Press Release - Major Projects Report 2008
18 December 2008
Over the past ten years, the Ministry of Defence has introduced
a number of reforms to the way it procures defence equipment, but
its performance on Major Projects remains variable. As part of its
annual report to Parliament, the National Audit Office examined
twenty of the largest defence equipment projects. The report found
that, during the 2007-08 financial year, forecast costs for these
projects rose in aggregate by a further £205 million over their
original budgets and forecast in-service dates slipped in aggregate
by an additional 96 months. On current forecasts a quarter of these
projects will not achieve all of their key performance
objectives.
The Ministry has worked with its industrial and commercial
partners to deliver urgently needed operational requirements and
made sensible decisions to prioritise where this is appropriate.
The Watchkeeper unmanned aircraft is not due to come into service
until 2010, so the Ministry worked with the contractor to fast
track the delivery of an interim capability by mid-2007 to meet
pressing operational needs. The Department has also used the Urgent
Operational Requirements process to buy 13 High Mobility Engineer
Excavators from JCB for £6.2 million, upgraded to a standard
suitable for deployment on current operations, to replace the
delayed Terrier armoured engineering vehicle project.
The Ministry of Defence changed the delivery programme for the
Beyond Visual Range Air-to-Air Missile to deliver it when it was
needed and at the lowest cost. The Ministry has adopted a two stage
delivery programme to build the missile and demonstrate it before
integrating it with a specific aircraft type. The second stage will
see the missile integrated with the Typhoon aircraft as part of the
Typhoon Future Capability Programme. The changes to the project,
including the increased duration, have led to a £111 million
overall in-year cost increase.
But overall performance continues to be varied, with five of the
projects examined by the NAO showing significant cost or schedule
problems in the past year (2007-8). These projects were the Nimrod
Maritime and Reconnaissance Mark 4 Aircraft, Terrier armoured
engineering vehicle, Soothsayer electronic warfare system, Naval
Satellite Communications Terminals and the Beyond Visual Range
Air-to-Air Missile.
Factors that contributed to cost increases and delays reported
included shortcomings in project management, a lack of realism at
the project outset, failure to identify project dependencies (such
as limited influence over United States’ weapons development
programmes) and underestimated costs.
Tim Burr, head of the National Audit Office, said
today:
“The Ministry of Defence’s major defence projects
experienced further aggregate delays of 96 months and cost
increases of £205 million in 2007-08. The Department has taken
reasonable decisions to reflect defence priorities and progress has
been made in improving procurement practice. But performance
remains variable and, until the MoD and the defence industry
improve their decision making processes and show sustained learning
from previous projects, value for money will not be consistently
delivered.”
Notes for Editors:
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The following projects were covered by
this report; Beyond Visual Range Air-to-Air Missile, Terrier
(armoured engineer vehicles), Soothsayer (electronic warfare
system), Nimrod MRA4 (aircraft), Support Vehicle (cargo and
recovery), Advanced Jet Trainer, Astute Class submarine, A400M
(aircraft), Future Lynx (helicopter), Type 45 Destroyer, Modernised
Target Acquisition Designation Sight/Pilots Night Vision Sensor,
Merlin Mk1 Capability Sustainment Programme, Sting Ray torpedo,
Watchkeeper (unmanned aerial vehicle), Falcon (communications
system), Future Joint Combat Aircraft, Typhoon Future Capability
Programme, Typhoon (aircraft), Next Generation Light Anti-Armour
Weapon, Naval Extremely High Frequency/Super High Frequency
Satellite Communications Terminals.
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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, Tim Burr,
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 58/08
All enquiries to Phil Groves, NAO Press Office:
Tel: 020 7798 5339
Mobile: 07770 678 477