15 April 2011
MPs have condemned the Ministry of Defence for being unable to control or explain the spiralling cost of the Typhoon fighter aircraft project, citing ‘an overall failure to control defence spending’.
The PublicAccounts Committee criticised the MoD following a damning report by the National Audit Office last month.
Typhoons, sometimes known as Eurofighters, are being built in a partnership with Germany, Italy and Spain.
The MoD originally planned to buy 232, but will eventually have a fleet of only 107.
These will cost it £20.2bn, £3.5bn more than the estimate for the original 232 aircraft.
Substantial extra costs arose when the MoD decided in 2004 to install a ground attack capability on the Typhoon, which had previously been planned only as a fighter.
Ground attack became possible by 2008, but in 2009 the MoD decided not to use the Typhoon for this purpose.
PAC chair Margaret Hodge said the MoD’s record on the Typhoon showed ‘yet another example of over-optimism, bad planning and an unacceptably high bill for the taxpayer’.
She said officials had been ‘unable to give us a coherent explanation’ of the ground attack issue.
Hodge also criticised the MoD for cancelling the project’s third phase in 2004 and then reinstating it five years later while being unable to explain why.
‘This pattern of decision-making is more about balancing the books in the short-term rather than ensuring value for money over time,’ she noted.
The committee also complained that the department's calculation of the unit costs was misleading. It put this at £73m, based solely on production costs, but development and capital costs should have been included, taking the figure to £126m.
The MoD should ‘calculate and report its unit costs on a basis that includes all expenditure’, it said.
Very few suppliers have the capability to work on Typhoons and so contracts are awarded without tendering.
The committee said the MoD should ‘demonstrate it is achieving value for money from its single source supply contracts but did not supply specific evidence that it is doing so’.
Arrangements to have a ‘senior responsible officer’ in charge of MoD projects broke down in this case, with the Typhoon’s officer being merely one among many people with responsibility for different parts of the project, it said.
Defence Secretary Liam Fox said the Typhoon project was now ‘under control and back on track’.
He said: ‘I am determined that in the future such projects are properly run from the outset, and I have announced reforms to reduce equipment delays and cost overruns. I will also chair regular Major Projects Review Boards to ensure our armed forces are well equipped and tax-payers get value for money.’
