MoD must find over £1bn in savings

[Sand4Gold]

The Ministry of Defence (MoD) is being forced to find savings of more than £1 billion to cover cost overruns on major projects, the public spending watchdog has revealed.


The National Audit Office (NAO) expressed "disappointment" that some of the Government's biggest defence programmes were continuing to incur significant extra costs.
The disclosure comes amid growing disquiet about military funding, with Prime Minister Gordon Brown coming under fire from former chiefs of the defence staff last week over his treatment of the armed forces.
While the total projected overrun on the MoD's 20 most expensive projects remained almost static over the last year at £2.5 billion, the NAO said this had only been achieved by shifting £609 million to different budgets in 2006/7.
The same arrangement had removed another £448 million from the major projects budget in 2005/6.
The "re-allocated" costs, totalling £1.057 billion, are being addressed through efficiency savings and reductions in the quantities of orders.
The figures came in the NAO's annual Major Projects Report, which also said there had been additional delays to projects totalling 38 months, compared to 33 months last year.
Edward Leigh, the Tory chairman of the Commons Public Accounts Committee, accused the MoD of "slipping costs from one budget to the next".
"It has moved more than £1 billion between internal budgets over the last two years," he said.
"We need to be clear: these are not savings. This juggling act must not happen again next year. The MoD should focus its creative efforts more on effective project management and less on shuffling figures around on balance sheets."


It just keeps getting better by the day.......:ugh:

[tucumseh]

The NAO and PAC are absolutely right. This juggling to reapportion costs, and presenting it as a savings, is common.

Instead of faffing around with such financial sleight of hand, the MoD should do something far simpler. They should identify real savings that do not affect time, cost or performance. And if you think that’s impossible, how about £300M last year from just two suggestions from one person? Both were recurring, with on-going through life savings, albeit at a lower level. But I’m not sure if they were taken up because this, of course, is embarrassing. It’s easier to just cancel a few programmes and carry on wasting.

[Bob Viking]

Could we really save THAT much money by binning JPA and PAYD?!!
BV:}:}

[gar170]

Its amazing that the chancellor cant find any money for the defence budget but hey 29 billion for looking after shareholders of northern rock no problem.

[[email protected]]

Maybe the chickens have come home to roost after so many years of promoting military people and sending them to do accountants jobs in MoD. If I had a pound for every one of the smug staff suits who had considered themselves so clever in manipulating the Long Term Costings to try and get the latest new project funded, I would be as rich as a defence contractor:) You would think they had just printed all the extra money themselves but they didn't seem to realise that robbing Peter to pay Paul just comes back and bites you in the a&se.

[maxburner]

The elephant in the room is still welfare spending, but I can't see Broon grasping that nettle, especially north of the border. The odd billion on defence is neither here nor there when set against the lunatic spending on benefits and tax credits.

[Bob Viking]

That doesn't matter, though, because they'll be promoted by then and won't give a damn!
BV:(

[Saintsman]

One of the biggest causes of delay and cost over-run is spec change. If the big boys made their mind up and stuck with their decission you'd find that you would get a lot more projects delivered on time and on budget. Every time they change the spec, the manufacturers suck their teeth and say "sorry its going to cost X anount and of course we'll have to start the design all over again." and all the time rubbing their hands with glee.

[nigegilb]

This explains why the A400M is only funded for the plumbing for fuel tank protection. The plumbing needs to be paid for this year but the ring fenced funding for the OBIGGS system will have to wait for a FY some time down the line. This is all well and good, but now that Treasury rules on UORs have changed, requiring MoD to stump up 50% of costs, what happens if a higher priority funding item comes up in the same FY as the OBIGGS is due?

Coherence and Defence Policy, words you never hear from a Labour Government.

[Not_a_boffin]

Spec change is only a part of it and often only occurs after significant time has elapsed getting all the approvals lined up and scrutinised by every hanger-on in MB and Treasury. Therein lies half the problem - too many cooks and too many b8ggers who can put a project on hold while their own pet question (often valid, but equally often, not) is answered.

I've sat in a room in MB and watched a mere four-ringer arbitrarily sh1t-can a fully-worked up requirement that had passed all the relevant scrutiny and had actually got through Initial Gate (no mean achievement in itself) only to have it's assessment phase funding savaged as part of the EP4.5 round a few years back. That one decision led to reworking a whole tranche of OA and associated requirementalism that knocked the job back well over a year. That particular project has still to get to the stage of placing it's first order, despite being an arguably more important than CVF (and a relatively simple) item to acquire.

No-one argues with relevant and proportionate scrutiny, particularly when it's taxpayers money and the people in charge are often only there for a 2 year tour, but the current shenanigans - so-called Smart Procurement - are laughable...

[Razor61]

MoD have been told by the treasury to delay the FRES in order to save a load of cash.
What did Gordon Brown say the other day in defence of all the guns pointing at him?
"We are committed to giving our soldiers the best kit available"
but then a few days later tells the MoD to delay the best kit available in order to save money.
What's going to happen after we leave Iraq? Regiments and equipment will be disbanded and more aircraft mothballed just like it was after 1991.

Are we the only country fighting conflicts whereby we shed a load of squadrons, aircraft, tanks, infantry and ships? And do so before we have any replacements even close to near completed and find we are in such a state because of it we cannot conduct the military operations properly and lifes are put at risk?

[GOLF_BRAVO_ZULU]

Well, according to Truth Central, we are doing very well with the kit we already have!
Logistics efficiency target exceeded. 29/11/2007

DE&S has achieved logistics efficiencies of £360 million in financial year 2006/07, exceeding the forecast of £225-£300 million.

This success is down to finding more efficient and effective ways of doing business, and to more evidence being available within the organisation of the benefits of these new ways of working.

