28 June 2006 | Rebecca Ellinor

The Ministry of Defence (MoD) should extend supplier management to second and third-tier suppliers, according to the Public Accounts Committee (PAC).

That was one of the recommendations of the committee's response to the Major Projects Report 2005, published by the National Audit Office (NAO), which provides information on the time, cost and performance of the MoD's largest projects.

The NAO report said that while forecast costs are £700 million less than last year, much of this is as a result of cutting the numbers or capability of equipment. It added that total forecast costs for these projects now amount to £29 billion, some 10 per cent over budget.

The PAC said while the MoD has introduced key supplier management to assess its 18 largest suppliers, "much of the innovation which will drive better acquisition performance comes from the second and third tiers of the supply chain".

Responding to the overall PAC report, Lord Drayson, minister for defence procurement, said: "The MoD has recorded significant improvement in acquisition performance since 2003, reducing the overall cost of major projects by some £642 million."

Meanwhile, the MoD yesterday awarded a contract to feed the British Armed Forces while on operations to Purple Foodservice Solutions, in a deal worth up to £300 million over five years.

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