MoD reforms bring costs under control

Equipment is still not arriving with the armed forces on time with 13 projects suffering from capability shorfalls, according to the government watchdog’s annual report.

Sir John Bourne’s report also revealed that changes in accounting rules led to a £233m cost increase on 11 programmes, but stressed that these were not linked to a substantive rise in costs. The average delay on the MoD’s top 20 programmes rose 12 projects telayed by a total of 63 months.

The report’s revelation that three Royal Navy Type 45 destroyers will be pushed into service without essential sonar systems to meet new procurement rules this morning sparked widespread criticism from defence experts.

The MoD has shaken-up the way it organises and goes about purchasing new equipment under its Smart Procurement programme, which the NAO report said had begun to improve performance.

Devolved project teams run by the Defence Procurement Agency (DPA) now have to decide how to juggle between capability, cost and time to meet order requirements within centralised limits.

The DPA last year adopted resource accounting and budgeting (RAB) in a bid to bring government accounts in line with the commercial sector.

The cost of the 20 biggest programmes had fallen by 0.2% or £78m in the year up to 30 March, but had run £2.4bn over budgets agreed by ministers on announcement. The cost of more recent projects over-ran across the year less than older projects, while most of the reduction over the year was linked to future expenditure, with £62m saved on the Eurofighter.

Baroness Symons, defence procurement minister, said: ‘It will take time for our new working methods to be translated into improvement in the NAO’s headline figures.

‘Nearly two-thirds of the delay is on projects that have either now entered service or been cancelled, and one quarter is previously reported delay on current projects.’


Baan fights back with MoD contract

MoD slated over finances

Reforms remodel MoD books

NAO website

MOD website

Related reading