The achievement doesn’t just relate to financial savings, but also improvements in operational effectiveness, against which DE&S has had a financial value allocated for the first time. Contributing to this has been improved availability of Harrier and Warrior, a reduction in through-life support costs for Typhoon and the extra man-hours made available by reducing the routine servicing schedule for the SA80 rifle. These are classed as output efficiencies and DE&S has delivered £140 million of these against a target of £105 million. It is on track to exceed its £50 million target for 2007/08, and efficiencies associated with the new change programme, PACE, will contribute to this.

General O’Donoghue says:

'This is particularly commendable given the other priorities DE&S has to deal with daily. It’s a great achievement, but we must bear in mind that DE&S still has to deliver around £170 million of logistics efficiency in 2007/08 to meet our Gershon target. Recording evidence is really important because I’m sure a lot of good work is going unrecognised through lack of auditable evidence. During the 2006/07 scrutiny by Defence Internal Audit (DIA), over £60 million of efficiency was disallowed for insufficient or unclear evidence. I recognise, however, that reporting efficiencies can be a significant burden in some areas. I am therefore pleased to report that we have agreed with the Permanent Under Secretary to reduce from a monthly to a quarterly reporting regime, and continue to work to reduce this burden further in future.'

For those with access; http://defenceintranet.diiweb.r.mil.uk/DefenceIntranet/News/DefenceNews/DES/LogisticsEfficiencyTargetExceeded.htm
The need to measure and record everything, though, does occasionally lead to some spectacular lunacy.

[Wader2]

'course it depends in whose pot you look.

Our pot has a £nnnk surplus, or underspend whichever way you look at it.

A friend also has an overflowing pot but can't use it to improve builidngs etc. What would he like?

There is money sloshing around the system but a bit like an aircraft's fuel tanks, bit here, bit there. T&S tank is dry. Chairs and carpets are still available.

[Roland Pulfrew]

The "re-allocated" costs, totalling £1.057 billion, are being addressed through efficiency savings and reductions in the quantities of orders.

Just where are these "efficiency savings" supposed to come from? There are no efficiencies left to be saved. We have a generation of senior officers and civil serpents who grew up with the "New Management Strategy" and who now see "savings" as the only thing they need to do.

Well I for one do not believe that there are any "savings" left to be had - only reductions in capability. If there were "savings" the MOD wouldn't be offering up 2 GR 4 sqns as a "savings" measure. That isn't a saving it's a cut in capability. :ugh::ugh:

And reductions in the quantities of orders isn't a saving, it's a cut in capability. Why do the papers allow the MOD forked tongues to get away with it?

[Wader2]

Well I for one do not believe that there are any "savings" left to be had - only reductions in capability. If there were "savings" the MOD wouldn't be offering up 2 GR 4 sqns as a "savings" measure. That isn't a saving it's a cut in capability. :ugh::ugh:

But the GR9 is being extended.

Looks very much like removing current reserve capacity 'cause it is not needed - like Jaguar, like Lynx, like that aircraft that WEBF keeps going on about, like the old Humber Pig we had to buy back, like frigates, destroyers, submarines, etc.

Wonder how much it would cost to rent a parking lot as Davis?

[Roland Pulfrew]

But the GR9 is being extended.


Wader. Do you imply that we have to lose 2 GR4 sqns because the GR9 is extended?

Or are we extending the GR9s because their replacement isn't going to be ready on time?

Either way the potential to lose 2 GR4 sqns is a cut in capability not a savings measure.

[Wader2]

Roland,

I have no idea. It could be one, it could be the other, it could be both.

I know the Tonka has a role in the Gulf and this is different from the GR7 role in the Stan. If they felt that the Gulf could be managed with less Tonkas now and a future need in both areas and else where covered by the Tiffy in due course then a 'capability holiday' is on the cards.

Don't half :mad: up the WSN(N) FJ planning. Planning?:)

[Evalu8ter]

Oh that it were only £1Bn in total....

Rumour control has it the real figure the MoD has to find is a lot, lot more...

The problem that the Govt/MoD has is how to Spin the deep cuts that are coming in the light of the "you've never had it so good" CSR spin; it also underlines the point made by the Ex-CDSs in the Lords last week.

You can just see the Mandarins & Appratchniks scurrying around MB putting the thumbscrews on the current Top Brass to prevent them from joining the assault and frantically trying to find some positive news....whilst all the time praying for a "good day to bury bad news".

Some major and unpalatable Cuts are coming. Or, they could do what they always do, and "re-profile" the capital costs over more years, hence massively increasing the overall costs, and effectively shafting their successors with the problem!!

[Basil]

The elephant in the room is still welfare spending,
Hear, hear!

[dallas]

A little bird told me a couple of non-lifex* tankers are for the chop next year, in response to the net reduction of pointy things. This simple paper plan looks great until it is remembered we do use them for other things - not least as a little more flexibility when the original route jet breaks down.

Our decision makers need more time at the coal face - our point is being missed.


*In RAF terms.

[mutleyfour]

But which out of the offerings made by MoD could we manage without?

[Pontius Navigator]

Iraq or Afg perhaps?

[serf]

Eff Three ??

[vecvechookattack]

Canel future Lynx and force Westlands to produce an Aircraft which meets the requirment.

[r supwoods]

Emmm.. save a £1bn ... well how do you expect to fund the £700m aid to be given to Uganda announced recently.

[Jackonicko]

**** can the carriers and you can find the saving, address the £2.5 Bn shortfall that led Drayson to give up in disgust, and stop f*cking about with PFIs and just buy the FSTA tankers.

[Lyneham Lad]

**** can the carriers and you can find the saving, address the £2.5 Bn shortfall that led Drayson to give up in disgust, and stop f*cking about with PFIs and just buy the FSTA tankers.

