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Liam Fox: Gray report shows MoD procurement process is broken

The handling of this report reflects much of the content of the report itself-unnecessary delay, incompetence, and an attempt to avoid responsibility.

We could have had this report months ago. We could have given it time and thought over the summer recess.

What did we get instead?

Publication barely an hour before the defence debate last week with some poor excuses about how it had to be reviewed.

Yet, as my Right Honourable Friend, the Member for Hampshire North East, said in Thursday's Defence Debate, he read a copy of it in July.

It must be the best read suppressed report ever.

Media management was about the only management skill New Labour ever had: now even that has deserted them.

I would like to also thank Bernard Gray, and his team, for their hard work and a job well done with this very substantial piece of work.

To the credit of the MoD it is widely understood that they wanted to publish the report. But No. 10 blocked it.

And we can see why it was blocked. Because as Chancellor of the Exchequer, the current Prime Minister took no interest in defence- and we are now paying the price.

The Government has increasingly announced and started procurement programmes without considering whether any money would ever be made available.

Children write letters to Santa Claus with comparable understanding between desirability and affordability.

The procurement programme under Labour is becoming a wish list.

The Secretary of State's statement was a poor, un-detailed, and superficial response to this complex report.

I don't think I have ever heard a more damning set of indictments.

Average time over-runs are 5 years.

Average cost overruns are 40% more than the original cost.

This total over-run is £35bn when we have a defence budget of only £37bn and an equipment budget of only £16bn.

In fact, expected cost over-runs in the next 10 years alone amount to £16bn.  This equates to unfunded liability of £4.4 million per day.

These sums are so large, and the report is so damning, that the "shock value" has almost diminished.

In the words of Bernard Gray, "The equipment programme is unaffordable on any likely projection of future budgets".

We have too many types of equipment being ordered.

There is a too large a range of tasks being covered by equipment.

 Equipment is being procured at too high a specification and with a built-in, sometime purposeful, under-estimation of likely cost

For example, the two year delay to the future carriers, done on the grounds that we can most charitably call utterly spurious by the unpaid Minister for Procurement, will add £1bn to the cost of the project.

So, to maintain the political fantasy that they are procuring the greatest amount of equipment in recent history, they stick £1bn onto the taxpayers' bill for the future and cut funding elsewhere, such as the brutal cuts to the TA.

How perfectly consistent for a Government where the interest on our national debt next year will be greater than the defence budget itself.

The fact that we have not had an SDR in almost twelve years is a big part of the problem, but it also lies with the fact that the current Prime Minister as Chancellor was never willing to fund Tony Blair's wars.

The consequence of both is that Defence planning is not conducted in tandem with costings-perhaps the most devastating indictment of all.

In the words of Bernard Gray:

"In corporate life, no enterprise would persist with a 12-year-old strategy without at least re-evaluating it fully on a regular basis. Few who would expect to prosper would even try to do so."

Yet, what is the Government's response?

First to play catch up with the Opposition.

After 12 years we will get a Green Paper, perhaps eight weeks before dissolution.

What do they expect-gratitude that after 12 years the penny has finally dropped?

Then we are to have regular defence reviews-we proposed that two years ago.

And 10 year capital allocations-we proposed that too.

When will he introduce his ten year equipment budget plan?

He refers to improving the way the MoD costs projects using better and more sophisticated techniques- can he elaborate on that?

What practical measures will he take NOW to 'accelerate the improvement of key skills (including in cost forecasting and programme management) in the DE&S and the MoD head office?

The procurement process is broken and needs fundamental recasting.

Many of its structures are upside down and with cost control at the end and not the beginning.

What does arms' length mean for DE&S.?

And why are the Government ruling out Go-Co?

Given the importance attached by Mr Gray to Research and Development, why has the Secretary of State cut a further arbitrary £100m from the defence research budget?  Surely, this action stands in complete defiance of the core Gray analysis?

The Secretary of State tried the old cop out today that these problems have occurred over many decades.

Yet, the report clearly points out that not only has it been quantitatively worse under Labour but problems are going and at an accelerating rate.

The Secretary of State is right in one thing-yes, there are dedicated people working in his department in procurement. Some are my own constituents.

Yet, they are stuck in a department where there have been four Secretary of State in four years.

No one driving.

No one in control-yet, we are at war.

What more damning conclusion could there be? 

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