The MoD claimed the four-year contracts awarded in 2002 were issued in accordance with normal procurement procedures, with a view to replacing the contracts in 2006. PricewaterhouseCoopers was paid £23m, Deloitte & Touche £4m, KPMG £12m and Ernst & Young £0.5m.
The payouts were revealed the same week as news that the MoD paid £1,000 for each chair in its modernised Whitehall HQ and defence secretary Geoff Hoon slashed four infantry battalions and scrapped large numbers of tanks, frigates and jet fighters.
Armed forces minister Adam Ingram told MPs in a written reply to a question in the Commons that the firms’ contracts were awarded following competition. The work was commissioned through individual tasking orders placed by MoD project teams.
The revelations accompanied the release of the MoD’s second annual resource-based accounts, qualified by the National Audit Office. The accounts were qualified last year, after the MoD ran into problems concerning accounting for Harrier aircraft, which were shown as retired ahead of schedule so appearing to boost the department’s expenditure.
NAO head Sir John Bourn acknowledged that the MoD had made strenuous efforts to produce acceptable accounts, resolving most of the issues raised the previous year.
But he said accounting transactions still might not be properly recorded because the stock-management systems were designed for logistics purposes. He also received limited evidence to support a £1.1bn net credit in the operating cost statement relating to consumable stock and spares.
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