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28 Jul 04. Major British defence projects face long delays and huge cost overruns because of failings in defence procurement that are leaving the Armed Forces without vital equipment, a parliamentary committee said on Wednesday. In 2002-2003, the top 20 defence equipment projects suffered cost increases of 3.1 billion pounds ($5.7 billion), and they will be delivered on average 18 months late, the House of Commons Defence Committee said in a report.

Parliamentarians slammed projects led by leading defence equipment manufacturers including Lockheed Martin Corp. (NYSE:LMT – News), France’s Thales SA (Paris:TCFP.PA – News) and BAE Systems Plc (London:BA.L – News).Delays will inevitably lead to cancellations or cuts in equipment projects and further hold ups in orders, the report said. More cost increases and time slippages can be expected.

“Our report has highlighted some quite staggering problems in the way the procurement of vital defence equipment has been handled,” committee chairman Bruce George said in a statement.

The committee’s scathing assessment comes a week after the government unveiled one of its biggest peacetime military overhauls, cutting tanks, ships and thousands of jobs in favour of upgraded technology to tackle modern threats like terrorism.

Parliamentarians identified “endemic” and “systematic” problems in Britain’s Defence Procurement Agency, which equips the Armed Forces, despite the so-called “Smart Acquisition” process introduced by the Ministry of Defence six years ago.

“Its objectives were to procure equipment faster, cheaper, better. On almost all counts, it has failed to deliver,” the committee found, saying the agency’s “woeful” performance would take some time to reverse. On specific projects, the report said weight problems affecting the performance of the Joint Strike Fighter jet, made by Lockheed, could affect its expected in-service date.

Parliamentarians are concerned the proposed in-service date of 2009 for the Future Rapid Effects System armoured vehicles will not be met, an opinion shared by industry, they said. They also fear the initial operating capability of the Watchkeeper aerial observation vehicle contract will be delivered later than forecast. A group of firms led by French defence electronics maker Thales SA (Paris:TCFP.PA – News) has been named as the preferred bidder for the Watchkeeper contract.

The committee urged the ministry to monitor progress closely on Astute attack submarines and the Nimrod aircraft programmes. Defence Secretary Geoff Hoon said last week there was still more work to be done before finalising production orders of new Astute submarines. Last year, BAE Systems struck a deal with the government to cap cost overruns on the Astute submarine and the Nimrod MRA4 maritime patrol plane. On the Eurofighter Typhoon aircraft, the committee supported the government’s decision to adapt a second tranche of planes to multi-role capabilities, but it questioned its assessment that the adaptation would have little impact on the programme’s total cost, “unless there are plans to reduce the size of the third tranche”.

Hoon said last week he expected to sign a contract for a second tranche of Eurofighter Typhoon aircraft as soon as negotiations over price and capability were completed. The committee said more risk assessment was needed on the government’s aircraft-carrier programme. The Ministry of Defence said this month it was extending the assessment period for the Future Carrier Programme, although in-service target dates remain 2012 and 2015. BAE was selected to lead the contracting. (Reuters)

Comment: ‘More of the same’, could be a remark leveled at this report and questions whether the Committee is attacking the right area of complaint. Historically major programmes have always overrun and under previous regimes the ‘cost-plus’

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