DEF270704 - No. 41

Session 2003-04, 27 July 2004

Publication of Report DEFENCE PROCUREMENT


Publication of Report DEFENCE PROCUREMENT

A major initiative introduced by the Ministry of Defence six years ago to buy defence equipment faster, cheaper and better has failed to deliver on almost all counts, says a highly critical report published today by the House of Commons Defence Committee.

The report, which looks at the so-called ‘Smart Acquisition’ process says that the armed forces have been let down as a result of ‘endemic’ and ‘systemic’ problems in the Defence Procurement Agency, the organisation tasked with equipping them. MPs conclude that the armed forces are not getting the equipment they need, when they need it.

Defence Committee members note that in 2002-03  there were average delays on major projects of 18 months and in-year cost increases of some £3.1 billion.

They say that this will inevitably lead to cancellations or cuts in equipment projects and delays in ordering equipment which the UK’s armed forces depend upon.

The Committee warns that further cost increases and time slippages can be expected in future and says that the ‘woeful’ performance of the Defence Procurement Agency will take some time to reverse.

MPs point to a range of problems which have led to the current situation including the existence of a ‘fear culture’ in the Defence Procurement Agency as well as poor internal review processes, which have resulted in project problems being hidden and remaining undetected for years. 

And the Committee is critical of the MoD’s failure to invest enough money and time in assessing risks and creating contingency plans to deal with problematic projects.  

The report also focuses on the Defence Industrial Policy introduced by MoD and the DTI in 2002 and highlights concerns that MoD is also failing to pursue the effective implementation of this policy.

Protectionist measures being proposed in the US also come in for criticism by the Committee. MPs believe these could not only damage the UK and US defence industries, there is a real risk that relations with the UK’s closest military ally could be harmed.

Commenting, Committee Chairman Rt Hon Bruce George MP said:

“Our armed forces are having to deal with many new security challenges in conditions where they are already overstretched and under-staffed. The last thing they need is to worry about is whether or not critical equipment will turn up on time or at all.

“Our report has highlighted some quite staggering problems in the way that the procurement of vital defence equipment has been handled.

“Only now is the Defence Procurement Agency making concerted efforts to identify best practice in procurement and contracting. We remain to be convinced that these actions will have a positive impact and it is imperative that the situation is monitored closely.

“It is also clear that delays in MoD decision making have resulted in uncertainty and expense for defence companies. This cannot carry on. British firms need to know that a level playing field exists if they are to be able to compete with defence companies in other countries.”

Other specific conclusions and recommendations include:

On the Astute attack submarine and the Nimrod aircraft programmes: The Committee is pleased that good progress is now being made on these projects, which have previously experienced substantial problems. It urges the government to monitor progress closely on both projects and on Astute, to identify a way forward to ensure that vital design skills are not lost.

On the Future Carrier Programme: The Committee recommends that more work is undertaken on assessing risks by extending the assessment period for the Future Carrier. On 19 July MoD announced that the assessment period would  be extended.

On the Joint Strike Fighter: Weight problems which are currently affecting the performance of the Joint Strike Fighter could impact on the expected in-service date, and must be addressed to ensure that the Future Carriers have their offensive airpower capability when they come into service.

On the Eurofighter/Typhoon: The Committee supports MoD’s decision to adapt future orders of the aircraft to reflect the changed security environment, but finds it surprising that MoD considers that the adaptation will have little impact on the total cost of the programme.

On the Future Rapid Effects System: The Committee is concerned that the proposed in-service date of 2009 will not be met, an anxiety shared by industry.

NOTES TO EDITORS:

1. Committee Membership is as follows: Rt Hon Bruce George MP (Chairman), Mr Crispin Blunt MP, Mr James Cran MP, Mr David Crausby MP, Mike Gapes MP, Mr Mike Hancock CBE MP, Dai Havard MP, Mr Kevan Jones MP, Mr Frank Roy MP, Rachel Squire MP, Peter Viggers MP

2. News Release: No. 41

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