The Nimrod Review - Official Documents

14.21
“[I]f there is one error, if you like, which has led consistently to setbacks, disappointment
and difficulties in procurement, it is because the whole community – industry, the MOD
and, if I may say, at the political level and the press – has conspired to be optimistic
about the cost of military capability and has conspired to neglect the degree of risk that is
involved in major defence projects where one is actually buying equipment that does not
yet exist and it is what McKinsey’s, I think called a conspiracy of optimism in their work on
Smart procurement.” 20
Chapter 14 – Procurement
In my view, the ‘conspiracy of optimism’ might equally be called a ‘conspiracy of cynicism’, given the
conscious pre-disposition of those involved in initial procurement to under-estimate the time and cost of
initial acquisition of equipment, as well as subsequent through-life costs, in order to get the project up and
running. This suits all parties who have an interest in heralding new military equipment acquisition projects.
2006: creation of DE&S announced
14.22
There was little time for the DPA and DLO to bed in further because, in July 2006, the Government announced
plans to create a new joint organisation to carry out integrated defence equipment procurement and support.
The DPA and DLO were amalgamated to form the Defence Equipment & Support (DE&S) organisation. The
new organisation had some 29,000 staff and a budget of £16 billion or 43% of the defence budget. The
merger was a major task and undertaken at a time when the organisation was supporting operations in Iraq
and Afghanistan. In order to achieve targeted savings, the staff of the new organisation would have to be
reduced by 27% by 2012. Commenting on this, the HCDC said:
“It is vital that the DE&S has a skilled workforce. We find it inexplicable that the number
of DE&S staff is to be substantially reduced when staff are currently so busy that they have
insufficient time to attend the training and upskilling courses they need.” 21
2007-08: HCDC reported continuing procurement problems
14.23
The 2007-08 HCDC Defence Equipment Report concluded as follows:
“Seven of the largest equipment programmes which featured in the Major Projects Report
2007 have experienced in-service date slippage in 2007-08 totalling some 6.5 years. Once
again, the MOD has failed to control slippage on key equipment programmes. We are
concerned that the MOD only now acknowledges that it needs to include in the project
management skills of its staff the ability to examine critically a contractor’s programme
schedule and consider whether it is credible……The Nimrod MRA4 programme has
experienced further cost growth of some £100 million in 2007-08 bringing the total cost
forecast growth on this programme to £787 million or 28% of the Approved Cost. The
programme has also experienced further slippage in 2007-08 which now totals 92 months,
some 7.5 years. …” 22
Statement by Secretary of State to House of Commons on 4 June 2009
14.24
On 4 June 2009, the immediate past Secretary of State for Defence, the Rt Hon. John Hutton MP told the
House of Commons: 23
“Today we do not just have to plan for contingent threats against a sophisticated state
adversary, where the practical implications of our planning assumptions are tested in large
part by their deterrence effect. As the past decade has instead proved, today our armed
20 Ibid, page 12.
21 House of Commons Select Committe on Defence: Tenth Report of Session 2007-08 published 27 March 2008. (HC295) (Summary)
22 Ibid,
23 Hansard Debates, Thursday 4 June 2009. Column 438.
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