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Sir John Bourn, head of the National Audit Office, reported today that in the last year, costs on the MOD’s 20 biggest equipment projects have increased by £1.7 billion and that these projects have been delayed by three months each on average. The problems on these projects show that the sensible principles of Smart Acquisition have not been consistently applied and the NAO expects to see more problems on these projects in future. Sir John supports the MOD’s recent efforts to improve its performance and warned that all parts of the department will need to work together to achieve this.

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The increase in the last year is less than the £3.1 billion which the NAO reported last year. The total cost of these projects is now expected to be £50 billion, which is 14 per cent higher than originally planned.

There is little evidence that acquisition has been improving. Many problems can be traced to the fact that the MOD has not spent enough time and resources in the assessment phase. Projects less than halfway through their procurement are already expected to be delivered later or to cost more than approved. The 15 most recent projects are moving rapidly towards their ‘not to be exceeded’ approvals and six have already breached them.

There have been some individual successes. The Successor Identification Friend or Foe system achieved its in-service date in March 2004 ahead of schedule and within cost. The MOD has also taken sensible measures to address complexities in the delivery of the Carrier Strike capability.

"There must be greater certainty as to when equipment will be ready for service and there must be greater control of costs. If not, some capabilities may have to be foregone or delayed to compensate for rising costs. It is of particular concern that newer projects are already showing increases. We are working with the MOD and industry to identify wider good practice, and I fully support the renewed efforts by the MOD to improve their performance. These efforts are as important as ever."

Sir John Bourn

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