Page last updated at 13:18 GMT, Thursday, 15 October 2009 14:18 UK

MoD equipment plan 'unaffordable'

James Arbuthnot, Conservative Chairman of the Defence Select Committee

The way the Ministry of Defence buys equipment is "unaffordable", with an estimated budget overrun of £35bn, a report has said.

The review, commissioned by the MoD, said too many types of equipment were being ordered for too large a range of tasks at too high a specification.

It found programmes are, on average, five years late into service and cost an extra £300m as a result.

The MoD accepted some of the findings and is working on "implementing them".

'Major mismatch'

The report, written by former MoD adviser Bernard Gray, was commissioned last year to assess how best to reform the procurement process.

It has called for systemic changes and improvements in the planning, management and delivery of equipment and described the system as "overheated".

Explaining what he meant by overheated, Mr Gray told the BBC: "I mean the MoD has plans to acquire equipment which are significantly in excess of any likely budget that's going to be available to pay for them."

FROM THE WORLD AT ONE

He also told BBC Radio 4's The World At One that individual services competing for a share of scarce resources were reluctant to cancel their requests.

"Once the ball is rolling on a programme, naturally enough people are reluctant to cancel it," he said.

"It's partly because they genuinely want the equipment in most cases and partly because it's an embarrassing thing to do to say you wanted something one day and you don't want it the next".

Ian Godden, Secretary of the Defence Industries Council, welcomed the report, which he said highlighted the need to set clear industry budgets.

'Thorough job'

"We don't have a long-term view of what the budget should be, there are delays to programmes caused by that budget pressure which then compound themselves in future years and, by those delays, the cost of projects go up," he said.

"It is this overheating which is causing, in simplistic terms, a major mismatch between what is perceived to be needed versus what is actually achieved."

A Merlin helicopter in 2005
Helicopters have been affected by shortages of spare parts

In May the Public Accounts Committee of MPs said delays in defence projects had left front-line troops in Afghanistan with almost obsolete equipment.

The projects included the Terrier armoured vehicle, the Soothsayer electronic warfare system and the A400M aircraft which replaces the ageing Hercules fleet.

Defence Secretary Bob Ainsworth acknowledged "problems" in the procurement process, but rejected calls for the Defence Equipment and Support (DE&S) group to contract out the acquisition of equipment.

He said: "The government has thought about this carefully, but we are not convinced that such a change would ultimately lead to better outcomes for the armed forces or defence generally."

Defence Select Committee chairman James Arbuthnot told the BBC the report identified "very profound" problems.

We accept most of his recommendations and are getting on with implementing them
Lord Drayson
Minister for Strategic Defence Acquisition Reform

The Conservative MP said it showed up to £2.2bn were being wasted every year because of a failure to address the problems.

He said: "The whole thing needs to be looked at in a much more long-term basis - 10-year budgets for the MoD which are independently analysed by an outside major firm of auditors to say whether they are realistic or not."

Liberal Democrat defence spokesman Nick Harvey warned the "devastating" findings would have a major effect on future defence policy.

He said: "The government has presided over a decade of overstretch and spiralling costs without being straight with the public about the consequences."

The report stated: "The Ministry of Defence has a substantially overheated equipment programme, with too many types of equipment being ordered for too large a range of tasks at too high a specification.

"This programme is unaffordable on any likely projection of future budgets. The result is that programmes take significantly longer than originally estimated."

The findings come just a day after the government announced 500 more troops are likely to go to Afghanistan.

Welcoming the report, Lord Drayson, Minister for Strategic Defence said: "We accept most of his recommendations and are getting on with implementing them alongside broader work to develop a future strategy for Defence Acquisition."



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