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The Major Projects Report 2005[1] provides information on the time, cost and performance of the Ministry of Defence's (the Department's) 20 largest projects where the main investment decision has been taken; and the 10 largest projects in the Assessment Phase. For the approved projects,[2] forecast costs were some £700 million lower compared to the previous year. This change was primarily due to reductions in either capability or platform numbers to balance the overall programme. Total forecast costs for these projects now amount to £29 billion, some 10% over budget. In-year timescale slippage increased by 45 months, giving a total delay of 375 months, or an average of some 20 months per project. The Department does, however, expect to meet the majority of its Key User Requirements.
The Government launched its Defence Industrial Strategy[3] in December 2005. The Strategy flows from the wider Defence Industrial Policy (2002)[4] and was developed directly in response to the changing threat facing the United Kingdom and consequently the manner in which equipment will be procured and used in the future. The Strategy aims to promote a sustainable and globally competitive defence manufacturing sector. If the Department and its industry partners can implement the Strategy successfully it could mean a significant improvement in the delivery of operational capability to the frontline but there are risks to be managed not least in sustaining competitive pressures. Projects could be delivered on time and at the right cost with this improved performance reflected in future Major Projects Reports.
On the basis of a Report from the Comptroller and Auditor General, the Committee took evidence from the Department on three main issues: enhancing programme and project management of defence acquisition; the impact of older projects on overall acquisition performance; and value for money from the Defence Industrial Strategy. As an annual report, our conclusions and recommendations should be read in conjunction with the findings of earlier Major Projects Reports as part of a sequence of recommended improvements.
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