07 July 2000
The report examined the MoD's 25 largest projects and found that overall they were running £2.7bn over budget and an average of four years late. It concluded that a further £426m bill would be run up maintaining old equipment until their replacements were ready.
Of the projects surveyed, 13 are expected to exceed their original budget and 23 have either missed their service start date or are expected to do so.
Committee chairman David Davis said the findings were a 'serious indictment' of the MoD's ability to oversee such projects.
'This situation is unsatisfactory, it is failing the taxpayer in terms of the efficient management of resources and it has the potential to compromise the UK's defence capability,' he said.
The NAO's report, published annually since 1993, covers the year up until March 1999 and marks the period immediately before the introduction of the 'smart procurement' regime in April of the same year. It found the increased costs and delays were due to problems already identified in previous years, such as technical difficulties, changes to the scope of projects and budgetary constraints.
Davis showed his exasperation at the lack of progress. 'The problems behind time and cost overruns are not new and it is high time that there were signs of improvement rather than further problems.'
The biggest time slippage has been on the Bowman communications project, designed to ensure secure field communications and running over six years late. The Eurofighter project is the most over budget, so far costing an extra £1.37bn.
The MoD's latest drubbing was reinforced by a report from the defence select committee, which reviewed four of the largest procurement projects. It described progress on the Bowman project as 'woefully slow' and said the MoD should run a new contract competition if Archer, the supplier, did not meet its commitments.
The report gave the Eurofighter a cautious thumbs-up, but concluded: 'There is a long way to go, however, before we can hope to report that all is well within the realm of MoD procurement.'
However, defence procurement minister Baroness Symons said the introduction of smart procurement would reduce problems in the future. 'These measures will improve our project performance by having a simplified approval process, by encouraging front-end expenditure to reduce risk and the establishment of a clear customer focus.'
PFjul2000
