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MoD accused of "conspiracy of optimism"

22/07/2008

The Ministry of Defence (MoD) has been accused of a "conspiracy of optimism" which is preventing progress being made in improving its procurement practices, a report has said.

The public accounts committee (PAC) accuses the MoD of deliberately seeking to undermine parliamentary accountability by shifting expenditure on major projects to other defence budgets.

Its report, published today, finds the MoD has reallocated over £1 billion of spending in the last two years on the grounds of allowing better management of individual teams.

While making good accounting sense, MPs warn there may not be a cost reduction in this process and many of the same project teams continue to be responsible for the transferred budgets.

"Such transfers mean that the forecast costs reported to parliament do not give the full picture of the expenditure required to bring equipment into military service as they fail to include training and logistics support costs," the report notes.

PAC chairman Edward Leigh said this move "diminishes parliamentary accountability" and is "not acceptable".

"In the light of a long line of critical reports by our committee, the MoD has made numerous reforms to its procurement working practices. Lasting improvements have not resulted," he commented.

"The department must address the systemic weaknesses underlying cost increases and time delays.

"There is a 'conspiracy of optimism' in the department and industry leading to the acceptance of unrealistically low estimates of the cost of bringing major equipment into service."

It took five-and-a-half years to award the contract for the Royal Navy's two aircraft carriers. The PAC says the government should learn from the "higher costs in the long run" seen when major equipment projects are delayed.

A statement from the MoD emphasised the importance of prioritising urgent operational requirements (UORs) to forces in Iraq and Afghanistan needed equipment quickly.

Defence equipment and support minister Baroness Taylor said: "It is not just UORs providing crucial support to operations, long-term equipment programmes like the Harrier GR9s are giving our troops a vital asset in the air.

"This is incontrovertible evidence of our determination to ensure our armed forces get the equipment they need."