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By Julian Nettlefold

11 Dec 08. Rt. Hon. John Hutton, U.K. Defence Minister announced today the outcome of its equipment examination, reprioritising programmes to better support current operations.

Since May 2008 the Ministry of Defence has been examining its equipment programme. The aims of the examination were to adapt to the rising cost of high-end defence equipment and to provide more support for current operations. The key conclusions I am announcing today help us meet these objectives; other aspects will be taken forward through our regular planning round, which will conclude next March.

The work to date will bring the defence equipment programme more closely into balance. Inevitably this has required a reprioritisation of investment to ensure that we deliver those capabilities of the highest immediate urgency, while continuing to invest in capabilities needed to respond to future threats. We remain committed to doing more for our people, here and on the front line – improving their support and welfare, pay, medical care, rehabilitation services and accommodation.

Support to current operations remains our highest priority. Among the top priorities of our operational commanders are the provision of the right mix of protected patrol vehicles and additional helicopter capability. The recent announcement of nearly 700 more protected patrol vehicles for Afghanistan, at a cost of over £700m, is evidence of our commitment to meet their requirements. In addition to our core budget, the Government will continue to fund the net additional costs of operations from the Treasury Reserve. Since 2001 we have received nearly £10 billion, over and above the core defence budget.

As well as the protected mobility package, we have agreed with the Treasury a budget of a further £635m in 2009/10 for other urgent operational requirements, with any expenditure over and above that being met initially by the Reserve but repaid by the defence budget after two years.

We undertook to inform Parliament about the major decisions emerging from our examination of the equipment programme as soon as we were able to do so. The following are the key conclusions.

In May 2008 we announced the provisional selection of Piranha V, offered by General Dynamics (UK) Ltd, as the preferred design for the FRES Utility Vehicle. Following a period of intensive negotiations with General Dynamics to address a number of commercial issues, it became clear to both parties that it would not be possible to reach agreement on the commercial conditions required to enable further progress on the basis of the current procurement strategy. I have therefore decided that we should withdraw General Dynamics (UK)’s provisional preferred bidder status.

Our examination of the equipment programme has, separately, considered the balance of investment and priority in the Army’s armoured vehicle programme. We have concluded that, in the context of current operations, and bearing in mind the considerable recent investment in protected mobility, the highest priority should now be accorded to delivering the Warrior Capability Sustainment Programme and the FRES Scout vehicle as quickly as possible. Against that background, we have decided to restructure the FRES programme, giving priority to FRES Scout over the FRES Utility Vehicle. Whilst this will mean a delay to the programme, we recognise the importance of the Utility Vehicle and are now looking at the best way to take this procurement forward. General Dynamics (UK) will have an opportunity to compete in any future Utility Vehicle competition.

We have increased the number of helicopter airframes and hours available to our commanders in Afghanistan by around 60% over the past two years, and will make a further significant increase in helicopter capacity in Afghanistan over the next two years.

In addition to our planned battlefield helicopt

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