Defence Ministrys £60m blunders

10 Feb 00
Weak and substandard procurement practices that have already cost the Ministry of Defence more than £60m could be the tip of the iceberg, a report from the National Audit Office revealed this week.

11 February 2000

Exposing a series of weaknesses in the ministry's procurement system, the NAO report found several incidents where the MoD accepted equipment before it was fully tested and found later that there were major design faults. It also disregarded the original 'staff requirement' to push equipment into service, and agreed provisos on faulty projects that it failed to pursue.

The NAO highlights poor communication between the MoD, its staff and industry, weak risk assessment and ambiguous acceptance criteria as the root causes of its procurement difficulties.

The report comes in the wake of recent criticism of the MoD's handling of IT projects and will add to 'calls for a major overhaul of the ministry.

The NAO examined 43 projects valued at £10m each between 1993 and 1998 and found that in more than 50% of cases the MoD accepted equipment which fell far short of its original requirements. In over half of these, the department decided not to pursue compensation from suppliers because the faults 'would have no detrimental impact on operational capability'. The report highlights one project, the Radar Type 996, which the MoD accepted into service despite major design flaws. It is now faced with a £45.1m bill to bring the radar up to scratch.

The Ministry of Defence was unable to comment on the report but is introducing a new Smart Acceptance process that is designed to improve and update procurement, although this is likely to take between five and ten years before it has any major impact.

The author of the report, Tim Banfield, said procurement at the MoD was a complex process that had been carried out satisfactorily in many projects.

'But our analysis does show that in a significant minority of cases, weaknesses in specifications, contracts, testing and pursuing contractual revenue have cost time and money,' he said. 'If properly applied, the department's new Smart Acceptance process should help to alleviate many of the problems indicated in the report.'


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