Typhoon aircraft overspend slammed

1 Mar 11
The Ministry of Defence has failed to secure value for money from the Typhoon fighter aircraft, the Public Accounts Committee has said.

By Mark Smulian

2 March 2011

The Ministry of Defence has failed to secure value for money from the Typhoon fighter aircraft, the National Audit Office has said.

The Eurofighter Typhoon, which the UK is procuring together with Germany, Italy and Spain, will form the core of the Royal Air Force’s air combat capability until at least 2030.

But an NAO report published today found that project costs had risen substantially, despite the MoD buying 72 fewer aircraft. Management of the Typhoon project revealed that forecast development and production costs have risen by 20% to £20.2bn, a 75% increase in the unit cost of each aircraft. Development costs alone have more than doubled to £6.7bn from the time the project was originally approved in 1987.

By the time all the Typhoons eventually go out of service the whole project will have cost some £37bn and ‘given the quality of cost control thus far in the project, the final figure may well turn out to be even higher’, the report noted.

The NAO criticised the ‘over-optimistic’ basis on which investment decisions were taken, slow decision-making and noted that the objectives of the four partner nations were not always well aligned.

NAO head Amyas Morse said: ‘The project suffered from corporate decisions to try to balance the defence budget and the department did not predict the substantial rate at which costs would rise. None of this suggests good cost control, a key determinant of value for money.’

Officials’ tenure in key posts should be lengthened ‘to ensure they see through the implementation of their decisions’, the NAO recommended.

Public Accounts Committee chair Margaret Hodge condemned the MoD for ‘yet another case of costs spiralling out of control, with billions of pounds of taxpayers’ money wasted owing to poor decision-making’.

Her remarks came only weeks after the committee accused the MoD of wasting billions of pounds by mismanaging other major projects.

Hodge said that the committee had ‘reported extensively on the MoD’s continuing failure to manage projects effectively and keep budgets under control’.

She said: ‘Yet again we see evidence of over-optimistic cost projections, slow decision-making, and problems with operational deployment of aircraft.’

Hodge urged the ministry to ‘get a firm grip on its equipment programme’ and said it should simplify decision-making.

Commenting on the NAO’s findings, defence minister Peter Luff said: ‘The four partner nations are working hard together to ensure their project management continues to match the excellence of the Typhoon, which is a world-class, multi-role weapon system which meets the defence challenges of the 21st century.

‘The defence secretary [Liam Fox] has announced reforms to prevent future delays and cost overruns in defence procurement, ensuring our armed forces are properly equipped and taxpayers get value for money.’

Fox is to chair a Major Projects Review Board to ensure projects are delivered on time and on budget, Luff added.



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