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Damning defence report

Laura Kuenssberg | 17:57 UK time, Thursday, 6 August 2009

We've just been given a document that we're told is a set of slides on a presentation given by Bernard Gray on his report on defence procurement.

Reports last night suggested that his findings would be critical of the tangled-up system of defence procurement, suggesting that he might identify up to £2bn that was "wasted" and a system that just didn't work.

But in black and white, the notes that I now have in front of me suggest just how damning the report, now delayed, was going to be. They say Mr Gray concludes that the:

"Ministry of Defence does not really know the price of any kit, and project management does not exist in the Department."

It says the "top 40 programmes annually expect an 80% overrun on time, and 40% on cost". The Ministry of Defence is "in denial" and it says the "current programme will exceed likely MOD funding profile" - in other words, The Ministry of Defence doesn't have enough money to pay for its plans.

There's much more in the document and we don't yet have a response from government. More soon.

Update, 18:42: Still no sign of Bernard Gray himself, but we now have much more detail on what his report into defence procurement was meant to say.

The BBC has been passed what we're told is a set of slides used to present his findings at two different meetings. One to the NDIC, a group where government meets with the top echelons of the defence industry at the beginning of June, and one at what's described as the "Shrivenham 4 Defence Acquisition Workshop".

While we are yet to have an official response from the Ministry of Defence, sources have just told the BBC that the slides are "probably authentic".

And we have been told that there was a "major row" between the MoD which was urging Downing Street to stick to the original schedule for the report, and publish it before the summer recess, and No 10, who refused, and delayed publication until the autumn.

We understand that hard copies were already circulating around the MoD, although the ministry is now trying to get them back. But the department's nervousness about delay was that the report would leak over the summer, and potentially be a more troublesome story. Oh, the irony.

The slides add up to a damning verdict on how the MoD deals with long-term decisions about buying kit for the military. Cast your eyes over some of the findings:

• the MoD does not really know the price of any kit and project management does not exist in the department
• top 40 programmes annually expect an 80% overrun on time; 40% on cost
• MoD always late in admitting there is a problem
• time issues are worse than since 1999
• the current programme will "exceed any likely MoD funding profile"

And civil servants may be alarmed to read that Mr Gray appears to say that there are just too many people involved in procurement, and makes a recommendation to:

"Reduce people in the process and those there must be better at their jobs".

So will Downing Street's insistence that there was no row about publication really be able to hold? They're returning my call.


  • Comment number 1.

    It's sad that this isn't even remotely surprising, that incompetence from this government is such a common occurrence that it's expected.

    Roll on the election!

    P.S. Laura, nice to have some regular blogs that contain actual journalism. You can stay as long as you like! :)

  • Comment number 2.

    "Ministry of Defence does not really know the price of any kit, and project management does not exist in the Department."

    It would seem that the MOD should be one of the first to follow the private sector in enforced job cutting...PROVIDING the cuts are in the useless civilians and not the actual service personnel.
    Perhaps we could also get some money back by putting the vacant £1k a pop office chairs on E-Bay.

    Thankyou Laura for some "unspun" reporting.

  • Comment number 3.

    Is the Gray report actually finished ?


    Well done on the multi-blog aspect to your caretaker role of this blog. I'm very impressed by your journalistic style, which actually relates directly to events happening now, and not just Westminister village gossip and propaganda.

  • Comment number 4.

    overun's on time and cost are because ministers refuse to accept the real ones put forward by industry and never place the contracts when they
    should so that they are always behind the cure from the start.

    This leave industry ramping teams up and down like a yoyo adding time
    and cost when the projects appear. I'm amazed that the figure are that good.

    Still it does not address the projects that should be there and are not there like the medium life helicopter programme etc.

    How much did the NHS computer system overrun by ?

  • Comment number 5.

    maybe HH is right women do a better job. More like this 1-2 years ago
    and Zanu-Labour would have sunk without trace.

  • Comment number 6.


    So will Downing Street's insistence that there was no row about publication really be able to hold?

    Well, probably not...Downing Street will have to evaluate the decision regarding the released of the report....

