The Ministry of Defence has been accused of a "lack of cost control" in its efforts to overhaul the management of Britain's barracks, training grounds and bases.
Industry insiders and leading politicians were shocked to discover that Deloitte, one of the UK's Big Four accountancy firms, was paid £14.8m in 2012-13 for advising the MoD on reforms to the Defence Infrastructure Organisation (DIO).
That is four times more than the MoD's second highest-paid consultant, EY, received for advice on another part of the MoD, Logistics Commodities and Services, which looks after everyday items such as food. The news emerges just days after the Public Accounts Committee found that the MoD was spending £400m a year on consultants owing to departmental skills shortages.
Deloitte was hired to help the MoD's preparations for an overhaul of the military's vast property and land estates. In March, the contractor Capita was awarded the £400m deal, with ministers hoping the firm's private-sector nous would result in hundreds of millions of savings.
The consultancy figures, revealed by the Defence minister Anna Soubry in a parliamentary answer, led to calls yesterday for a full explanation of how Deloitte deserved that hefty fee. The shadow Secretary of State for Defence, Vernon Coaker, said: "The Government should outline what this money was spent on and explain why Deloitte was paid such a staggering amount more than any other consultancy firm."
A source at one of the country's leading defence firms added: "That looks way over budget. It's another example of a lack of cost control at the MoD."
When Deloitte's contract was awarded, the source said, the fee was supposed to be closer to £5m. But a source close to Deloitte argued the total also included other contracts related to DIO awarded later.
Freshfields Bruckhaus Deringer, the leading law firm, was also paid nearly £2.7m for its work on DIO in 2012-13. The MoD's total payments to legal outfits came to £28m, up from £25m the previous year.
A MoD spokesperson said: "The support of these highly specialised consultants with niche skills not available within the MoD is helping to radically transform the department so it's more efficient.
"Their independent advice must be considered in the context of the £3.3bn invested in infrastructure each year and will ensure this transformation takes place smoothly and efficiently aiming to secure savings of up to £350m a year for taxpayers in the future."
Defence has proved to be lucrative work for Deloitte. The accounting giant also received more than £2m for assistance on a study into the future of the army.
Deloitte is believed to be one of the firms longlisted to help run part of Defence Equipment and Support, the £14bn-budget agency that buys the armed forces' tanks, fighter jets and battle-gear.
The Secretary of State for Defence, Philip Hammond, has been determined to get the private sector to run as much of this agency as possible and is starting by outsourcing what is described as project delivery – making sure that the Government does not overpay for military kit.
Other firms that are believed to be on this long list, which could be published this week, include the US giants Bechtel and Jacobs.Reuse content