Summary
'The Major Projects Report 2010’ (HC 687) examines the Ministry of Defence's (MoD) progress in meeting cost, time and performance targets for its 15 most costly military equipment ventures.
The Committee of Public Accounts has reported before that the defence equipment programme is unaffordable with commitments exceeding forecast budgets over a ten year period by £36 billion.
The MoD's short term decisions to keep in-year expenditure within voted limits and the need to understand the full cost implications of these decisions have damaging consequences. In 2011 alone the cost of the major projects rose by £3.3 billion and nearly £5 billion was lost through late cancellations.
The scale of problems created by this financial imbalance masks the improved performance of the majority of projects against cost and budget.
The Strategic Defence and Security Review (SDSR) offered the Department an opportunity to bring its plans into balance with the expenditure limits set in the Comprehensive Spending Review (CSR).
Projects such as the Nimrod MRA4 and Sentinel aircraft have been cancelled, accepting greater operational risks in some areas and writing off nearly £5 billion of taxpayer's money. But implementing the SDSR will require further decisions and the renegotiation or cancellation of a significant number of existing contracts to make the programme affordable.
The MoD has a poor track record in taking such decisions on the well informed basis necessary to optimise value for money. Other projects examined in detail include the Queen Elizabeth Class aircraft carriers and the Typhoon aircraft.
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