    ~Dennis Junior~

  • Comment number 7.

    Laura - hope you get Nick's job here as you've proved yourself again and again as a star.

    The whole MOD Prj Mgt thingy has been a total joke for at least 20 yrs. My other half used to regale me with stories of his defence contractor jobs where the MOD's budget was routinely used to book commercial job work to as it was 'expected' to over-run time and budget massively - and so his employers used the UK tax payer to subsidise their overseas [mainly Saudi] orders - hilarious if only it weren't true...

  • Comment number 8.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 9.

    Dont tell us that Quentin Davies was spinning a line this morning on the Today programme. Perish the thought....

    See the today programme at 8.30 am

  • Comment number 10.

    Like most civil servants the MOD waste the peoples' money. We entrust them with the responsibility of buying efficiently - but there is never any comeback when they don't! (Just promotion!)

    They think they can get away with it by hiding behind the even less efficient and more wasteful procurement of computer systems, but there really is no excuse and nowhere to hide and those responsible should be sacked (or rather - sack the Permanent Secretary (Bill Jeffrey appointed 2005)! and continue sacking them until the civil servants solve the problem.)

    This is not the place the very long list of procurement disasters but...

  • Comment number 11.

    sagamix at 8 wrote:
    "hi Laura ... all very interesting (I mean that!) but how about something on the Cameron mortgage, or the Coulson thing? - Nick promised us a follow up on both of those"

    I think Laura is pursuing a NEWS agenda saga...namely the delayed Defence Report which apparently outlines the cost of £billions hosed down the drain and thereby service lives lost. It surely far outweighs
    the old/non-stories you mention

  • Comment number 12.

    Let's be honest the government is inept. Not because they are poor at running the country (I don't know who would be good at that job) but inept because they are too frightened politically.

    They should have had a massive run in with the Civil Servants. They are the highly paid people who should have been setting up a proper business model for getting the forces their Kit. I frequently pass Abbey Wood outside Bristol - where procurement is based and see several thousand workers going in every day. My estimate is that the ratio of soldier to procurement civil servant is much worse than 10 to 1. There are obviously too many. I would not go so far as saying even one civil servant was being lazy, but I believe that too many roles are duplicated and subject to a pyramid of monitoring. If the government had streamlined their work and cut down this cost, then the money could have gone on kit, soldiers quarters, rehab etc. Bashing bureaucrats and helping our boys would have made great headlines for the government.

    All they would have had to admit was that they had been let down by the civil service. The tougher they were the more that the public would believe they were the people who could make efficency savings. A strike would have little public sympathy and would give the gov a chance to prove how tough they could be.

    But what does Brown do? Hide in the corner. It his unwillingness to have public confrontations that lead him to the fake election and his inability to go ahead with policies he believes in without the cast iron support of big guns. He is not a leader - some people aren't. He is like many contestants on X Factor. They may have the talent, but the lack of the X factor is such that their aspirations will never be fullfilled.

  • Comment number 13.


    I'm sure you can't keep this up! It's getting like standing at the bus stop for a few days. You wait for a few hours for a blog to come along, then there are three in a row.

    How can an organisation like the MoD, which has roughly 1 staff member for every 2 troops in the military, NOT have a large number of people with project management skills? When procurement of massively expensive and highly complex equipment is involved? That beggars belief.

    How can you challenge any provider if you don't have the personnel able to, and capable of, matching their promises with your detailed examination of how they will meet expectations?

    Aircraft are highly complex bits of stuff. The B747 had a million bits. The French navy commissioned ships that were rapdily proved to be unstable and required massive reconstruction. But project managers must be around from the buyer's as well as the supplier's side, to analyse progress as well as realise when stuff goes wrong. (As it always does!)

    Were there no decent project managers involved when the MoD spent a couple of BILLION to create a "nice place" for their civilian staff to work, while troops were obliged to "share" body armour? That, by the way, I believe to be an offence. To send troops into battle without the equipment they obviously need, while spending money on swanky chairs is an insult.

    Isn't it time for a complete shake up within the administration of our government?

