24 Nov 2006. The MoD has shown improvements in controlling cost increases in the equipment programme by taking sensible measures to ensure that it lives within its means according to an independent report issued by the National Audit Office (NAO) today.

The Major Projects Report 2006 (MPR06) sets out the actions taken by the Department to control costs and reports forecast timings and performance for the MoD’s 20 largest equipment programmes.

Support Vehicle is expected not to meet three of its Key User Requirements. This is a correction of an error in the Major Projects Report 2005, which stated that 24 Key User Requirements would be met rather than 23. The Department still expects to meet 98 per cent of Key User Requirements, although performance is marginally worse than recorded in the Major Projects Report 2005.

Over their lives thus far, projects have been delayed by a total of 433 months. Thirty-three months of the total delay occurred within the year 2005-06, a lower contribution to the total than in any Major Projects Report since 2002.

The current total forecast cost for the population is £27bn, an increase of eleven per cent compared with the total budgeted costs approved at Main Gate. During 2005-06, the Department undertook a review of the post Main Gate projects to control costs better. This Review has reduced the costs of these 20 projects as recorded by the Major Projects Report by £781m, some three per cent overall and equivalent to a 21 per cent reduction in the overall cost increases on projects since Main Gate.

During its Review the Department paid particular attention to the past recommendations of the Committee of Public Accounts which have stressed the need for the Department to live within its means. £242m, that is 31 per cent of the £781m reduction is from:
The better management of commercial and contractual arrangements, for example on the Nimrod MRA4 project the Department is negotiating a one per cent cost reduction in the fee it pays to its contractor;
More cost effective means of delivery, for example on the Astute submarine project the Department made £7m savings by devising more efficient ways to deliver safety requirements;
Re-assessing quantities required, for example, on the Guided Multiple Launch Rocket System project the Department reduced the numbers of rockets being procured to save £114m; and
More appropriate accounting treatments, for example, on the Terrier project the Department is now accruing for future milestone payments resulting in a saving of £3m on cost of capital charges.

Amongst the equipment delivered the front line commands during the
course of the year were:

1. The Javelin anti-armour missile which was four months early into
service.

2. The world class Osprey improved body armour system.

3. More than 200 of the combat-proven Storm Shadow cruise missiles.

4. 12 Typhoon combat aircraft and two Merlin HM Mk1 helicopters.

5. The advanced Sonar 2087 submarine hunting system was accepted into
service five months ahead of schedule;

6. Deliveries of night vision equipment and SA80 Carbines continued

7. Over 9,000 Bowman radio units were delivered to the Armed Forces,
with a value of £290m. The Combat, Infrastructure and Platform BISA –
a digital information handling element of Bowman – was accepted into
service;

8. Modernisation of Warrior and Scimitar armoured vehicles continued
with further deliveries of the Battlegroup Thermal Imaging System.

9. Deliveries of Viking protected vehicles to the Royal Marines
continued and more than 500 light trucks and modified Land Rovers
plus over 190 modern wheeled fuel and water tankers.