, but particularly to BAE, which receives a quarter of the department’s total equipment spend.
The four projects highlighted by the NAO’s Major Projects Report 2003 all date from the mid-1990s or earlier and have been plagued by a history of technical problems and delays.
A BAE spokesman said: “BAE Systems has formulated and is now executing continuous improvement in all areas under its control in the company’s performance on major MoD projects.”
NAO Auditor General Sir John Bourn said: “I am disappointed by the large rises in costs and delays on four older projects in particular.”
While projects initiated under smart acquisition seemed to be performing better in both time and cost terms, he warned there were signs that these newer programmes may also be drifting towards overspend and delay.
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January 23, 2004 at 9:24 am