House of Commons censures defence equipment delays

By Bill Kincaid, Editor, RUSI Defence Systems

The House of Commons Defence Committee (HCDC) report on Defence Equipment 2009, published on 26 February, is pretty damning. Whilst quite rightly praising the Department for its performance in delivering equipment under the Urgent Operational Requirements (UOR) procedure, it finds that:

• DE&S performance in procuring longer-term equipment declined significantly during 2007/08;
• funding issues are more acute than ever;
• the Future Rapid Effects System (FRES) programme has been a fiasco;
• there is doubt that an updated Defence Industrial Strategy (DIS) will appear at all;
• the reduction in the amount spent on defence research is short-sighted; 
• the delay to the aircraft carriers means that it will be some time before they are operating with their full complement of Joint Strike Fighter aircraft;
• the extent of dependence on UORs and the effect on the future core budget is concerning.

Cost and Time Performance

The National Audit Office report on MoD’s major projects published in December last year showed that there was an increase of £2.95 billion in the cost of nineteen projects since their Main Gate approvals (figures for Typhoon are not included). Most of this is accounted for by further cost overruns in the Astute, Nimrod RMA4 and Type 45 programmes. Will large cost overruns be a thing of the past once these are all in-service? It would be nice to think so. But if cost control is improving (a big if), it would seem to be at the expense of time as nine of the sixteen projects whose in-service dates are declared have slipped, some by very large amounts (Terrier by twenty-seven months, Satcom terminals by nineteen, Soothsayer by sixteen, and A400M by nine months) all during the previous twelve months. If we look at the delay over the full procurement cycle, slips have been very large indeed: A400M four years and still slipping, Astute seven years plus, NLAW six, MRA4 ten, Type 45 eight, BVRAAM at least six. How much of this has been for the lack of realistic funding?

Funding Issues

There is no doubt that funding issues are more acute than ever. The report quotes industrial witnesses as saying that, ‘the future equipment programme is paralysed’, ‘the limbo started last year [2007]’, and ‘many companies could point to a very significant spend to keep teams going until MoD makes up its mind about what it actually wants to do’. The MoD statement in December last year on the result of the review of the equipment programme did little to dispel this view, with announcements on the delays to the aircraft carriers and FRES. The aim of this review was to focus on costs and rebalancing the equipment programme to better support the front line. While the delays to the carriers and to FRES could be argued as focusing on the front line in the near term, this only delays the inevitable as the ‘savings’ made will just reappear as increased costs in two or three years’ time. If time is money, how can delay reduce costs? It cannot – it can only increase the problem in future years.

One of the problems is inflation in defence, particularly in defence equipment. Professor David Kirkpatrick’s paper, which was published in RUSI Defence Systems in October last year, was used by the Committee when it asked for the MoD’s views. MoD replied that it had much work in hand and this would be complete by 2010, a ‘lack of urgency’ that the Committee found ‘regrettable’. The debate is to be continued in RUSI Defence Systems in the June edition, and it is to be hoped that HCDC, amongst others, will follow and, perhaps, contribute to it.

Future Rapid Effects System (FRES)

As for FRES, the report states that:

The FRES programme has been a fiasco. In February 2007 we concluded that the MoD’s attempts to meet its medium-weight vehicle requirement had been a sorry story of indecision, changing requirements and delay. Two years later the story is, incredibly, even worse …’

And before FRES there was FLAV, FFLAV, MBAV, MRAV and TRACER – an extraordinary thirty-year saga of indecision.

Defence Industrial Strategy (DIS 2)

From the evidence given by the Minister and MoD officials, it seems that the Defence Industrial Strategy (DIS) will not be updated any time soon. DIS 2 was scheduled to appear in December 2007, but was then slipped to Spring 2008 when Planning Round 2008 would be finalised. It was then slipped again by the need to complete the examination of the equipment programme and DIS 2, it was stated, would be published in 2009. However, in evidence, the Minister cast considerable doubt on whether it would be published at all. The Committee thought that it was:

… astonishing that the new Minister for Defence Equipment and Support was ”open-minded” as to whether it made sense to have an updated version of the DIS. The DIS is now over three years old and a key aim was to provide industry with clarity about the MoD’s future requirements’.

Without identification of adequate funding, DIS will die. In its second paper (RUSI Defence Systems, October 2006), the RUSI Acquisition Focus said:

The retention of an onshore defence industry is likely to cost significant sums of money. How this is to be funded needs to be identified’.

Apart from updating DIS in terms of sector strategies and achievements, DIS 2 must identify sufficient funds to implement it. It is this, of course, that is delaying publication and will continue to do so.

Other Issues

There is no room here to cover all the major issues discussed by the report – inadequate funding for research, lack of the promised transparency on MoD planning, the impact of such large numbers of Urgent Operational Requirements (UORs) on future core funding (and it should be said on the defence industry), delay to the aircraft carriers and MARS, helicopters and small and medium-sized enterprises (SMEs) – but it is well worth reading these parts of the report.

All in all, the report makes depressing reading for anyone who believes defence is important. The one bright spot is the delivery of UOR equipment, but in other areas it is a largely gloomy picture – not least in the lack of clarity of vision and the failure to translate strategy into an affordable equipment programme.

 

 

 

 

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 The views expressed above are the author's own, and do not necessarily reflect those of RUSI.