Press Release - Ministry of Defence: Major Projects Report
2006
24 November 2006
The National Audit Office’s annual report on 20 of the top
defence equipment projects shows the Ministry of Defence has
responded to recommendations made by the National Audit Office and
the Committee of Public Accounts, on controlling increases in
forecast expenditure and living within its means.
Faced with the possibility of rising costs in 2005-06, the MoD
launched an internal review to halt these and find reductions
across its procurement activities. This review identified potential
savings of £781 million by buying fewer of particular items,
re-assessing military requirements and reviewing existing contracts
and commercial arrangements.
Fifty seven per cent of the cost reductions were generated by
reallocating costs to different budgets. The rationale behind this
change – to attribute more appropriately costs to budget holders
who are better placed to manage them - is sensible. But as these
costs are being transferred into another MoD budget, they are of no
net financial benefit to the Department.
Some of the delays and cost reductions, particularly those made
by buying less, as in Guided Multiple Launch Rocket System, may
result in a gap in capability or a delay in introducing enhanced
capability. The Department recognises the risk and plans exist to
mitigate any potential impact.
In 2005-06, twelve projects have progressed to schedule and two
were ahead of last year’s schedule. Delays across five projects
contributed to the total in-year delay of 33 months. This is an
average of 1.7 months per project this year, less than the average
of 2.4 months in last year’s Major Projects Report. Beyond Visual
Range Air-to-Air Missile is expected to be delayed by 12 months.
The Next Generation Light Anti-Armour Weapon has been delayed by 8
months but is still expected to enter service within the timescale
set when the project was approved. The delays were caused by
technical problems.
The National Audit Office has also confirmed it is working with
the MoD to change how it reports on the top defence equipment
projects in the future. Increasing emphasis on the management of
defence capability through life for projects mean it is necessary
for the Major Projects Report to evolve to continue giving the most
complete details on the performance, cost and timeliness of defence
equipment projects. Proposals for a new look MPR are being
developed with the intention of introducing the new report in
2008.
Sir John Bourn, head of the NAO, said
today:
“The Ministry of Defence has recognised the concerns
expressed by the Committee of Public Accounts and ourselves about
the need to tighten its control of costs. A sensible step to
achieving this has been to reallocate some costs to budget holders
who can manage them more effectively."
“The way in which MoD conducts its acquisition business
is evolving. To provide more public information to Parliament we
are working with the MoD to make sure that the Major Projects
Report evolves in parallel to ensure it provides a more complete
account of the progress of defence equipment
projects.”
Notes for Editors
- Press notices and reports are available from the date of
publication on the NAO website, which is at www.nao.org.uk. Hard
copies can be obtained from The Stationery Office on 0845 702
3474.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office which employs some 850 staff. He
and the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 61/06
All enquiries to Mark Anderson, NAO Press Office:
Tel: 020 7798 7558
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