2.6 To date, cost increases after programmes have gone on contract occurred less often. Four of the 12 reported significant cost increases of between 18% and 60%. These were the Warrior armoured vehicle upgrade (recently cancelled) and procurements for the Protector unmanned aerial vehicle, A400M transport aircraft and Astute Boat 5 attack submarine. Protector has seen the largest cost increase since approval. The single largest element of the forecast cost increase for Protector was the decision to defer the programme for short-term affordability reasons, and not due to contract management issues.
2.7 Possible reasons for the lower levels of increase in cost estimates once the programme is on contract may include:
• that, at this point, there is a much higher degree of cost certainty, although the Department may continue to change its requirements, as described in paragraph 3.9. Two of the programmes - the Boxer armoured vehicle and P-8A Poseidon maritime patrol aircraft - are purchasing equipment already in service with other nations, which should significantly de-risk acquisition;
• improved programme management practices within Defence Equipment & Support (DE&S) (see paragraph 3.11); and
• that the Department has limited the cost implications of problems by using firm-fixed price contracts (see paragraph 3.3).
However, some programmes have not been on contract for long, and cost pressures are more likely to emerge further into the contract. Two of the 12 programmes have been on contract from early in 2021, and two others since late 2019.