By Mark Smulian | 3 September 2013
The Ministry of Defence has wasted tens of millions of pounds through indecision on the Carrier Strike project to build two aircraft carriers, and may lack the competence to manage it, the Public Accounts Committee report has said today.
Carrier Strike was originally intended to provide two carriers, as well as the aircraft to fly from them and a helicopter-based early warning radar system. Projected costs for the scheme were £3.65bn when the programme began in 2007, but committee chair Margaret Hodge said it would now cost at least £5.5bn while also failing to deliver any aircraft carriers for nearly a decade.
The PAC found that in October 2010, the MoD ‘decided on the basis of deeply flawed information’ to change the type of aircraft to be flown from the Short Take-Off and Vertical Landing variant of the Joint Strike Fighter to the Carrier variant.
This decision was reversed at a cost of £74m in 2012 ‘when the department realised that this decision would result in additional costs and delay’, the committee said.
On top of this, the MoD ‘still faces major challenges to the affordability of the Carrier Strike programme, particularly with what MPs called ‘uncontrolled cost growth’ in the aircraft and carriers.
The committee also said the MoD ‘might not have the skills or capability to manage the programme despite having some 400 staff working on it’.
It urged the National Audit Office to probe the competence of MoD staff, to establish ‘whether the department has the appropriate mix of staff, skills and capability in procuring equipment and support from industry, and whether the department’s processes for managing contracts are fit for purpose’.
Hodge said the prevarication over what aircraft to use was ‘the latest in an ongoing saga that has seen billions of pounds of taxpayers’ money down the drain’.
The MoD rushed into a decision to change the aircraft and was then forced to admit it had miscalculated, the Carrier Strike: the 2012 reversion decision report stated.
The department admitted that the 2010 decision to change aircraft type ‘was based on deeply flawed information, generated under time pressure and in secret’.
Hodge added: ‘Officials also made incredibly basic errors such as forgetting to include the costs of VAT and inflation.’
She said the PAC remained unconvinced the MoD had the programme under control, not least as an early warning radar system essential to the carrier’s operation would not be available until 2022, two years after the carrier could come into service.
The PAC said the MoD had ‘a history of making poor decisions, based on inadequate information’ and planning for the 2015 Strategic Defence and Security Review must begin now ‘to provide decision makers with improved information [and] sufficient time to consider options rationally’.
Responding to the report, Defence Secretary Philip Hammond said the original contracts for the scheme, signed by the previous Labour government, were ‘not fit for purpose’ as they failed to provide industry with ‘any real incentive’ to control costs.
He said his officials were negotiating with suppliers to bring costs under control, ‘but we are doing so within the context of a contract that gives us very little negotiating leverage’.
Hammond said the £74m bill for reversing the decision on which aircraft to use had been good value as it had saved £1.2bn.
