MPs attack £3bn cost overruns on defence projects

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The Independent Online

Massive cost overruns and delays on major procurement projects for the armed forces were attacked yesterday by a committee of MPs who called on the Ministry of Defence to stop "hand-wringing and get a firm grip".

The Commons Public Accounts Committee said the total forecast cost of the largest projects remained £3bn over budget at £29bn, while the average delay was 20 months with some equipment, such as the Nimrod MRA4 reconnaissance aircraft, running more than seven years late.

In its defence, the MoD blamed the cost overruns on a small number of "toxic legacy" programmes and told the MPs that the forecast cost of its 19 largest projects had been cut by £700m last year.

But the committee said this cost reduction had been achieved largely by reducing the amount of weaponry on order or the capability of the kit. Edward Leigh, the committee's chairman, said: "This hand-wringing has gone on far too long. It is now time for the Department finally to get a grip on these projects and provide truly realistic performance, time and cost estimates."

The Astute submarine is running 43 months late, while the Navy's new Type 45 destroyers will be two years late entering service. The number required has been cut from 12 to 8.

The committee said that in deciding how to live within its overstretched budget the MoD should not make short-term cuts in equipment programmes for the sake of expediency without first spelling out the longer-term negative impact on capability and value for money.

It also said that although the ministry had got better at setting meaningful in-service dates, these did not always reflect when useable equipment would reach the front line.

The committee also served notice that the £3.5bn collaborative project with France to build three new aircraft carriers for the Navy should not turn into a re-run of the pan-European Eurofighter Typhoon programme. This has been offset by chronic cost and time overruns and "lack of management direction" caused by work being handed out on the basis of the number of planes each country is buying rather than which contractors can provide the best value for money.

The MPs said that on joint defence projects with the US, the UK's influence had been reduced because it was the junior partner. But the opposite was the case with large pan-European programmes where a lack of leadership had stymied progress.

The committee also said that the MoD needed to do more to improve the performance of its second and third-tier suppliers if it wanted to bring its procurement budget under better control rather than concentrating as it does on its 18 largest suppliers.

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