The TaxPayers’ Alliance is today calling on the Government to learn the lessons of past defence procurement decisions if the costs of the expected renewal of Trident are not to spiral out of control. On the publication of a report detailing a plethora of previous errors, the TPA warns that unless the lessons of those failures are learned, the successor to Trident could end up swallowing half the equipment budget, putting operational capabilities at risk and leading to the cancellation of other equipment programmes.
Criticisms of the procurement process highlighted in the 2009 Gray Report include:
- Too much equipment being ordered at too high a specification
- Systematic incentives leading to costs being underestimated as branches of the armed forces compete for funding
- Under-costing not being constrained by fear on the part of those ordering as the MoD seldom cancels orders
- Underestimation of costs leading to programmes taking longer than estimated because the MoD can't afford to build to the original timetable
- Projects overrunning so they take more time; and more time meaning more money spent while old equipment also has to be run at a significant additional cost
Lessons to be learnt from past acquisition efforts include the need for:
- A clear contractual relationship between the MoD and BAE. The eagerness of the government to transfer responsibilities to contractors has been a major cause of the problems encountered on the Astute class submarine programme. The first boats were delivered 58 months late and £1.3 billion over budget.
- Accurate cost estimates. The original manufacturing contract for the Queen Elizabeth class aircraft carriers failed to account for inflation. This was just one of the factors that has led to current cost estimates exceeding the original estimates by 80 per cent. Cost estimates should be regularly updated as the programme proceeds.
- Specifications and volumes to be stuck to. Indecision by the government over which variant of the F-35B/Lightning II Joint Combat Aircraft to order cost £74 million and delayed the QE aircraft carriers by two years.
- The use of readily available technology where appropriate. The costs of the Type 26 Global Combat Ship will be be reduced by the use of "off-the-shelf" solutions.
Commenting on the paper, Jonathan Isaby, Chief Executive of the TaxPayers’ Alliance, said:
“It is absolutely crucial that lessons are learnt from previous mistakes - as well as success stories - to make sure taxpayers aren't paying the price for bungled defence contracts.
"When politicians finally sign off on Trident's replacement it will involve a huge amount of taxpayers' money while the nature of the contract means that it will have to be completed within a tight deadline in order to maintain a continuous deterrent. Too much is at stake for past mistakes to be repeated."
TPA spokesmen are available for live and pre-recorded broadcast interviews via 07795 084 113 (no texts)
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