MoD Accused Of Cover-Up And Overspend

#1
The latest criticism comes in a report that warns a 10-year equipment programme is unaffordable.

It goes even further, effectively accusing the MoD of trying to hide the scale of the budget crisis.

The backbench Defence Select Committee brands officials as "disingenuous" in their replies to MPs.

The Committee said responses to questions over a £21bn funding gap had been "at best confused and unhelpful, at worst deliberately obstructive".

The probe into military equipment costs also warns that the Ministry's attempt to spread spending by delaying major projects is a false economy and will only push programmes deeper into the red, adding hundreds of millions of pounds to the final bill.
Full Article
 
#2
Eh, where's the big surprise here....?
 
#3
Big fat fcuking surprise!
 
#5
DeltaDog said:
Surely the story is Government underspending, rather than MoD overspending?
Correct and the continual need to reassess downwards the spending plan as the Treasury puts its boot in. Death by a thousand cuts is a good anology.
 
#8
The problem lies in our procurement system. There are few people out there will suitable commercial experience to see when we are being taken for a ride. Personnel change post frequently so there is no continuity with the Client as people will have different ideas. There isn't enough end user input through out the process. Also the civvy companies aren't going to complain if we keep changing our mind with the specification etc. They view us as a very large company who aren't going to go bankrupt or walk away.

Rather than having staff officers running the IPT's we should have decent, highly experienced civilian commercial managers who are going to be in post long enough to see things through who are supported by staff officers to provide the military input. Also having a more robust contract might help, with penalty clauses for late delivery etc.
 
#9
plant_life said:
Rather than having staff officers running the IPT's we should have decent, highly experienced civilian commercial managers who are going to be in post long enough to see things through who are supported by staff officers to provide the military input. Also having a more robust contract might help, with penalty clauses for late delivery etc.
The IPT (or PT as it's now known) that I have the misfortune of being in does indeed have a civvy TL, however the only leadership on show is in the job title. Some of our contracts do have penalties but not enough and not robust enough.
 
#10
I suppose the problem is that the Civil Service won't pay the going rate for a decent commercial manager (£50 - 60K pa) so they struggle to attract the best applicants.
 

BrunoNoMedals

LE
Kit Reviewer
#11
plant_life said:
I suppose the problem is that the Civil Service won't pay the going rate for a decent commercial manager (£50 - 60K pa) so they struggle to attract the best applicants.
Indeed. Your average PT (the "I" was taken out; I'm guessing because we're not Integrated anymore) commercial officer is earning £25k (plus or minus £5k) and generally trained in contract law by the Defence Learning portal. They're then expected to deal with people earning three times what they do, who have law degrees. Spot the gap.

As for the announcement - it smacks of blame-shifting to me. Underfunding by the current government isn't exactly news, but now they want to make it seem like it's entirely MOD's fault that things aren't being done and money isn't going far enough.
 
#12
I'd be cynical enough to note that lines on what should or should not be said in front of committees are generally cleared or rejected by Ministers. Don't blame the people for saying what they were told to say, blame the system at the top which made them say it.
 
#13
The story is that the MOD, despite knowing what the budget was, willfully decided to ignore it and hide. I think it is unjustifiable to argue for an increase in the defence budget whilst there is this culture of hiding program costs, leaking briefs to the press and ignoring the problem.

More money isn't the solution - spending what you have wisely is.

In December the National Audit Office - the public spending watchdog - warned of a £36bn deficit over the next 10 years if the defence budget was not increased.

Its report said the cost of the 15 biggest military projects had increased by £1.2bn in 2008-9 alone, and £733m of that was down to deliberate delays.
That's 3/4 of a billion pounds thrown away through deliberately delaying projects in one year alone.
 
#14
ASR - the reason for deliberate delay is a consequence of our planning system - we plan on a Yr1-10 cycle, with expenditure profiled for each year. Over the last few years we've had several planning rounds (i.e. defence cuts by stealth) where we've had to meet an imposed expenditure ceiling.

The reason for delaying, even knowing that it would cost more, is two-fold - firstly it enables us to make reductions in the years where it is is difficult to make savings (e.g. delaying project X by 1 year may save £30m in year, even if it costs an extra £20m in the longer term). The other reason it happens is that delaying kit is a better choice than cancelling it altogether.

The MOD has a thankless task here - its got to equip the forces and deal with an ever tighter budget, which is shifting its priorities on an annual basis - they are being asked the impossible and are struggling to do it.
 
#15
Jim, taking what you say at face value, surely then the way to approach this is for the MOD to cancel projects... at the moment they're making do, mending, fudging, delaying all so the government can claim to reduce spending whilst no-one notices the loss in capability, the in-service date just gets pushed back but becuase its in the pipeline Joe Public still feel like they have a well equiped armed forces.