Jacko - why don't you just come out and say what you really mean! ;)

LL

[Wigan Warrior]

(From Barry Beelzebub)

...if we really want to talk about wasted money, how about the £7.5 billion a year paid out in incapacity benefits for such debilitating illnesses as “tiredness”, gout and acne?
I realise that it’s a convenient way for the government to keep the underclasses off the unemployment register, and seeing as they’ve no intention of ever working anyway that’s probably a justifiable step, but do they have to be quite so blatant in their bare-faced bribery?
The Department of Work and Pensions has a checklist of 480 possible complaints that people of working age have used to receive incapacity benefit, including almost 2,000 claimants recorded as suffering from obesity ( pocketing £4.4 million), another 1,100 with sleep disorders, and 50 with the skin disorder acne. So that’s fat, lazy and spotty – remind you of anyone? The average teenager, perhaps?

[Sand4Gold]

DEC and IPTs how we fail
After 8 years in procurement I am more convinced than ever that we should simply give the Chiefs money and guidance and let them buy off the yanks; wither UK defence industry - it and all arguments to retain it are a joke.


I suspect many people within the military will agree with you - I do.

[vecvechookattack]

That 700 million for Uganda won't go to Uganda.... Its been promised to Uganda but it won't actually get there....in much the same way that the money promised to the sufferers of the Boxing Day Tsunami didn't get there....

[vecvechookattack]

DEC and IPTs how we fail
After 8 years in procurement I am more convinced than ever that we should simply give the Chiefs money and guidance and let them buy off the yanks; wither UK defence industry - it and all arguments to retain it are a joke.

Yeah....which would pretty much see the collapse of the economy in the UK. The UK defence industry is vital for this country. In 2001 the defence industry employed 1.5 million people and provided billions and billions of money towards the UK Economy. So its not really a good idea to make 1.5 million people unemployed and then handover Billions to Uncle Sam is it?

[Level 28]

Well edited vecvechookattack.

I think the point theprior was making is that the UK defence industry is self-serving. Yes, also politically driven, but can we as a Nation continue to waste billions of pounds on a 'questionable' procurement strategy that does not deliver frontline requirements on time.

Do want a first class cargo plane asap? Buy a squadron of C17s.

[22/7 Master]

The plain fact is that defence in the round is an insurance policy.

Now when you or I buy an insurance policy the main driver is cost. We may go for the policy that gives you a courtesy car, so we can carry on in the event a claim is made, and we will probably pay a little extra to avoid a large excess in the event of a claim.

Now, what New Liarbour have done (admittedly on the back of the Tories) is, since they came to power, buy the cheapest possible policy on the market. Then they have made multiple claims, quite small to begin with, Sierra Leone, Kosovo and this gave them a taste for it. So they then made two massive claims, Iraq and Afghanistan. Now foolishly the Insurance Company paid out without looking at the cover they had bought, previous claims etc. Never once did they say if you make these claims your future cover will suffer...

So funnily enough, now, the Insurance Company has said 'your claim history is appaling - time to up your premiums' and the government isn't willing to do so. They would rather reduce the cover even more, even if this means they won't be covered in the event of, say, a journey to Iran.

Now, the Insurance Company actuaries want to keep the business, so they have said 'yes, no problem' and to achieve this they have reduced costs - redundancies, running, not maintaining their buildings as they should, but they are at a point where they are deeply in the red and staff, fed up with their pay reducing in real terms for over 17 years are leaving to join competitors.

Perhaps saying to B-Liar and Broon, 'Calm down dear, it's only a war on two fronts' was not such a wise piece of advice.

[dallas]

Its a classic paradox: money gets tipped into the top of the defence funnel and is syphoned off by those earlier in the process for whom the resultant underperforming, shoddy or simply insufficient amount of kit is of little consequence. Those in uniform, actually performing the defence role, have to suck it up because they're on duty - but given the money to go shopping for the kit they want they could save billions. Of course this wouldn't be politically expedient and the same people that allocate the money and call for thrift, dictate that it must be wasted.

Instead, funds are reduced at the top of the funnel, Project Pie in the Sky still gets a relative amount to waste and the people with no vote at the end of the process - you and me - get even less equally shoddy kit.

As has been observed, there is scope for Chiefs to have more buying power and I think that's been recognised. I still favour bulldozing the whole defence process and building a model that works today - something akin to what we're going to have to do in the future when we lose badly.

[ShyTorque]

I hereby elect to donate my personal £900 NVTPM (non-voluntary, tax payer's money) stake in Northern Rock to the defence budget.

I'll be telling Gordon to get Alastair to transfer it on monday. :hmm:

Oh, yes, while he's at it, he can cancel my contribution to foreign aid for Sudan. :*

[vecvechookattack]

But you assuming that the Role of the UK Defence industry is to provide equipment for the UK Armed Forces......

60% of the output from the UK defence industry is exported.

[Wrathmonk]

60% of the output from the UK defence industry is exported

So if we (i.e the UK) no longer supported without question or competition the UK Defence Industry it wouldn't

pretty much see the collapse of the economy in the UK

Granted it may see some redundancies - I would reckon on the majority being in New Labour strongholds. Its not our economy that would suffer, its the Labour vote. IMHO. Value for money does not always mean the cheapest but you try convincing the Treasury otherwise.

[vecvechookattack]

and so there you go.... clearly a good reason why not to lose the UK defence industry..... because if we did then the Labour party would lose votes and the David Cameron-Blair would be voted in....and nobody wants to see that happen.

[Melchett01]

the Labour party would lose votes and the David Cameron-Blair would be voted in....and nobody wants to see that happen.

