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Ministry of Defence: 1 Major Projectsreport 1993

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Ministry of Defence: 1 Major Projectsreport 1993 NATIONAL AUDIT OFFICE REPORTBY THE COMPTROLLERAND AUDITOR GENERAL ] Ministry of Defence: 1 Major ProjectsReport 1993 ORDEREDBY : THEHOIJSEOFCOMMONS TO BE PRINTED 22APRlL 1994 LONDON:HMSO 356 t12.65 NET MINISTRY OF DEFENCE: MAJOR PROJECTS REPORT 1993 This report has been prepared under Section 6 of the National Audit Act 1983 for presentation to the House of Commons in accordancewith Section 9 of the Act. John Bourn National Audit Office ’ Comptroller and Auditor General 6 April 1994 The Comptroller and Auditor General is the head of the National Audit Office employing some 800 staff. He, and the NAO, are totally independent of Government. He certifies the accounts of all Government departments and a wide rangeof other public sectorbodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources. MINISTRY OF DEFENCE: MAJOR PROJECTS REPORT 1993 Contents Pages Part 1: Introduction 1 Part 2: Assessmentof the new format of the Major Projects Report 3 Part 3: Analysis of the Major Projects Report 1993 6 Part 4: Mid-Life Updates 18 Appendix Major Projects Report 1993 34 MINISTRY OF DEFENCE: MAJOR PROJECTS REPORT 1993 Part 1: Introduction Origin of the Report which the facts and figures in the Statement and associated report were given a security classification. This permitted the National 1.1 The 1993 Major Projects Report (previously known as the Major Projects Statement) is Audit Office to publish their findings together the eleventh to be produced by the Ministry with key data from the Statement for the of Defence [the Department). The Report was year ended March 1991 for the first time. The introduced at the request of the Committee Department have adopted the same approach of Public Accounts and stemmed from their for the Major Projects Report 1993. 9th Report, Session 198142, which noted the absence of any requirement for the 1.4 Inevitably, a small number of facts and Department to inform Parliament about the figures are commercially sensitive and cannot costs of major defence projects. The Report is be disclosed in this National Audit Office intended to advise Parliament of the progress Report since disclosure could undermine the and costs of major defence equipment Department’s negotiating stance and/or their projects. contractors’ commercial arrangements. The National Audit Office have provided the 1.2 The National Audit Office report on the 1991 Committee with a separate memorandum Major Projects Statement concluded that the covering these areas. The Major Projects format of the Statement might be improved Report is provided, in full, to the Committee to provide a more meaningful analysis of cost by the Department. overruns and time slippages and suggested fundamental changes to its structure. The National Audit Office also pointed to the Examination by the National length of time taken to present the Audit Office information to Parliament (at least nine months after the due date to which it 1.5 The Major Projects Report is not an related). The Committee of Public Accounts accountable document and the National (45th Report of Session 1992-93) endorsed Audit Office do not verify that it is complete the proposed amendments to the format and and accurate in every respect. In the main noted that the Department would submit it they seek to highlight aspects that arise from more quickly in future. No Report was the Report. In their examination of this produced for the year ended 31 March 1992 Report the National Audit Office have, because of a potential overlap in timescales nevertheless, validated the accuracy of the given the Department’s commitment to data for a sample of the project summary produce the 1993 Report by August 1993. The sheets. Their findings are considered in Part 1993 Major Projects Report is the first to be TWO. produced in the revised format. 1.6 The main areas examined by the National 1.3 Until 1991 both the Major Projects Statement Audit Office in relation to the 1993 Report and the associated National Audit Office TWXe: memorandum were provided to the Committee of Public Accounts on a @I an assessment of the new format of the confidential basis. Following expressions of Major Projects Report (Part Two); concern by the Committee at the relatively @I an analysis of the 1993 Report including high security classification of the Statement consideration of those projects and the associated National Audit Office appearing to show the greatest cost memorandum, and in line with the move variances and in-Service date slippages towards more open government, the (Part Three); Department sought to minimise the extent to 1 MINISTRY OF DEFENCE: MAJOR PROJECTS REPORT 1993 [c) the management of projects to provide Summaries of the niain points arising from mid-life updates to in-Service defence the National Audit Office examination are equipments; Tornado GRl and Sea contained within each individual section Harrier aircraft, Challenger 1 tank*, under the heading “Key Points”. Seawolf missile, Swiftsure and Trafalgar Class submarine [Part Four). * The Defence Secretary announced on 1 December 1883 that it would be more cost effective to buy more Challenger 2 tanks than to upgrade Challenger 1 and the upgrade programme will not now proceed. / L . 