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22 February 2011 | Lindsay Clark
The UK’s influential Committee of Public Accounts (PAC) has given the Ministry of Defence (MoD) a deadline to report on the status of its contract renegotiations and cancellations.
In its report on major MoD projects, the PAC said it needed an assessment of the value for money of decisions the MoD is taking with regards to contracts following the last October’s StrategicDefence and Security Review (SDSR). The SDSR saw the scaling back and cancellation of major defence procurement programmes.
The committee gave the department until the end of April 2011 to set out “in detail its forecasts of the costs of implementing the SDSR, the status of contract cancellations and renegotiations and how it has assessed the value for money of the decisions it is taking”.
The report described how the MoD would often change the volume and specifications of the equipment orders, which caused delays and cost increases. “Instead,” the report said, “procurement should deliver rapid and cost-effective equipment, enabling the department to respond with more agility to changing operational needs, while retaining the flexibility to develop the capability further should it be required.”
The PAC added: “The department regretted the way contracts had been negotiated in the past and believed that current contracts do now have flexibility to change without penalties being incurred.”
The SDSR announced the cancellation of a contract to replace RAF Nimrod surveillance aircraft, writing off around £3.6 billion. Meanwhile, the government also scaled-back the procurement programme for two aircraft carriers. One vessel will be shared with allies while the other will be held in a state of “extended readiness”.