The cost-effective delivery of an armoured vehicle capability - Public Accounts Committee Contents

1  The failure to deliver an armoured vehicles programme

1. Since the 1998 Strategic Defence Review, the Department has tried to acquire armoured vehicles through a number of programmes. It originally intended to procure around 1,000 vehicles through two programmes: 'TRACER' (Tactical Reconnaissance Armoured Combat Equipment Requirement) and 'MRAV' (Multi-Role Armoured Vehicle). However, in 2002 the Department proceeded instead with the Future Rapid Effect System (FRES) project, and TRACER and MRAV were cancelled. FRES aimed to supply 3,700 vehicles at a cost of £14 billion, with planned delivery of vehicles from 2008.[2]

2. Despite spending a total of £1.1 billion since 1998, the Department has so far failed to deliver any of its core vehicle projects. As well as cancelling the TRACER and MRAV projects, the Department has, to date, been unable to deliver FRES. The largest element of that project, FRES Utility, was indefinitely suspended in 2008, and the FRES Scout variant is also delayed and not expected to enter service until 2017.[3] In total, £321 million has been spent on projects cancelled or indefinitely suspended, and £397 million on projects that have yet to deliver. Only £407 million of the expenditure since 1998 has resulted in vehicles being delivered (some 160 specialist vehicles).[4]

3. The Department admitted to us that the delivery of armoured vehicle projects was undermined by the budget cuts it made in an attempt to balance the overall defence budget.[5] Over the past six years the Department has removed £47.4 billion from its equipment programme up to 2020-21. The largest contribution to these savings has come from reducing forecast spend on armoured vehicles, which has fallen by £10.8 billion over the same period.[6] In addition, the Department has also removed up to £1 billion from the budget for protected vehicles, which are designed to offer improved protection against specific threats such as roadside bombs.[7]

4. The Accounting Officer acknowledged that if the overall defence budget had been in balance, it would not have been necessary to go back and cut funding from the equipment programme.[8] We heard that armoured vehicles projects were cancelled and delayed primarily because funds for these projects were not contractually committed.[9]

5. For the procurement of its 'core' armoured vehicles, the Department used its standard equipment acquisition process. However, the Department accepted there had been failings in its procurement of armoured vehicles.[10] The procurement process was overly complex and the Department has suffered from a culture of setting over-ambitious requirements - especially its desire to use cutting edge technology in its equipment.[11] This led to projects which were not affordable within the funding available.[12] The Chief of Materiel (Land) recognised that the procurement and requirements setting process had been "slow, lumbering and bureaucratic - it was aiming for the stars when, as it now is, it should have been much more pragmatic."[13]

6. The witnesses also acknowledged that compared to other nations, the UK has been particularly indecisive and poor at making decisions about the equipment it wants.[14] The Accounting Officer told us that the Department was now starting to do things differently, and the procurement of the Foxhound vehicle was an example of improved procurement and requirements setting.[15] The Department now accepts it does not necessarily need to use leading edge technology. It is trying to set more realistic requirements for vehicles which may deliver a lower capability initially, while allowing for further upgrades through the life of the vehicle.[16]

7. In our Major Projects Report 2010, we reported that Senior Responsible Owners for programmes only remain in post for short periods, typically two to three years.[17] We heard this was also the case for armoured vehicles.[18] This has resulted in poor accountability for long-term acquisition projects, and it is consequently difficult to hold anyone responsible for failures, delays and overspends. The Accounting Officer was unable to identify whether anyone had paid a penalty for the failures in the delivery of armoured vehicles projects.[19]

2   C&AG's Report, Figure 1, p 5 Back

3   C&AG's Report, Figure 1, p 5 Back

4   C&AG's Report, para 3 and Figure 1, p 5 Back

5   Qq 13, 122 Back

6   C&AG's Report, Figure 5, p 23; Ev 15. The £10.8 billion in armoured vehicle savings includes the £7.4 billion of funding reductions identified in Figure 5 of the C&AG's report. The C&AG's supplementary memorandum identifies an additional £600 million removed as part of the Planning Round 2011 and £2.8 billion removed during the subsequent Three-Month Exercise. Back

7   Qq 20, 77, C&AG's Report, Figure 7, p 32, spending on 'Vehicles - Protected'. Back

8   Q 56 Back

9   Qq 11-12 Back

10   Q 25 Back

11   Qq 19, 49, 81-82 Back

12   Q 13 Back

13   Q 91 Back

14   Qq 18-19 Back

15   Q 55 Back

16   Qq 54, 87, 92 Back

17   Committee of Public Accounts, Twenty-third Report of Session 2010-11, Ministry of Defence: Major Projects Report 2010, HC 687, conclusion 3 Back

18   Q 5 Back

19   Qq 26-29 Back

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© Parliamentary copyright 2011
Prepared 9 December 2011