MoD slammed for juggling funds

6 Dec 07
Major Ministry of Defence projects continue to be afflicted by cost overruns and time delays, government auditors have said.

07 December 2007

Major Ministry of Defence projects continue to be afflicted by cost overruns and time delays, government auditors have said.

The National Audit Office's annual examination of the 20 largest defence equipment projects found that, at £20bn, total forecast costs were £2.5bn over initial estimations. Only half of the 20 projects are on course to be delivered within their initial cost forecasts.

However, the November 30 report noted that the MoD had limited potential cost increases through reassessing requirements, reducing quantities of equipment and diverting any money saved to other projects.

Time slippages were also an issue in a quarter of projects. Five had been delayed by a total of an extra 38 months in 2006/07, compared with 33 months on five projects in 2005/06.

Of these, the most significant were the Type 45 Destroyer, which has been delayed by a further 11 months, and the Terrier and Next Generation Light Anti-Armour Weapon projects, which have each been delayed by a further year.

Public Accounts Committee chair Edward Leigh said: 'At a time when our armed forces are being asked to do very difficult jobs in unbelievably trying circumstances, delays in introducing key equipment are the last thing they need.'

Leigh added that the MoD's tactic of moving money between internal budgets was unacceptable. In the past two years, more than £1bn in expenditure has been reallocated to other projects. 'We need to be clear: these are not savings,' Leigh said.

'This juggling act must not happen again next year. The MoD should focus its creative efforts more on effective project management and less on shuffling figures around on balance sheets.'

Responding to the report, Baroness Taylor, minister for defence equipment and support, said: 'The size and complexity of these equipment programmes with their huge challenges in delivery and technology must not be underestimated. The National Audit Office recognises that we are moving in the right direction to keep costs down.'

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