1. The Department has failed to deliver any vehicles from its core programmes despite spending £1.1 billion since 1998. A major contributory factor is that it has cut £10.8 billion from its armoured vehicles programme in an attempt to balance its overall equipment budget. Armoured vehicles have suffered more severe cuts than any other equipment area because lower levels of contractual commitment have made it an easy target. The Department concedes that it needs to be clear about its military priorities and not commit to projects it cannot afford, such as the original Future Rapid Effect System programme which sought to deliver 3,700 vehicles at a cost of £14 billion. The Department should ensure that future procurement decisions are based on a clear analysis of its operational priorities, and must challenge proposals vigorously to ensure they are both realistic and affordable. Once budgets have been set, they must be adhered to.
2. The Department's inability to deliver its armoured vehicles programme has been exacerbated by over-specifying vehicle requirements and using complex procurement methods. The Department conceded these shortcomings but claimed that budgetary pressures had led it to introduce a more pragmatic and cost-conscious approach: the Foxhound vehicle, for example, had been procured more simply to meet a requirement that was driven by realism. It was aiming to purchase more vehicles "off the shelf through international competition, while seeking to retain the ability to upgrade and maintain vehicles in the UK. The Department needs to demonstrate in future projects that its procurement culture has changed towards realistic specifications and simpler procurement routes. It should buy vehicles off the shelf through international competition where possible, having identified and assessed the consequent impact on the UK's industrial capability.
3. The Department has spent £2.8 billion meeting urgent operational requirements (UORs) necessitated by its failure to deliver the core armoured vehicle programmes. A failure to plan properly has led to extra money being spent outside departmental budget limits to fund essential equipment needed by troops on the front line. Meeting the UORs has meant buying more vehicles than would otherwise have been required and, compared to core vehicle programmes, they are expensive, less reliable, and will not meet the full requirements of the Strategic Defence and Security Review (SDSR). In future, the Department must avoid introducing UORs to compensate for its own poor programme and financial management but should use them only to respond to urgent military imperatives.
4. Delays bringing core vehicles into service have meant the Department has had to use other equipment to deliver essential capabilities. This has required helicopters in particular to undertake additional battlefield reconnaissance and other tasks, spreading scarce resources more thinly. The Department acknowledges that this is neither effective nor efficient. The Department must ensure it does not delay any further in deciding which armoured vehicles it can afford and bring them into service. It should apply the positive lessons of its more pragmatic approach to meeting urgent operational requirements to speed up the core procurement process.
5. The Department has yet to devise a coherent plan for delivering the equipment it needs to meet its strategic defence commitments. Despite having conducted the SDSR and two subsequent reviews, the Department has yet to reach a clear set of defence priorities which are achievable within the defence budget. The Accounting Officer assured us that the Department would not commit to expenditure if it did not have the budget to do so, and that it would stay within its budget in the 2011-12 financial year. Living within the 2011-12 budget should not mean making cuts in the short term which involve extra expenditure over time. The Department should urgently complete the unfinished work of the SDSR to balance its budget fully, identifying the equipment required to meet its capability needs and allocating resources accordingly. In the case of armoured vehicles, it should act urgently to establish which existing vehicles it intends to retain in service, and which new vehicles it can afford to procure.
6 . There is poor accountability for long-term equipment projects, such that no-one has had to answer for this prolonged failure of management. Senior Responsible Owners do not remain in post long enough to ensure continuity on large scale programmes, making it difficult to hold anyone responsible for whether they succeed or fail. Despite having failed to deliver any principal armoured vehicles for over a decade, the Accounting Officer was unable to tell us who was responsible or whether anyone had paid the penalty for these failures. The Accounting Officer should ensure that the lines of accountability for projects, and the way in which those responsible will be held to account, are clearly articulated and understood throughout the Department.