    I'd be happy for a MoD with senior management recruited from the armed forces. Having worked with ex-military guys from across the disciplines, I know they have a "can-do" approach. What we have across many departments is a bunch of people with no exposure to or real understanding of the discipline they should manage, a tendency to believe that "we reflect the political will".

    Who was the last Minister of Defence who had actually experienced the reality of conflict?

    No wonder the Chinese think that the Brits are light weight. (Why they queried whether Mini Miliband had any qualification to be a Minister responsible for scientific stuff like climate change...) We have no ministers with any real connection with the department they represent. Oh, sorry, Harriet is the Minister for Women. That came via genetics, not some acquired knowledge.

    It's a mess. Nothing really new.

  • Comment number 14.

    There are 3 things that should give us cause for concern about this:

    1) Governmental incompetence in matters of defense procurement. If £2bn has really been wasted, it is a total disgrace, especially when you consider the troops do not have the right sort of vehicles or enough helicopters with armour protection. This is particularly appalling when we learn that the government is contesting compensation payments to injured servicemen/women in order to save a few quid.

    2) Given the scale of this incompetence, the government tries to delay publication of a damning report in order to avoid embarrassment. These politicians and civil servants have been entrusted to safeguard our interests and security, but are more concerned in protecting their own backsides.

    3) In the light of governmental delaying tactics and obfuscation, we have to rely on leaks to find out the truth. Ordinarily, leaks concerning national security should be a matter of concern. In this case it is the government itself that is jeopardizing our security through institutionalised incompetence.

  • Comment number 15.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 16.

    WOW! What a scoop!

    Laura, your blog posts and reports are a million times better than Nick's.

    Your reports and blog posts are actually full of facts and breaking stories, instead of rather blunt opinions. And you actually seem to pursure and report stories in depth, instead of Nick's abrasive, blunt and over-simplified style.

    Please please please BBC - make Laura the main political editor!

  • Comment number 17.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 18.

    #4 "How much did the NHS computer system overrun by ?"

    The NHS computer system did *NOT* overrun, since, by definition, it is a failure because it failed to deliver to specifications !! No amount of spin will turn that black cat into a white cat or even a grey cat !!

  • Comment number 19.

    When Britain's Ministry of Defense has more chairborne warriors than front line soldiers, this is bound to happen !! Civil servants outnumber fighting troops by at least 2:1 in that ministry !!

  • Comment number 20.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 21.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 22.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 23.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 24.

    Consider the Chinook HC3 helicopters.... The MoD ordered eight, for delivery by 1998. They were actually dlivered in 2001, three years late. They failed the airworthiness tests because their software was impossible to verify. Why? Because the original contract didn't allow the MoD access to eth source code.

    So, in 2007 (six years later), someone came up with the bright idea of downgrading them to HC2s (no, really) at a cost of £50m... and the fleet still isn't operational.

    The National Audit Office called it a "gold-standard cockup"... and that's just one defense project.

  • Comment number 25.

    If only the BBC would give you this Newslog PERMANENTLY, I would return to reading it regularly. You have shown what independent (BBC!!) journalism should be, without inane comments clouding the information, which unfortunately is usually the case.
    In this regard, a week(or three!) is too short in Politics.
    Thank you.
    I await with interest a response from the Government, MOD, or Brown, whoever has the guts to try to spin (lie) their way out of this one.
    The Silence may be deafening.

  • Comment number 26.

    Well, this is going to be a messy one for Bob Ainsworth, innit?

    Defence procurement has always been a mess, for many reasons. It was a mess as MOD(PE) and it hasnt changed, even though they decamped most of the same people to (Sh)Abby Wood and still let the three single service chiefs make the decisions on what kit they're going to buy. Now, taking that last comment in isolation, it may not necessarily be a bad thing, you might say.. a soldier is going to know what kit a soldier needs, likewise Airmen and Sailors, right?


    Not in the world of Joint Operations. There are heaven knows how many single service oriented systems and processes which, when they need to work together in an operation like Afghanistan, dont. Or even with our NATO partners. You would be amazed how many there are. And its not just the front line either. Supply and distribution is one particular one... over 200 different systems. No joined up thinking for joined up operations.

