The NAO – in a report which revealed tanks’ air filters clogged up with sand and dust after four hours of dessert running – said it was longstanding MoD policy, agreed with the Treasury,ÿthat when costing operations the net additional costs, such as additional fuel and transport costs directly attributable to the operation, should qualify for additional funding.
It said other costs, such as the salaries of personnel taking part,ÿdid not qualify on the basis that military capability represented by the Armed Services would otherwise be deployed elsewhere and paid for from existing budgets.
But in their report on ExerciseÿSaif Sareea II, the NAO said it consideredÿthere was a case for ‘basing decisions onÿa knowledge of the full cost or an exercise, not least because the real scale of the resources consumed by any activity is generally a key factor in deciding whether it should take place or not’.
The MoD’s view is that this would beÿcostly and time-consuming and not provide enough useful management informationÿto justify the effort.
The report said full costs had not been calculated for the exercise -ÿfor which an original budget of £90.3m was settled – but these would be ‘significantly more’.
Even the basis of additional costs was inconsistently applied, according to the report. The MoD has issued a policy paper to address the problem – which the NAO considered would not eradicate the problem but represented progress.
There was also criticisms over uncertainty about the original budget which the audit watchdog said complicated planning.
MPs on the Public Accounts Committee will cross-examine the MoD in the autumn and make their own recommendation for future accounting arrangements.
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