Maybe a bit of working to rule is required... not enough funding = binned project and ministers have to explain to the public why HMF won't be getting upgrade A, or vehicle B, etc.
 
#16
TopBadger - genius idea, the problem is that if you believe the rumours, Ministers / No 10 won't let us cancel projects due to the harm this will do to their reelection prospects.
My gut feeling is MOD would love to be allowed to cancel things, and hopefully if we do SDR right then we can sort out the requirements properly and ditch things then.
 
#17
Come on guys din't get lured by the overspend/underspend debate...the fact is defence procurement is in a rag order state and has been for at least ten years. The level of waste and inefficiency - regardless of the "profit" which defence companies unreasonably insist on making on providing goods and services - would buy a hell of a lot of kit. However resolving the waste and inefficiency would involve an awful lot of "rice bowls" getting broken.

As for the contracting situation, there just are not enough contracts officers in the procurement organisation. Of those who do exist, relatively few are experienced. Many of the most experienced were promoted out of their contracts roles or were lured into private industry. The majority of commercial directors in industry are not lawyers but they are usually specialist contract negotiators. Most of the "good" ideas for contracting originated with these guys so like every issue, there are black and white shades in the overall miasma of greyness!

The procurement environment used to be very well organised, was a closed system and involved a "one cap-badge" organisation encompassing R&T through to support. Rationalisations, defence reviews and some frankly insane privatisations has rendered the procurement environment unsupportable at its current scale. The civil/military mix is not of itself an issue. Some of the highest profile IPTs/PTs of recent years have been run by civilians or indeed by military figures operating outside their "home domain" - for example T45.

The underlying systems engineering approach is clunky at present and requires more rapid methodologies to assimilate the faster tempo of requirements change - not creep but genuine adaptation of user requirements. In the Cold War twenty-five year development cycles were cool. Now there is a war on - oops sorry an enduring operation - this is being telescoped to the point of microscopy. so the V diagram needs to be an O and so forth. Injections of operational experience cannot merely rely on the fat major whose last tour was Bosnia in 1998 and who went Weapons because he wasn't frankly cut out for G1 or G3. owever amusing his rants about the bloody civilians not knowing what our chaps are going through on the front line may be.

In my various occupations in and around defence and other government departments I have always been fascinated by the ability of the NAO to identify the problems and issues forensically. They are seriously good at this sh1t. However their findings are then handed back to the guilty parties for action, which is either obfuscation or "carry on" until the next audit. The vast majority of project problems are iwthin the customer side not the industry side. The usual cause of overspend is the "excuse us chaps, when we said we wanted a helicopter, we actually meant an underwater hang-glider capable of supersonic flight on Tuesdays" syndrome. Sadly it is a syndrome and as long as design chills can take place umpteen years before production, this will not be clearing up in a hurry.
 
#18
jim30 said:
ASR - the reason for deliberate delay is a consequence of our planning system - we plan on a Yr1-10 cycle, with expenditure profiled for each year. Over the last few years we've had several planning rounds (i.e. defence cuts by stealth) where we've had to meet an imposed expenditure ceiling.

The reason for delaying, even knowing that it would cost more, is two-fold - firstly it enables us to make reductions in the years where it is is difficult to make savings (e.g. delaying project X by 1 year may save £30m in year, even if it costs an extra £20m in the longer term). The other reason it happens is that delaying kit is a better choice than cancelling it altogether.

The MOD has a thankless task here - its got to equip the forces and deal with an ever tighter budget, which is shifting its priorities on an annual basis - they are being asked the impossible and are struggling to do it.
It's avoidance of reality through tri-service rivalry, incompetence and short termism. Nobody is willing to cancel projects or make tough decisions. The preferred option seems to be to enter into a contract for the gold-plated version of something you can't afford and then delay it when the money, surprise surprise, runs out. The ultimate result is that nobody takes the MoD seriously when they go cap in hand to the treasury and ask for more money to waste.
 
#19
plant_life said:
The problem lies in our procurement system. There are few people out there will suitable commercial experience to see when we are being taken for a ride. Personnel change post frequently so there is no continuity with the Client as people will have different ideas. There isn't enough end user input through out the process. Also the civvy companies aren't going to complain if we keep changing our mind with the specification etc. They view us as a very large company who aren't going to go bankrupt or walk away.

Rather than having staff officers running the IPT's we should have decent, highly experienced civilian commercial managers who are going to be in post long enough to see things through who are supported by staff officers to provide the military input. Also having a more robust contract might help, with penalty clauses for late delivery etc.
Well said! In a nutshell and absolutely bang on. :salut:
 
#20
Good project managers pay for themsleves. If the Tories do get in they have brought in a lot of new candidates from the business world. Hopefully they should be able to shake things up, and get govt departments more business focused.
Meanwhile, back in reality.......