The National Audit Office has found that only five of the Ministry of Defence’s 25 largest equipment projects have achieved or are likely to achieve their planned in-service dates.
Because of the MoD’s inability to fund procurement within the funds available – which it defines as ‘budgetary constraints’ – delays to 22 of these projects rose by an average of five months from 35 to 40 months in 1995-96.
The NAO report provides a snapshot of the 25 projects at 31 March 1996 and does not include information available since then.
The navy’s £4.27bn EH101 Merlin helicopter project is now going to cost £652m more than originally envisaged, while inflation has led to a £107m rise in Eurofighter 2000’s costs. A drive to cut the costs of the army’s £40m pan-European Cobra radar led to a two year slip.
While conceding the thrust of the NAO’s criticisms, the MoD pointed out this week that the NAO has set these cost and time overruns against the ministry’s earliest estimates for all these projects, which were set 10 years ago under the MoD procurement executive’s long term costings.
The MoD claims ‘smart procurement’ reforms set out by defence secretary George Robertson in July should eliminate cost overruns and improve the ministry’s management record.
The MoD also points to a £160m saving in the cost of the assault ships Albion and Bulwark over the sum originally provided for. The ships will together cost £515m and are being built by VSEL.
They will not enter service until March 2002 and March 2003, not October 1998 and December 2000 as planned.