Parliament and Politics: Defence ministry 'partly to blame' for pounds 166m delay

THE FAILURE of the Ministry of Defence to define requirements was partly to blame for the mid-life modernisation of Britain's Tornado GR1 bombers running three years late and pounds 166m over budget, the Public Accounts Committee was told yesterday.

The update is now expected to cost pounds 657m - a third more than the original estimate - with the improved aircraft entering service in 1996 instead of this year.

Dr Malcolm McIntosh, Chief of Defence Procurement, told MPs that when the project was approved, 'we were not sure whether certain things would be required or not' to improve the aircraft's avionics and armament to keep it effective into the next century. The Gulf war had been helpful in that regard, and other items had been added. But under questioning from Terry Davis, MP for Birmingham Hodge Hill, he said the definiton of the work had not been 'taut enough', and agreed it was 'fair comment' that the project got its approval by being badly defined.

There had been a serious under-estimate of costings both in the development specification and in the industry's initial estimates, and the result was about pounds 60m added to the total. But Dr McIntosh argued it could be difficult to predict the costs of state-of-the-art equipment.

The committee also learnt that political decisions added at least pounds 51m to the cost of two new Royal Navy supply vessels, the first of which is now three years late and expected to cost pounds 190m against the original pounds 127m contract price.

At least pounds 35m in direct costs was added to the bill for the Fort Victoria, because of the decision to privatise the Harland and Wolff yard. The contract was awarded in 1986, but uncertainties during the 16-month run up to privatisation in September 1989 hit morale, with more than 200 experienced staff leaving. Dr McIntosh told the committee the privatisation process had proved 'very difficult'. Some workers, unsure of their future, 'took the opportunity to find other employment'.

About pounds 16m was added to the costs of the second vessel after George Younger, Secretary of State for Defence, directed Dr McIntosh's predecessor, Sir Peter Levene, to award its construction to Swan Hunters on Tyneside. Sir Peter had advised on value-for-money grounds that the contract should go out for competition .

Dr McIntosh told the MPs that this was 'a very unusual occurrence'. But the decision had been made 'in view of the concerns about the economic prospects for the north-east of England'.