Question to the Ministry of Defence:

To ask Her Majesty’s Government how many defence procurement projects have overrun their original budgets over the last three years; at what cost; and who has been responsible for meeting the increased cost.

Defence procurement projects cover an extensive range of equipment, infrastructure, information services and broad service contracts. Following the Levene reforms, responsibility and budgets for procurement have been delegated in large degree to the Front Line Commands, who use Defence Equipment and Support (DE&S), the Defence Infrastructure Organisation (DIO), as well as Information Systems and Services (ISS), as their principal delivery organisations. The time and cost performance of delegated projects is monitored and controlled by these organisations at a level appropriate to their cost. Only the largest or most contentious projects, such as equipment projects over £400 million or infrastructure projects over £75 million (‘Category A’ Projects), are approved directly by Head Office. This includes review of those projects that overrun on time or cost.

In recent years the National Audit Office (NAO) has provided an independent review of the Ministry of Defence’s delivery performance of the largest procurement projects and presented the findings in an annual publication, the “Major Projects Report” (MPR). These reports include details of the cost, time and quality delivery forecasts for a sample of the largest defence procurement projects that had reached the demonstration and manufacture phases of their project lifecycle – that is to say they had passed the main investment decision point. The reports contain a summary of the projects’ original budgets and their latest forecast costs to completion, enabling individual identification of increases and decreases in cost.

The table below shows the combined MPR results for the last three financial years.

[Note: A direct comparison from year-to-year is not possible. Projects enter or exit the MPR population annually following approval or reaching in-service date respectively. Additionally, the scope of projects has also been known to change in response to emergent requirements.]

A more in-depth breakdown on a project-by-project basis, including total cost variance by project, is available in the MPR. Additionally, explanations of the causal factors of the variances can be found for each project in the project summary sheets which accompany the reports.

MPR15:

https://www.nao.org.uk/report/major-projects-report-2015-and-the-equipment-plan-2015-to-2025/

(For the MPR15 Summary Table see Appendix 3, page 42)

MPR14:

https://www.nao.org.uk/report/major-projects-report-2014-and-the-equipment-plan-2014-to-2024/

(for the MPR14 Summary Table see Appendix 2, page 40)

MPR13:

https://www.nao.org.uk/report/ministry-of-defence-the-major-projects-report-2013/

(For the MPR13 Summary Table see Appendix 3, page 40)

In the first instance, cost overruns must be absorbed by the Front Line Commands by prioritising their projects within overall procurement control totals. How these were apportioned for each of the projects cited in the reports would require further analysis.