Quite right. Why bite the hand that feeds you?

Or should that be the hand that beats you? Now, lets think again about Noo Liabour losing votes.

Maybe we should persuade the electoral commission to come up with some sort of scheme where by the number of Liabour seats in the House are tied to the amount the defence budget has increased in real terms since they took power in 97. Wonder what they'd think of that? How would they spin themselves out of that one? - from an overall majority to opposition ' "but I think you'll find it's an increase in the number of seats in real terms" said the ex MP and Minister of Defence Bob Hainsworth' :E

[Pontius Navigator]

We have been engaged in the present conflicts as long as we were engaged in WW2. Maybe we need to return to the Principles of War, selection and maintenance of the aim.

During that war the Defence Industry effort was focussed on war production to defeat the existing enemy. True, towards the end of the war research labs started to look to the future but were aiming at a future over 10 years hence.

Now we are both fighting current conflicts and also maintaining an R&D effort for future unknown conflicts - SSBN, CVS, JSF, etc. Why?

One answer is that in the passed the generals have always been accused of preparing for the last war not the next.

We must however question why we are preparing for the next when we are ill prepared for the present.

[hulahoop7]

You're all doing the politicians job for them. We need CVF, JSF, SSBN, FRES etc etc and we need money for the front line now. You don't cut the throat of one to feed the other. We need more money. Simple as.

Jaco for one winds me up, he's been banging a drum about CVF for years in the face of reasoned and INFORMED argument on this site. Perhaps start banging the drum about more cash.:ugh:

[Wader2]

hulahoop,

You may be right - more cash to fulfill all the Government's aspiration.

In the 60s the Tories were strapped for cash and had to rob peter to pay paul. When harold Wilson took over he too was strapped for cash and wanted to reduce commmitments to match available cash. He wanted to retain the Far East role and reduce the role in Germany; not quite sure why this was changed.

The come all the defence reviews, the Nott cuts, the Falklands and finally the ending of the first Cold War. With a peace dividend and options for change we had a defence review reorientating and resizing the defence forces.

Now after the Balkans, two Gulf wars and the Afghan war, not to mention Sierra Leone, and Government plans for power projection - CVS, SSBN etc, what we have not had is a Government Policy Review and a Defence Review.

Please can we have a match between aspiration and resource.

PS, as we have WW 1 and 2, GW 1 and 2, which AW should it be? 3rd or do we count the Russian one and call it 4th?

[Top Right]

VVC and theprior,

An unsubstantiated comment but it was said on the Beeb last week that more people are made redundant/laid off annually in UK than the total employed in the UK defence sector. If true, are there really 1.5M in the sector?

And with so many other UK businesses competing well on the global stage, why do we remain protectionist about the defence sector which almost operates as a monopoly?

[Wader2]

It is not in the interests of companies to deliver network enabled solutions. They want to sell us their system, with their software. As long as we get led down that garden path we will have capabilities that cannot share information.

No names, but I was interviewed on Tuesday by a contractor whose contract is a major IT system. Part of the contract however is to determine the answers to a whole range of question including water, telephones, electrics, fuel etc. It would seem to be part of a 'network enabled solution.'

10 years after I wrote a paper on the nonsense of each new piece of software being introduced with its own bespoke piece of hardware, we may be getting a one-per-desk solution.

The driver to my paper 10 years ago was 6 systems on one desk, stacked 2 deep.

[Gainesy]

PS, as we have WW 1 and 2, GW 1 and 2, which AW should it be? 3rd or do we count the Russian one and call it 4th?

...and Kosovo 2 looks likely to kick off fairly soon. About time the Chiefs Various just say :"Sorry, can't do that, not enough money".

[blogger]

Well when the last servicman leaves and turns off the lights the savings on the wages and lecky will more than cover what they are required to save.

Last one out flick the switch.

[JagRigger]

Do you believe there could be a case argued to bring back RAuxAF flying Sqns?

You could have one fully manned ( and I mean fully manned ) Sqn supporting an Auxillary in terms of engineering / logistic support during the week/offtime.

Inreased ability of simulation could be a factor too, for the aircrew.

OK, so they may not be fully combat ready, but workups could be handled I'm sure.

[XV277]

What happens when you have polititians who demanded a 'Peace Dividend' then spent the next 15 years waging various wars around the world.

[8-15fromOdium]

From today's Gruniad:

http://www.guardian.co.uk/military/story/0,,2221531,00.html


The rift has caused the Ministry of Defence to postpone publication of the latest 10-year industrial strategy on Thursday week because ministers admit current negotiations are ongoing and no agreement has been reached.


... may explain why a certain Defence Minister decided to go on a driving holiday.

[The Adjutant]

jagrigger,
Good idea young man. We already have a fair number of RAuxAF aircrew working around the place and I see no reason why we cant do better by engaging more ex RAF aircrew into the "oggies". It might be more difficult to train RAuxAF aircrew from scratch as was done in the good old days, but if the will is there....
Now what we want is a 2007 version of the Mosquito, made of carbon fibre and with turbo prop engines with off the shelf avionics. Cheap to build, easy to fly lots of payload in the way of bombs and rockets. Man them with RAuxAF aircrew and the problem is solved.
Discuss.

[Roland Pulfrew]

And in today's Telegraph Online

Cabinet split over defence cuts
By Laura Clout
Last Updated: 7:48am GMT 04/12/2007

Plans to slash the defence budget by up to £15 billion over the next decade has caused a split in the Cabinet leading to the Ministry of Defence delaying the publication of its latest 10 year industrial strategy, due to be published next Thursday.

