MoD slammed as cost overruns hit £2.7bn

Two recent reports have slammed Ministry of Defence equipment projects for being an average of four years late and billions of pounds over budget. One project, the new Bowman radio for the army, is eight years late and was condemned last week by the House of Commons Defence Committee as `a very good example of […]

Two recent reports have slammed Ministry of Defence equipment projects for being an average of four years late and billions of pounds over budget.

One project, the new Bowman radio for the army, is eight years late and was condemned last week by the House of Commons Defence Committee as `a very good example of the antithesis of smart procurement’.

And according to the National Audit Office, 25 major defence projects running at 31 March 1999 were forecast to cost a total of £2.7bn more than originally estimated. Four projects – Bowman, the Spearfish heavyweight torpedo, the Merlin naval helicopter and Eurofighter – account for 94% of these cost overruns.

On average, the 25 projects will enter service 47 months late. This compares with a 43 month delay in last year’s major projects report. While 15 projects will enter service at least three years late, 10 have been subject to additional delay since the 1998 report, with seven being delayed by another year or more.

One project which industry sources say is likely to be cancelled is the Tracer armoured reconnaissance vehicle, which is running 46 months late.

The NAO found that 13 projects will exceed their original cost estimates, 11 are expected to be under budget and one will cost the same as originally forecast.

On Eurofighter, the defence committee said £90m had been wasted on its Mauser cannon, which the RAF will not now use. Savings from not using guns on the first Eurofighter batch will amount to just £2.5m a year. MPs have demanded a further explanation of the reasons why the guns are not being included.

Sir John Bourn, the NAO’s head, described the MoD’s past performance in procuring major equipment as: `unsatisfactory, with significant cost overruns and delays on projects and adverse operational implications’. But he welcomed possible savings from the introduction of `smart procurement’, which involves closer cooperation between the armed forces and manufacturers.

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