MoD under attack for £6bn overspending

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Huge overspending on defence was condemned by auditors yesterday, who warned that the Ministry of Defence's 20 largest deals for new equipment were £6bn over budget.

Huge overspending on defence was condemned by auditors yesterday, who warned that the Ministry of Defence's 20 largest deals for new equipment were £6bn over budget.

The National Audit Office (NAO) said there was "little evidence" of improvements in the way large contracts were handled by the MoD, after it found cost overruns had soared by £1.7bn in the past year and the total delays had increased by 62 months. The cost of the 20 projects, including Eurofighter, Nimrod and Future Joint Combat aircraft, is now estimated at £50bn, far exceeding the £44bn total when the projects were approved.

The NAO said cost increases were less than the £3.1bn rise recorded last year. But auditors criticised the management of major procurement projects, claiming that defence officials had not properly implemented their "smart acquisition" initiative - designed to halt delays and massive cost overruns.

They also said: "We expect there to be problems emerging on existing projects in future."

The report said the long- delayed Nimrod reconnaissance aircraft had run £408m over budget last year, taking its estimated total to £3.6bn, almost £800m more than planned. It is expected to be in service by 2009, more than six years late. The Future Joint Combat Aircraft, which will eventually replace the Harrier jump jet, ran £372m over budget last year, taking its estimated cost to £2.6bn, £500m more than its original budget.

Sir John Bourne, the head of the NAO, said: "It is of particular concern that newer projects are already showing increases."

Gerald Howarth, the Tories' defence spokesman, said the NAO report was "damning". He added: "The Government has repeatedly tried to heap the blame on older projects, like Eurofighter, started under the last Conservative government, claiming Labour's new policy of 'smart acquisition' had changed everything for the better."

The MoD admitted the report was "disappointing" but said the picture was influenced by the problems of older projects. Lord Bach, the minister for defence procurement, said: "Although the report's headline figures are much lower than last year - £1.7bn this year compared to £3.1bn last year, and 62 months this year compared to 144 months last year - we are still disappointed with the cost and time increases shown.

"It is, however, necessary to look at this in a wider context ...We have now established a credible baseline which will better allow us to track the progress."

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