By David Williams
4 March 2010
MPs have condemned the Ministry of Defence for wasting hundreds of millions of pounds every year through its equipment procurement programme.
A damning report, published today by the Commons defence select committee, also accuses the department of being ‘disingenuous’ in denying the existence of a £21bn funding gap last year.
The report criticises the MoD’s practice of postponing procurement projects to reduce costs in the short term, saying it only adds to the funding gap. The ministry is overspending because it has ‘commissioned more work than it can afford to pay for’, the committee says, and it is ‘shocking’ that no attempt has been made to calculate the cost of delays.
In one example, the postponement of an aircraft carrier programme caused short-term savings but incurred additional costs of £674m – or 13% of the £5.2bn total cost of the project.
‘Such cost increases are unsustainable in the context of a tightening budget situation,’ the report says, ‘and illustrate precisely why the equipment programme has become out of balance with the budget.’
Overall, in 2008/09 such delays led to extra costs of £733m in the MoD’s core equipment procurement programme, according to National Audit Office data.
Chair James Arbuthnot also criticised the MoD for more than halving research and technology spending in real terms over the past 15 years. ‘The research programme cannot be turned on and off at short notice and the benefits can only be realised with a consistent and long-term commitment of resources,’ he said.
Quentin Davies, minister for defence equipment and support, acknowledged that improvements were necessary, but said that since 2008 almost 90% of projects had come in on budget, while 80% were on time.
He added that the ministry had already made clear commitments to improve its equipment procurement by bringing costs into balance and being more transparent.
‘The report does not criticise the way we currently equip our forces on the front line,’ he said.
4 March 2010
MPs have condemned the Ministry of Defence for wasting hundreds of millions of pounds every year through its equipment procurement programme.
A damning report, published today by the Commons defence select committee, also accuses the department of being ‘disingenuous’ in denying the existence of a £21bn funding gap last year.
The report criticises the MoD’s practice of postponing procurement projects to reduce costs in the short term, saying it only adds to the funding gap. The ministry is overspending because it has ‘commissioned more work than it can afford to pay for’, the committee says, and it is ‘shocking’ that no attempt has been made to calculate the cost of delays.
In one example, the postponement of an aircraft carrier programme caused short-term savings but incurred additional costs of £674m – or 13% of the £5.2bn total cost of the project.
‘Such cost increases are unsustainable in the context of a tightening budget situation,’ the report says, ‘and illustrate precisely why the equipment programme has become out of balance with the budget.’
Overall, in 2008/09 such delays led to extra costs of £733m in the MoD’s core equipment procurement programme, according to National Audit Office data.
Chair James Arbuthnot also criticised the MoD for more than halving research and technology spending in real terms over the past 15 years. ‘The research programme cannot be turned on and off at short notice and the benefits can only be realised with a consistent and long-term commitment of resources,’ he said.
Quentin Davies, minister for defence equipment and support, acknowledged that improvements were necessary, but said that since 2008 almost 90% of projects had come in on budget, while 80% were on time.
He added that the ministry had already made clear commitments to improve its equipment procurement by bringing costs into balance and being more transparent.
‘The report does not criticise the way we currently equip our forces on the front line,’ he said.