2 MINISTRY OF DEFENCE: MAJOR PROJECTS REPORT 1993 Part Z: Assessment of the new format of the Major Projects Report Introduction Statement though there have been minor editorial changes. The 25 separate project 2.1 The aim of the new format is to provide a summary sheets form the Major Projects greater degree of detail than was previously Report for 1993 (Appendix]. Key data relating available, to present it so that it can be to the costs of the projects have been immediately understood, to aid comparisons extracted from the project summary sheets in between projects and to help the Committee the Report and are shown at Table 1 and key to examine the Department’s success in data relating to in-Service dates are shown at managing projects to time and cost. The Table 2. Classified data have been replaced format of each project summary sheet by an asterisk both in the Appendix and in contains the same data as the example shown the Tables. to the Committee on Appendix 2 to the 1991 Table 1: Project Cost!? Further Spend to Expenditurein At MOOApproval Current estimate Difference 31.3.93 Clear Prospect (fm) of costs (fm) Em) Em) W-W Sea Systems CommonNew GenerationFrigate -7 GWS26 Model l/Vertical LaunchSeawolf 5s 5;: 4 5:; 190 ReplacementType 23 CommandSystem 262 233 SpearfishHeavyweight Torpedo 982 1,005 2; 945103 30(I S & T Class NuclearSubmarine Update 146 145 460 Trident’ 13.487 10.676 -2,611 6.3;: Land Systems AS90 Self Propelled Howitzer 431 466 55 164 Bowman td 257 16413 1,740 Challenger1 Upgrade Challenger2 992 1,000 a 251 COBRA 66 DROPS 414 4;: 1: 2:: High Velocity Missile 366 396 IO 266 Medium RangeTRIGAT 2,0;2 2,075109 140 1,4z 6;: Rapier FSC Warrior 1,391 1,263 -126 1.081 Air Systems AMRAAM 165 153 -12 20 ASRAAM 766 697 -71 120 BOXU 204 329 125 196 EHIOI Merlin 3,906 3,906 0 1,413 Eurofighter2000 2,890 3,463 573 1,333 9,990 HarrierTlO 329 332 125 ITl”S “lllv 339 339 249 290 Sea Harrier mid-life update . 37 406 Tornado GRl mid-life update 540 159 Source:Major Projects Report 1993 (I) Costs are shown at 1993-94 average out turn prices except for Trident which is shown at average 7992-93 prices following an agreementby the House of CommonsDefence Committee that, as Trident cost informationis updatedin November for submission to Parliament,it would be unnecessaryto provide an additionalupdate for the Major Projects Report. (2) Expenditurenot yet approved but which there is strong reason to believe that Ministers plan in due come fo incur. (3) ‘=Ftgure classifiedas Commercial-in-Confidence. 3 MINISTRY OF DEFENCE: MAJOR PROJECTS REPORT 1993 Table 2: Proiect m-service’ ^ Dates At MOOApproval CurrentForecasts Variation (in months) Sea Systems CommonNew GenerationFrigate December2002 December2002 0 GWS26 Model i/Vertical LaunchSeawoll May 1990 ReplacementType 23 CommandSystem May 1995 OctoberMarch 19971991 :: Spear&h HeavyweightTorpedo December1967 September 1993 69 S & T Class NuclearSubmarine Update (Stages 1 & 2) October 1994 August 1996 22 Trident 0 Land Systems AS90 Self Propelled Howitzer August 1992 November1993 15 Bowman 1995 June 1999 Challenger1 Upgrade Not now to proceed WA N”A Challeger,2 Oecember1995 December1995 0 COBRA DROPS-MMLC December1969 August 1990 -lMMLC December1969 me 1994 High Velocity Missile December1990 May 1994 Medium RangeTRIGAT December1995 December1996 Rapier FSC-Army 1990 --RAF 1969 JanuaryOctober 19941995 Warrior December1966 March 1966 Air Systems AMRAAM 5 ASFtAAM Boxer :i EHIOI Merlin 60 Eurofighter2000 20 HarrierTIO JTIDS September 1966 September 1993 6: Sea Harrier MLU December1969 January 1994 Tornado GRl MLU Mid 1993 Mid 1996 Source:Major Projects Report 1993. ‘=F@m classifiedas Confidential. 2.2 The criterion for the inclusion of a project expenditure which may not cover all phases within the Major Projects Report has changed of the project. Thus the Swiftsure and since the 1991 Statement. In previous years Trafalgar Class submarine update project all projects with Treasury approval for summary sheet (Appendix, page 50) shows a expenditure in excess of E250 million were current estimate for the approved initial included. The Report for 1993 is based on the phase of the project of El45 million, .1?3 25 projects with the highest estimated million less than the estimated cost at expenditure over the following ten years. approval. The total procurement cost, The National Audit Office confirmed from however, including the final phase, is the Department’srecords that the 25projects estimated at f700 million.
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