Ministry of Defence project performance criticised

Summary

This Report ‘Ministry of Defence: Major Projects Report 2006’ (HC 295) provides information on the time, cost and performance of the twenty largest Ministry of Defence projects where the main investment decision (known as ‘Main Gate’) had been taken.

Evidence taken by the Committee covered three main issues:

The impact of the cost saving measures identified by the Departmental reviews in 2005-06
The performance of individual projects
The Department’s initiatives to improve acquisition performance.

The Department’s review of the twenty ‘Main Gate’ projects reduced costs by £781m – this figure included an HM Revenue & Customs rebate of £91m and £242m saved as the result of better management of commercial and contractual arrangements.

However, £448m of costs were reclassified as expenditure in other procurement or support budgets or towards corporate management. These re-allocations have, according to the Committee, achieved cost reductions for individual projects but do not represent a saving for the Department as a whole.

Total forecast costs for the approved projects amounts to £27bn, 11% over budget. In additions, dates forecast for the projects slipped with a cumulative delay of 433 months.

The Department is now placing increased emphasis on through life management of Defence projects, involving the life-cycle management of the projects, services and activities

This Committee Report follows on from a National Audit Office Report in November 2006 ‘Major Projects Report 2006’ (HC 23) into major projects undertaken by the Ministry of Defence.

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Law-Making Explained

This is a House of Commons Paper (HC 295 2006-07): it is a Report from the House of Commons Committee of Public Accounts.

Find out more about House of Commons Papers.

How does it affect me?

If you work in the defence sector or are interested in public spending on defence, this affects you.

Edward Leigh MP, Chairman of the Committee of Public Accounts, said: “The Ministry of Defence is confident that its performance in implementing big defence equipment projects is improving. Fourteen projects have been reported as incurring no new delays in the last year. But the truth is that the Department’s track-record in managing these projects is pretty dire and it is too early to say whether its confidence is genuinely justified.” He urged the MOD to “live within its means.”