Arms projects £3bn over budget and 18 months overdue

The cost of major defence projects rose by £3.1bn last year while delivery times have been delayed by an average of 18 months, the National Audit Office (NAO) disclosed yesterday.

Four of the long-term weapons procurements have soaked up £2.7bn of the massive increase. And while the introduction of the so-called "smart acquisitions" system in 1998 has led to improvements, there are signs that even newer projects are suffering from rising costs and delays.

The programmes for Astute class submarines, the Advanced Air-Launched Anti-Armour Weapon (AAAW), the Nimrod MRA4 reconnaissance aircraft and the Eurofighter Typhoon were highlighted in the NAO report as being the main problems because of technical and project-management difficulties.

Another project, for a support vehicle ordered under smart acquisitions rules, did not follow the guidelines laid down, with the MoD deciding to bypass an assessment and risk identification phase. As a result, the delivery time slipped by 19 months.

The Comptroller and Auditor General, Sir John Bourne, said: "I am disappointed by the large rises in costs and delays on four older projects in particular.

"There are encouraging signs that some projects are performing better on cost and time, but it is worrying that others seem to be following the historic patterns of cost increases and slippages as they mature."

The Government said that the smart acquisition policy it introduced, streamlining the equipment ordering systems, was paying dividends. The high-cost acquisitions, it maintained, were due to projects inherited from the previous Conservative governments. But the NAO pointed out that the four problem projects have failed to show any improvement over the past few years. The cost overrun of the Astute and Nimrod amounted to £1.54bn, and that of the Eurofighter Typhoon and AAAW came to £1.05bn.

Lord Bach, the Defence Procurement Minister, said: "The improvements that we are making to the way we conduct business will not, by themselves, address the problems reported by the NAO. Industry must also recognise its share for the serious difficulties that have been encountered. They must also raise their game to improve performance across acquisition and ensure that projects are delivered to cost and time. We will insist on improvements in industrial project management as a condition of doing business with us."

But Gerald Howarth, a defence spokesman for the Conservatives, said: "This is a scandal. Five years ago Labour promised that they would make buying defence equipment 'better, faster and cheaper'. They promised they would end delays and cost overruns. But all we have seen is worse, slower, and more expensive. These huge cost overruns are forcing other vital equipment programmes - like the new aircraft carriers - to be cut and/or delayed."