Stewart Penney/LONDON

Keeping elderly systems in service because of delays in delivery of new equipment will cost the UK Ministry of Defence £426 million ($645 million), according to a report from the National Audit Office, the government's financial watchdog.

The NAO's annual report, which reviews the MoD's 25 most expensive procurement programmes in the year to 31 March, 1999, included for the first time the cost of keeping obsolete equipment operational. NAO sources say the £426 million is calculated by subtracting the cost of supporting new equipment had it entered service on time from the cost of retaining elderly systems. If the equipment has a new capability and does not replace older equipment, the MoD saves money.

The charge is in addition to an overspend of £2.73 billion, or 7.8%, of the total forecast cost on the 25 projects. The NAO report blames MoD inefficiencies for most of the project delays. During the year, the average delay to introducing new equipment increased by four months to 47 months.

The worst offender, says the NAO's Major Projects Report, is the Royal Navy's next-generation anti-air warfare warship, the Type 45 destroyer. Service entry is planned for 2007, after a 57-month delay. The cost of maintaining the current fleet will run to £537 million.

Much of the delay is attributed to the failure of a tri-national collaborative programme.

But delays are not always damaging in financial terms. The report reveals that £201 million was saved by not fielding an attack helicopter in December 1997 because of delays in selecting a winner. The GKN Westland WAH-64 Apache will enter service in December this year.

The cost implications of continuing to use the unguided Hunting BL755 cluster bomb because of 118 months of MoD delays in selecting a replacement anti-armour weapon include £20 million for upgrading the munition and an additional, undefined, overhead for clearing unexploded bomblets following last year's Operation Allied Force in Kosovo.

The BL755 will be replaced by Alenia Marconi Systems' Brimstone precision guided missile late next year. "Since contract award, the programme has gone very well," says an NAO source.

The MoD responded to the NAO criticism, claiming that acquisition reforms that have come into effect in the past year are already bringing improvements.

Source: Flight International