MoD parries National Audit Office criticisms of millions in overspend

Neil Waghorn

'In the period since 1998, the Department’s standard acquisition approach 14 has failed to deliver armoured vehicle projects on a consistent basis in line with plans. While the Department has delivered a number of smaller projects worth £407 million, it has spent £718 million on projects that have yet to deliver, some of which have been cancelled or suspended indefinitely. In practice, however, this is a relatively small fraction of the £14 billion the Department intended to spend on the Future Rapid Effect System project alone. The result is that the Armed Forces have not received much of the equipment they expected to have over the last decade.'
- National Audit Office's report on the cost effective delivery of an armoured vehicle capability
Defence Minister Peter Luff replied to these observations by stressing the successes of the Urgent Operational Requirements process and accepting that there were problems with the procurement process but warned that: "Given the disastrous state of the Department’s finances we inherited, […] change will take time." Secretary for State, Dr Liam Fox, seconded this in a speech at Chatam House, saying that ‘This cannot be done overnight – with sunk costs, kit in build, contractual liabilities and other inherited committed spend, room for manoeuvre in the short-term is limited.’
These eventual changes will reportedly depend on the findings of the Defence Reform Unit. This unit, expected to report its findings in July 2011, is tasked with ‘fundamentally [re-evaluating] the way the Ministry of Defence is structured and managed’ and will result in a ‘new, more cost-effective model for the management of Defence, with clear allocation of responsibility, authority and accountability.’ According to Minister Peter Luff, after the findings, the Products Review Board will hold those personally responsible for failure to account.
Whilst Defence Minister Peter Luff says that the SDSR will not be revisited, Defence Secretary Liam Fox stresses that the ‘SDSR was not a single event, it was part of a cycle of five yearly defence reviews designed to constantly adapt to changing global security circumstances.’