Aircraft Carriers contract – underwater already?

The National Audit Office is on a roll. Having laid into the Fire Control project, they’ve now had a look (here) at the MOD changes to the aircraft carrier and associated Joint Strike Fighter (JSF) aircraft project, announced in the 2010 Strategic Defence and Security Review (SDSR). Ministers agreed to change the design of one, or both, of the aircraft carriers to make them compatible with the US Navy's version of the Joint Strike Fighter.  HMS Prince of Wales will not enter service - it will be built but not kitted out, and then kept as a reserve vessel - while HMS Queen Elizabeth is expected to go into service around 2020, with both said to cost some £6bn.

Anyway, the NAO don’t like what they see. The most striking statement is perhaps this.

It will take two years for the Department to reach a mature understanding of the consequences of the decision.

So the MOD doesn’t understand the decision it made – so how could it (or the politicians) have made the decision in the first place? NAO also thinks it will probably overrun on budget, and there is more uncertainly on technical and schedule issues. And the UK will be without carrier capability for 9 years.

NAO also say they weren’t given access to papers they wanted to see. That’s unusual to say the least, and doesn’t fit well with all the focus on transparency emanating from number 10 and the Cabinet Office.

"We were not given access to particular Cabinet Committee papers held by the Cabinet Office.... the Cabinet Office have told us that the papers which have been withheld were written to inform policy decisions".

I seem to remember noise at the time of the SDSR about the unaffordability of cancelling this contract - the NAO also contradicts this.

"Although the Department also considered cancellation, which was feasible and offered significant medium-term savings, it concluded that this would have been unaffordable in the short term.

However, cancellation would have had serious consequences both for jobs and for the UK’s long term shipbuilding capability – things are rarely straightforward in the world of military procurement.

But the NAO doesn’t understand how the various factors were “brought together to enable the Accounting Officer to reach a judgement on value for money” during the Review. That is a serious charge – that the Permanent Secretary (accounting officer) made such a major spending decision without having the appropriate information. It may be, however, that she gained comfort from the papers that NAO weren’t allowed to see.

So the NAO “are deeply concerned about the risks to the achievement of value for money on what were previously relatively mature projects with understood risks and funded mitigation plans”.

And when the NAO is deeply concerned, history suggests the tax payer can kiss goodbye to another few hundred million. At least.

“The worst Government decision I’ve seen in 30 years”. That was what a friend of mine, who has been intimately involved in these matters, said about the initial carrier decision (made by the Labour Government). It looks like the new government may be maintaining the tradition of major MOD equipment cock-ups. But to be clear - this is not a criticism of MOD procurement staff, this is top of the office and Ministerial stuff.

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