Friday, 25 July 2008

Public Accounts Committee critical of MoD's handling of major projects

The Commons' Public Accounts Committee has recently published its report on major projects being undertaken by the Ministry of Defence. Its key findings are:

  • Since 2005 the MoD has been side-stepping the implications of rising costs on major projects by simply transferring costs and budgets internally with the result that the root causes for overspends are not being resolved.
  • These internal transfers mean that the MoD is obscuring the true cost of individual projects thereby limiting effective public scrutiny.
  • The MoD could not provide concrete examples of the impact of these unplanned transfers on other areas of Defence spending.
  • Although the MoD is spending £305 million to maintain the UK’s shipbuilding industry (which is in line with the Defence Industrial Strategy), it has not developed the means to assess whether it is getting value for money from these payments.
  • The future viability of the UK's shipbuilding industry rests on the procurement of two new aircraft carriers and yet it has taken the MoD over five years to get round to signing the contract. Past experience shows that delaying projects leads to increased costs in the long run. The Department and the Treasury need to look carefully at experience on the Future Aircraft Carrier project and identify specific lessons which they can apply on forthcoming projects to prevent such potentially damaging delays.
  • The MoD is ordering fewer munitions for the Guided Multiple Launch Rocket System and transferring a budget of £165 million to the Indirect Fire Precision Attack (IPFA) project to fund alternative munitions. There is no guarantee that IPFA will be approved as currently envisaged and so there is a risk that frontline troops will go short of equipment. The MoD should develop a robust methodology which, as a minimum, should cover analysis of operational requirements, technical risk and likelihood of timely delivery. This would allow it to demonstrate to the Committee the cost-effectiveness of this and future transfers between projects.
  • There are a wide range of factors leading to cost and time overruns on defence projects and, despite numerous reforms to working practices, the MoD seems unable to bring about lasting improvements. The MoD should conduct an in-depth analysis of the way previous change programmes and initiatives were implemented to understand why they failed to deliver, as well as identify how to secure and sustain the necessary improvements in performance.

These projects involve the spending of £billions on equipment and services which are fundamentally critical to the future of UK Defence. It is a scandal that the MoD continues to fail to learn from its past mistakes. For years we have heard about one major defence project after another being the subject of massive overspends and delays and yet here we are again in 2008 being told that the MoD still can't be bothered to investigate why these cock-ups have happened so that they can be avoided in the future. It would seem from the Report that MoD civil servants prefer to spend their time and resources in obfuscation rather than investigation. [Yes, Minister]