    Its been down to a number of things. Front Line First under the tories and one of the most abominable SecDefs of modern times, Bunter Soames, told the three service chiefs to reap the peace dividend after the end of the cold war. "Dont care how you do it, just do it". Which they did.

    What happened? All three services shrank by 50%, bases closed, ships paid off, regiments cut... but still the same number of flag ranks, but shifted around into different commands, which then grew their own empires of more chiefs with even less indians.

    When Labour came in, nothing much changed except for the amount of conflicts around the world that Blair volunteered the services for around the world. Some of those were just, like Kosovo and Bosnia, others like Iraq... well, thats another discussion.

    Someone has rightly said, we are not a major power any more. True enough. We have plenty of quality and bravery at the front line. But, they cant keep on punching the whole organisation way above its weight without breaking down. Those in the MOD are letting the front line down badly. Some of it is industrial - had it not been the insistence of building kit under licence, Westlands would have rightly gone bust years ago. We could have given every worker at Westlands a 1m pound redundancy, still got the right number of helos and had a billion left over had we bought the Apaches directly from Sikorsky.

    The last time someone put a gun to the MOD's head like that was Thatcher when AEW Nimrod was binned. Years late, 1bn pounds down the gurgler and she killed it stone dead and bought the E3 instead. Thats the kind of decisiveness needed now, not pandering to the unions. Now we end up locked in the Eurofighter contract buying fighters we cant use because we dont have the crews for a threat that largely has disappeared. Carriers that we dont have anything to put on..

    The whole ministry is a mess. Its not all of Browns making, but he and TB could have done something about it. The two half decent defence secretary's they've had, one became NATO SecGen and the other jumped ship as soon as he saw this report coming and knew he couldnt defend it, despite probably knowing that he was going to be whipped into doing just that or be smeared by Brown's attack dogs.

    The service chiefs have the most to answer for. Like the police, they are utterly bereft of leadership skills, Dannatt excepted. All just interested in chasing their pensions and jobs in the industry.

    Its a mess. An election and a strong SecDef to shake the place up is long overdue.

    Dunno where we're going to find one though, not sure Liam Fox is upto it.

  • Comment number 27.

    Did Nick know what he was doing when he let Laura cover for his absence?

    Mind you were there not rumours that Nick was moving to another post anyway?

    Onto the subject matter. A simple question. Why is military procurement not done bu military personnel?

    They would surely know what kit was needed, what it had to do and how much it was worth. In the case of its worth they would not be surprised at the cost a pricy piece of kit but also would not be screwed by a greedy contractor.

    Remember when all this awful unnessary war started how our troops had boots that fell apart and had to buy their own. And how the Yanks nicknamed our squaddies "the borrowers" ?

    Time to change the whole military procurement setup methinks.

  • Comment number 28.

    Laura, you say "So will Downing Street's insistence that there was no row about publication really be able to hold? They're returning my call"

    Did they say when they would get back to you? Presumably they've all gone home now... and Fridays are notoriously hard for getting hold of people as they are POETS days, Go Home Early Tomorrow's Saturday (I'm paraphrasing obviously)

    You might put it to them that to lose ONE billion pounds may be regarded as a misfortune. To lose TWO looks like carelessness....

  • Comment number 29.

    U.S. President Eisenhower, previously Supreme Commander Europe, WW II, warned of the Military-Industrial complex. This has been going on forever. You can look back and if you can find the documents and see the same thing. Governmental corruption and political interference in any attempts to protect the taxpayers money has been a constant. Only the lastest example, nothing new. Scoundrels always wrap themselves in the flag.

  • Comment number 30.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 31.

    That sounds more like a generic public sector report.

    Having worked in local government, the sad truth is that those comments about too many staff, and incompetent staff, coupled with the comments about no project management, and about overruns and overbudget projects mimics my thoughts about local government during my 6.5 years there.

  • Comment number 32.

    a good defence is a strong offence may be an old saying but how many times has it been prooved right.
    this governments negligence is close to joke levels if it were not for the deaths due to their ineptness.
    sadly these problems will continue under this and the next government.