Overall spending on defence is due to rise from £34.1 billion next year to £36.9 billion in 2010, but Whitehall is said to be split over cuts which could include reducing the number of new Astute nuclear powered submarines being built at Barrow from eight to as few as four and cancelling orders for the seventh and eigth Type 45 frigate at Portsmouth or diverting them from the Royal Navy by selling them to the Malaysian navy.

The revelation, in a report by spending watchdogs on the cost of Britain's 20 biggest weapon projects, put the likely cost overrun at £2.5 billion out of a total bill of £28 billion

[jindabyne]

Also from a recent DT letter, a quote from Winston Churchill in 1904:

The Army is not like a limited liability company, to be reconstructed, remodelled, liquidated and refloated, from week to week, as the money market fluctuates. It is not an inaminate thing, like a house, to be pulled down or stucturally altered at the caprice of tenant or owner.

It is a living thing. If it is bullied, it sulks; if it is unhappy, it pines; if it is harried, it gets feverish; if it is sufficiently disturbed, it will wither and dwindle and almost die; and when it comes to this last serious condition it is only to be revived by lots of time and lots of money

Plus ca change ----

[Melchett01]

Yet more cuts in the pipeline ? Well I suppose we shouldn't expect much more from this champagne socilaist 'regime' who is quite happy to exist under the freedom guaranteed by the forces whilst simulateously amputating huge chunks of capability at a whim to fund god know what ill conceived and poorly managed bureacratic nightmare.

Give today's report on the Nimrod incident (which I suspect has led to the lawyers rubbing their hands in glee at prospect of a negligence case - and in this instance, I am more than happy for the dogs to be released against the MOD) it is about time we asked - and got an answer to the important question - just what value does this government put on the life of an individual?

I'm well aware that defence is not a vote winner, but that wasting billions on dole scroungers, immigrants and propping up the NHS and welfare systems is a vote winner. But the decision to constantly cut funding comes with risks of systemic failure and catastrophic incidents which may - and have - lead to the loss of countless lives. Given how devious Brown & Browne et al are and how this country is now driven by the bottom line on a profit / loss statement, they will have worked out how much of a risk they can take with their enforced cuts and subsequent erosion of capability with its attendent risks to OUR - not yours Brown - OUR lives, and what the return is likely to be for the risk. So here it is, bottom line - the risk reward question:

IIRC, BP reckoned in terms of a negligence pay out, the value of one of their employees was ~$20M before they would go to court and argue or pay out to improve facilities, standards, procedures etc. What specific numerical value has this government assigned in terms of votes and cold hard cash to an individual serviceman's life?

[LFFC]

Telegraph (http://www.telegraph.co.uk/news/main.jhtml;jsessionid=AHMMWXKUBBIB5QFIQMGSFF4AVCBQWIV0?xml=/news/2008/01/30/ndefence130.xml)

It looks like we're short of about £3 billion!


The Ministry of Defence was "living in cloud-cuckoo-land" in believing it could achieve all its major procurement projects, the head of the Commons' defence committee has said.

In a damning hearing on the MoD's equipment programme, the military was forced to concede it "did not know" whether cash would be available for major projects.

Defence analysts believe the MoD is facing a £3 billion shortfall out of £19 billion in funding for hardware vital to ensuring Britain's global position at the "top table".

I wonder which projects will be axed soon?


Gen Kevin O'Donoghue was the first official to publicly suggest that one of the military's major defence projects faced the axe.

Among the projects in disarray is the "stand-off" over the £4 billion aircraft carrier programme announced with great fanfare by the Government last year.

[Navaleye]

Gordo said today at PMQs that the CVF project will go ahead.

[Horror box]

Gordo said today at PMQs that the CVF project will go ahead.

Normally a pretty good pre-cursor to the demise of that particular project, if history serves us right!!

[glad rag]

http://www.pprune.org/forums/showthread.php?t=310998

[LFFC]

The trouble is that, where contracts have already been signed, not much money will be saved by their cancellation - just look at Typhoon. So regardless of what Gordo says, my guess is that it will be projects that haven't reached contract signature will be axed. FSTA possibly, but not much capital outlay will be saved by axing that project - in fact axing it may force more short term spending.

Another thing. Don't you have to look at the CVF and JSF as a system? What good is one without the other? You might be able to get on with Harrier for a few years, but committing to CVF will eventually force commitment to JSF.

So if Gordo really is committed to CVF, stand by for more cuts to SLAM, CEA, pay and allowances etc.....

As Admiral Boyce (http://www.stv.tv/content/news/Politics_NEW/display.html?id=opencms:/news/politics/Defence_Secretary_criticises_former_Chie_2007112) said, there'll be "blood on the floor" in the MOD.

[LFFC]

‘Black’ mood at overwhelmed ministry - FT 28 Apr 08 (http://www.ft.com/cms/s/0/9311d258-14b0-11dd-a741-0000779fd2ac.html?nclick_check=1)

Britain’s defence ministry faces its most severe funding crunch in three decades, leaving its strategy towards the industry in disarray and the armed forces stretched to the limit.

According to people with close knowledge of the department, the crisis has come to a head after building up for more than a decade.

How very depressing! :(

[tucumseh]

The article is pretty much spot on - and could have been written any time in the last few years. In particular, rumour has it that the inability to comply with the Defence Industrial Strategy is one of the main stumbling blocks on FRES. Well, it's a bit of a howler saying we must have an indigenous capability after decades of running down the British engineering industry, isn't it?

[Jackonicko]

There's one programme, that provides a 'nice to have' capability - but not a capability whose absence would be show-stopping - whose cancellation would save all of the money required, and which would still allow the full spend on Tranche 3, Nimrod R replacement, FSTA and FRC.

It's time to can the carriers and JSF, and the only reason it's not on the cards is to safeguard jobs in the PM's constituency.

[D-IFF_ident]

Don't you mean 'safeguard votes from the PM's constituency'?

