The Nimrod Review - Official Documents

CHAPTER 14 – PROCUREMENT
Contents
“The defence ministry’s capacity to waste money is legendary. Procurement is a dismal
story of delays and extortion. The defence contractors, assured their prosperity is vital to
national security, have a captive customer and no incentive to cut costs.” 1 (Philip Stephens,
Financial Times, 1998)
“Every one of our servicemen and women has the right to know that we are doing everything
possible to ensure that every pound of investment in our equipment programme goes
towards the front line and is not wasted in inefficient or weak processes of acquisition.”
(Former Secretary of State for Defence, the Rt Hon. John Hutton MP, 4 June 2009) 2
Chapter 14 deals with Procurement issues and, and answers the following questions:
Summary
1 Financial Times 1998.
2 Hansard Debates, Thursday 4 Jun 2009: Column 438.
What is the Procurement history of the replacement Nimrod MRA4 programme?
What effect have delays in the MRA4 programme had on the MR2?
Chapter 14 – Procurement
What is the history of Procurement in the MOD generally? What significance do delays and cost
overruns in Procurement have for the wider health of Defence In-Service Support?
What changes in the Procurement system have there been? Have these been effective? Are there
current proposals?
What is the current state of Procurement? Does it pose a risk to the health of other functions of
the MOD, in particular In-Service Support and safety and airworthiness?
1. The Procurement history of the replacement ‘Nimrod 2000’ (subsequently re-named ‘Nimrod MRA4’)
programme has been one of continuous delays and cost over-runs. ‘Nimrod 2000’ was originally
scheduled to come into service in 2000; but the In-Service Date of the replacement programme
subsequently slipped on at least six occasions (in 1999, 2001, 2003, 2004, 2005 and 2008). The current
scheduled In-Service Date of the Nimrod MRA4 is now December 2010, i.e. over 10 years later. The
total cost over-run is currently approximately £789 million.
2. But for the delays in the Nimrod replacement programme, XV230 would probably have no longer
have been flying in September 2006, because it would have reached its Out-of-Service Date and
already been scrapped, or stripped for conversion.
3. The serial delays in the In-Service Date of the replacement Nimrod 2000/MRA4 programme caused
commensurate delays in the Out-of-Service Date of the Nimrod MR2. This has had a baleful effect
on In-Service Support for the MR2: (a) because the MR2 was perceived to be ‘just about’ to go Outof-Service,
it did not benefit from longer-term investment decisions; and (b) because the uncertainty
has led to difficulties of planning and sourcing sufficient spares for its remaining expected life.
4. The history of Procurement generally in the MOD has been one of years of major delays and cost
over-runs. This has had a baleful effect on In-Service Support and safety and airworthiness. Poor
Procurement practices have helped create ‘bow waves’ of deferred financial problems, the knockon
effects of which have been visited on In-Service Support, with concomitant change, confusion,
dilution and distraction (see the post-Strategic Defence Review period 1998-2006 and Chapter 13).
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