[Jackonicko]

That's the irony, isn't it?

Even if Brown shags them royally, these working class Jockistani labour voters will vote Labour. His is hardly a swing seat.....

Maybe we should ****-can the CVFs and JSF and give Gordon £1 Bn to invest in his constituency. It would still solve the defence funding problem!

And I suspect that it's the only option that would do that, unless you seriously believe that more money will be made available from elsewhere......

[soddim]

Better still, give Gordon and his party MPs £50bn to share on condition they exit Parliament for good by the nearest exit and let back in a Government that will create a real economy not one built on ever-increasing mortgages.

[Squirrel 41]

Back to the topic....

The most telling part in this excellent article - and many thanks to LFFC for posting the link, I'd missed it - is that SDR was never funded in full, and that MoD proceeded on a wing, a prayer and an expectation that enough programmes would slip far enough to the right, so that it'd all come out in the wash.

Well, at least a couple of things (e.g. Iraq/Afghanistan/crap procurement/senior slopey-shoulderness/defence inflation/defence industrial strategy/insert other bugbear of choice) have got in the way. And the happily ever after is now putting front line lives at risk.

So, the issue really comes down to whether (a) the commitments will fall meet the budget :) (b) the budget will rise to meet the commitments, :cool: (c) a little of both :* or (d) we continue to squeeze the front line and watch seniors and politicians alike wring their hands. :hmm:

Call me cynical but in increasing order of likelihood, I'd rank these (b) [no dosh, no appetite for overt tax increases] (a) [too much politically riding on the ops we're on] (c) [but emphasis on "more with less", so not a 100% tradeoff between these measures], leaving (d) a clear winner by a country mile. :yuk:

Thoughts?

S41

[SirToppamHat]

S41

There or thereabouts I'd say. I would be interested to know how many of the 'Savings Measures' submitted under PR08 are actually being taken? I know of one for sure, but nothing seems to be being announced (waiting for a good day to release an awful lot of bad news?). The trouble is, the layers of civil serpants that are gradually taking-over the MoD serve to ensure that those 'taking the decisions' don't actually do so with the real facts in front of them.

I understand Swiss Des is someone who doesn't care what goes on in his ministry so long as he pesonally doesn't get the blame. Far better to have the decisions taken well down the chain.

Still, on the positive side, I note the recent distribution of a women's health booklet and a tome about PE are boosting morale tremendously.

Bitter? Moi?

Yep

STH

[D-IFF_ident]

The endgame of doing more with less is to do everything with nothing.

Considering 'lean', streamlining, etc - someone, somewhere will undoubtedly explain to us mere mortals how a further cut of 1Bn will make us all better off.

'These are not the defence cuts you are looking for'. etc

:{

[Grimweasel]

Here we are cash strapped and we receive 80 copies of a 200+ book on the RAF last week to distribute to anyone on the unit we see fit? By the looks of it, it was all paid for by the 200 pages of adverts, but still, why is the book necessary?

This country is double F'@@ked when it comes to finances. Brown binged on cheap creidt during his tenure and now his chickens are coming home to roost. He should have been reducing the national debts etc not increasing the country's reliance on debt.

The banking sector still has the bad effects of the credit crisis filtering down to the customer base to come. If you think things are bad now, give it a few months. Many think we could be in for a torrid summer of financial gloom. How is HMG going to pay for all this and the other Government Dept's that all need extra cash when the only real GDP 'adder' in this county (service industry) is in the grips of financial decline??

The £ will start falling like a stone soon as the BoE start to lower interest rates to bouy the housing market. Foreign investors will then take their money elsewhere for a better yield thus increasing the doom for the £.

Food prices are in the grip of a price bubble and so is oil. With OPEC predicting oil at $200 PB soon (a little optimistic I think) then fuel costs will soar and along with it will all the goods in the shops. (LL may be curtailed as well; how will we pay for all the fuel at those levels??)

The only real answer is to sell everything and hedge into gold. As oil rises gold will too along with the $/£ falling it will become even more of a safe haven. Use this recent dip as an opportunity to buy back in for the long run up to possibly $2500 an ounce!!

Only a prediction. Time will tell if it's all folly but an 'educated' guess (if one can have such a notion - read the 'Black Swan' by Nicolas Taleb to gauge how useless we are at predicting and preparing for those unexpected events)

[SSSETOWTF]

I don't pretend to be even remotely impartial in this, but I really can't support the notion of pulling out of JSF while throwing money down the toilet of Tranche 3 Typhoon.

For well over a decade I personally have been green-eyed with envy at all the NATO countries who were flying F-16s when we wasted our money on the kipper that was/is the F-3. Even today when the F-3 nav union proudly beat their chests and blah on about having the best airplane in the world, I'm afraid I'd take an MLU F-16 every time. In 10 years time, NATO will consist of those that are flying JSF and the second tier of those that aren't. The aircraft will do everything that Tranche 3 Typhoon dreams of and a whole lot more and offers a truly transformational leap in capability (in much the same time frame).

The wider argument of whether or not we can afford carriers, or should be spending cash on jets at all before we sort out our helo/transport/uav fleets or a decent radio etc for the grunts is a different matter though...

Just my 2p.

Single Seat, Single Engine, The Only Way To Fly!

[Backwards PLT]

Interesting trend that I have noticed is that generally harrier guys are very pro JSF and other pilots are more pro Typhoon. Don't know why that is - can't just be the vertical stuff.

Anyway, I think that JSF will be a leap forward from Typhoon in some areas (LO for example!), it should be, although many of its capabilities are still paper. If it doesn't slip any more (and that must be the biggest IF in the history of aviation) it's IOC date is 10 years later than Typhoon and it has many billions more spent on it. However in terms of range/payload/aerodynamic performance the F35B doesn't compare so well. You can argue about the relevance of those, if you like!

Having said that, I totally agree with SSSETOWTF that we can't afford not to buy JSFs. Its a club we need to be part of - like maybe we should have been in the F16 club (maybe not, I'd rather have been in the F15E club, think how much better they would have been all these years compared to Harrier, Jaguar, Tornado).

Also last point on other priorites totally valid.

Must go sit down and beat myself now for agreeing with a (ex?)harrier pilot. Disagreeing with them is usually much more fun.

[ORAC]

Torygraph: UK helicopter industry 'will die in MoD cuts'
(http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2008/04/29/narmy229.xml)

A £1 billion helicopter project has been "offered up as a sacrifice" for defence cuts as the Ministry of Defence struggles to manage its funding crisis, it was claimed yesterday. The termination of the Future Lynx deal would herald the end of major helicopter manufacturing in Britain if Gordon Brown decides to go ahead with the reductions.

A decision on auditing major defence projects has been delayed to the end of next month with the Government attempting to avoid embarrassing job losses just before local elections on Thursday. But defence sources said it was now "highly likely" that the order for 70 Future Lynx utility helicopters, which were to be bought for the Army and the Royal Navy, will be axed. The decision could lead to the closure of the Westland helicopter plant in Yeovil, Somerset, with the loss of 800 jobs.

Douglas Carswell, a Tory MP who has written a paper on scrapping the Lynx deal with the Italian firm Finmeccanica, said: "This is a bad deal and the sooner we get out of it the better. We could announce, for example, that we would buy the same amount of helicopters from Sikorsky - and still have £580 million to spend addressing funding shortages elsewhere in the Armed Forces."

He added that the Sikorsky Seahawk helicopters would be available within 12 months. The Lynx is not expected in service until 2013. The American-built Seahawks would cost £6 million, or the MoD could buy the well-regarded EADS Eurocopter at £4.5 million each rather than the £14 million for each Lynx.

The likely cut will be part of an "examination" of major projects as the MoD faces a £1 billion hole in defence spending this year. Questions over the future size of the Navy will also be asked.

The auditors will look at whether six of the highly advanced Type 45 air defence destroyers will be sufficient for the Navy rather than the eight that senior sailors believe will be the "minimum" necessary to protect aircraft carriers and landing ships. Also vulnerable will be the Astute hunter killer submarine.

But one programme that defence sources have confirmed is certain to go ahead will be the two aircraft carriers being built for £4 billion in Scottish constituencies with strong Labour Party ties.

The issues are expected to come up on Thursday when industry chiefs meet Baroness Taylor, the defence procurement minister .

[Mister-T]

I for one just wish that they (DB and number 10) would just get on with it and put us out of our misery.

[helimarshaller]

He added that the Sikorsky Seahawk helicopters would be available within 12 months. The Lynx is not expected in service until 2013. The American-built Seahawks would cost £6 million, .....

The article does not however tell us much would it cost to convert RN Ships to operate the Seahawk or how long it would be before the ships would be fully operational with a Seahawk flight on board!!!!!

[tucumseh]

or a decent radio etc for the grunts


Well, they had a decent radio, but then BOWMAN came along………

And therein, I believe, lies the real story. The thread title mentions £1Bn. That’s the very least of it, and represents the good news fed to journalists who swallow it hook line and sinker. £1Bn is NOTHING – finding that without affecting operational capability is a complete no-brainer.

There are two strands here. One is the headline – too many programmes for the budget to withstand, so one or more must go. It seems like Future Lynx is the latest favourite.

But the more important strand, and one which no-one mentions, is the fact that programmes like BOWMAN need to be baled out big time. Look at the simple facts. 10 years ago the price on the table was £4Bn+. Anyone with the slightest scoobie took one look at the “shopping list”, identified the huge gaps (airborne for example) and said “It won’t work if you don’t fund/plug the gaps”. What did they do? Constricted the programme boundaries even further, went out to tender again and let a contract for £2Bn which had even more gaps. All this was reported, but the spin was “look how clever we are, £2Bn saved”.

So, other IPTs / Platforms who for years had been told to assume BOWMAN would provide this or that capability, suddenly found themselves responsible. Did they get compensatory funding? I jest. That meant they had to cut other programmes within their remit. As this level (IPT) is below the radar of most in MoD Centre, never mind the press, the upshot has been ongoing, year on year, stealth cuts in the Defence Budget. A direct consequence is the fragmented approach to the airborne component. And the land vehicle conversion programme is a catastrophic disaster in terms of time and cost (that it doesn’t perform is a given).

And so back to SSSETOWTF’s comment. Given the BOWMAN radios (or at least the vast bulk of them used at lower echelons) are (a) crap, (b) at least 2 generations out of date, and (c) unwanted by the primary user (Infantry), just who is going to replace them? Well, the Public Accounts Committee has already acknowledged they ARE to be replaced, but doesn’t mention the programme. (Nor did it mention this encompasses around 55,000 radios, and they reported before the latest debacle which will see 12,000 or so crucial ancillaries ditched. But don’t worry, this latest is “only” £100M or so at a rough guess and, yes, they MUST be replaced). The reader is left to assume it’s the BOWMAN IPT. But if you read the MoD Contracts Bulletin (headlines are free, the detail requires a subscription) there have been a number of Invitations to Tender quietly issued these last few years, none of them by the BOWMAN IPT. It would seem that the programme that is meant to ENHANCE the BOWMAN baseline must now regress 10 years and REPLACE BOWMAN. Due largely to this state of affairs, this programme has yet to achieve Main Gate, 3 years after it was scheduled. One can only assume this is because it cannot define its requirement until it can be agreed (a) just how much of BOWMAN needs replacing and (b) how they’re going to spin it. Yet again, the poor bloody soldier is going to be disappointed and placed at greater risk. Having successfully trialled superb kit some years ago (and not unreasonably expects much the same from the production contract) all he may get is what he was told BOWMAN would deliver 10 years ago.

Not interested in BOWMAN? See Nimrod MRA4. Chinook Mk3. And the rest. THAT is where the Defence Budget bleeds away and THAT is what needs the “savings”. The headline programmes are essentially red herrings in the scheme of things.

Oh, and now compare those programmes with the senior staff lists. Does it ever strike you that they only tackle the problems openly when those responsible retire? Unfair? Why wait so long for MRA4 and Chinook? And why is BOWMAN seldom mentioned?

[althenick]

As has already been said on this thread lets take a look at Manpower before cutting present and future capabilities

Here is a good start...

http://www.theherald.co.uk/politics/news/display.var.2093241.0.Navy_has_33_admirals_earning_average_o f_more_than_120_000.php

And I dare say that the Army and Air force are grossly top-heavy too

[The Nr Fairy]

Nice idea, but unless I've not read the article properly, 33 x 120k is just shy of 4 million.

4 million is about 0.4% of the 1 billion savings.

[althenick]

True but then you have all their staff/flunkies etc. How many of them do you think there are?

[Epimetheus]

In the mid 90s there was a term kicked around the centre - "entryism". After the Army had succeeded in procuring lots of artillery pieces they came back to the table for the funding of the shells. "Offside" screamed the scrutineers, declaring that this "entryism" where a project was totally dependent upon another could not be allowed to happen again. All costs had to be declared up front for the entire programme and essential sequiturs were banned.
I know I'm a tad simplistic, but the Carrier/JSF debate does remind me of this term.
Incoming expected, and I await tucumseh's broader enlightenment on my definition of "entryism". I'm sure he has some better detail. And as for BOWMAN and airframe comms commonality, it's incredible that we still don't have as good a secure fit as we should have.

[tucumseh]

Epimetheus

Couldn't put it better. I didn't know about the artillery example you cite, but it's a classic example. To be fair, the problem was (and still is) largely down to the failure to adhere to PUS' mandated rules on scrutiny, and usually wasn't a deliberate misrepresentation or deception.

The rules contain simple questions the scrutineer MUST answer. 2(h) (Associated Costs) and 7(c) (Usage rate of consumables) would cover artillery shells adequately. Integration costs are specifically cited as an example in 2(h), but are commonly left out of DEC costings - which is bit of a howler on aircraft comms. The beanies can't complain if they don't know their own job.

Of course, that said, about 10 years ago CDP notoriously ruled that applying these mandated scrutiny rules is a disciplinary offence. PUS chose not to over-rule him and successive Mins(AF) supported him, which is all rather confusing to the average Joe in Acquisition, so little wonder most don't bother. The resultant waste is the stuff of legend.

[Cpt_Pugwash]

Further to Tucs reference to costings above, and the mention at post #76 of things being under the radar of MoD Centre and the press, another little publicised consequence of the merger of DPA/DLO was the break-up of pricing/costing organisation. This is now beginning to affect IPT’s as they prepare for Initial and Main Gate submissions.
At risk of teaching Granny to suck eggs, I should explain that passing either of these Gates requires the production of a Business Case, a component of which is a Combined Operational Effectiveness and Investment Appraisal (COEIA). The IA element of the BC for major projects was mostly (but by no means always) carried out by the Pricing and Forecasting Group (PFG). Now this organisation has not had a very good press on these forums (see Not-a-Boffins comment on the CVF thread), but generally provided IPT's with rigorous IA’s with sound Value for Money (VFM) recommendations on a Whole Life Cost (WLC) basis. However, these were not always accepted (The AJT would have been an Italian machine if they were!)
Since the middle of last year, PFG were split into two groups, one to provide realistic(?) early budgetary estimates to the DECs and DEP in order to avoid entryism, the other to carry out the traditional pricing/costing work including IA’s.
So what, you may say.
Well, it seems the plan is to hive off the latter group to a GOCO under TUPE terms, with the result that a lot of staff voted with their feet and found other posts, with the result that support to IPT’s is now affected, and if the scheme is approved, in the future advice on major investment decisions will be produced by a commercial organisation with, potentially, links to probable suppliers.
I leave you to ponder the wisdom of this.

[JFZ90]

So for the sake of £1Bn it looks like DIS is all but dead and the MoD is seriously contemplating abandonning the UK domestic helicopter industry, having only what seems like 5 mins ago signed a long term partnering arrangement with Westlands. This is surely not going to happen is it?

Did anyone one else notice today on the news that increases in oil prices alone will lead to a £2Bn extra in tax revenue this year alone (thats not extra tax due to revenue changes, just unplanned for extra income as it is partially calculated as % on top of the market price of oil).

[GOLF_BRAVO_ZULU]

I would suggest that those seriously interested read Cpt_Pugwash's Post carefuly as he makes some good points. As an in service support wallah, I think the amalgamation with the DPA was a good thing. We never manage to do something simple simply, though. There were a few truly bone sub initiatives and Cpt_Pugwash has spotted a good one.

[Not_a_boffin]

Concur.

Without decent costings the whole acquisitions shebang will come to a grinding halt (sub-plot maybe?). Knowing some of the PFG lads as I did, the issue was partly what they were allowed to do, partly what they weren't funded or trained to do (eg call the likes of Big And Expensive Ships on some of their pricing assumptions) and some bits of silliness like assuming 7M manhours are required to build a tanker.

As ever with MoD, tasked to do something but not funded, equipped or trained to deliver it all.