  • Comment number 33.

    It does seem worth mentioning that Blair inherited a commitment to try and sort out the mess in the Balkans. But then embarked on two "wars of choice".

    I was never sure that the Balkans adventure was a good idea. If the US had decided that the UK should be broken up, because its Irish-American powerhouse lost its rag and determined that Northern Ireland should be reunited with Eire, I wouldn't have been too happy. And I wouldn't be pleased if the UN said that Texas, Colorado, California, etc., should be restored to Mexico (from whom the US pinched by military force not so long ago in history!).

    Blair knew what he was leading the UK into. Brown was his Chancellor. IF any country is placed on a war-footing (although, as far as I know, we never declared war on either Iraq or Afghanistan), there has to be a genuine recognition that cash - as well as blood and guts - will be required.

    To simply believe that the rediculously under-appreciated military services would do his bidding (while wives and families often live in appalling housing), without ensuring a complete overhaul of the manner in which equipment and training needs were addressed was a complete abdication of responsibility.

    By the way, is anyone aware of a single major nation which has "outsourced" the training of military personnel to a private company? Well, the UK (this government) has handed most of that responsibility to a consortium headed by QinetiQ. The very same QinetiQ (formerly DERA) that was privatised under this government. Where the civil servants who ran it were allowed to negotiate terms that saw their "investments" of a couple of hundred thousand turn into £10+MILLION. Smart move that!

    I wouldn't trust any member of the present administration with a shovel to dig a field latrine. But, I'd be happy to see every member of cabinet obliged to spend at least a month in frontline positions, to gain a little understanding of the risks they happily nod through on behalf of our service personnel.

    Where's the moral compass? Messed up by the magnetic pull of power!
    But power, without responsibility is the age-old mantra of the street walkers.

    Stroll on.

  • Comment number 34.

    A major problem that bedevils Defence Procurement is that projects run for so long (sometimes out of genuine necessity) that none of those who are in at the outset are there even halfway through, never mind at the end. Military personnel are posted in and out as part of their normal career pattern, and civil servants are always looking for a promotion every two or three years, and of course that promotion is always elsewhere and relates to something else entirely. Likewise those posted in have very little of the specialist knowledge required to hit the ground running on a project that is partway through its life cycle.

    There can also be a reluctance to make a firm decision (or a firm recommendation to Ministers, as the case may be) just in case the opportunity to move on fails to materialise and the consequences of that decision (or advice) being wrong land back where they originated.

    Sir Humphrey may have been something of a caricature but that which he portrayed was too close to the truth for comfort.

  • Comment number 35.

    JR @ 22

    I don't recall Nick addressing the Cameron mortgage story

    he didn't make as much of it as he could/should have done, that's true, but he did mention it a couple of times and I was certainly expecting a follow up by now - still, never mind ... as I say, this topic we have instead (the MoD not knowing their a from their e) IS quite interesting, albeit truly madly deeply unsurprising

  • Comment number 36.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 37.

    I'm not surprised there is a deficit in procurement spending as the system has some very basic flaws in it. Probably one of the costliest is the projection of spares requirements. It shocked me, when I was involved in looking at a particular problem in the RAF in the 80's, that expected requirements for spares were never fully accepted. Instead a figure of 30% possibly 40% would be put on order. Obviously any such stock held by manufacturers would soon be used and any further orders even for things as basic as nuts and bolts, washers etc. would (supposedly) have to be manufactured. This also kicked in additional costs as priority collection and delivery was involved as well as aircraft downtime. This created a distrust in the system and, as a consequence, any unused spares were hoarded (with the best of intentions) exacerbating the problem. Any aircraft grounded awaiting spares is a problem but when those spares (even the nuts and bolts etc) have to be manufactured (even though they might already be hoarded within the system) it leads to massive overspends. The easy way to avoid this is to budget for a realistic 100% spares projection which, while increasing the budget in the first year, would see enormous savings thereafter.

  • Comment number 38.

    Well so far these blogs have been a breath of fresh air compared to the usual NR flannel. On this subject I would like to add my two pence worth and speak with a great deal of experience. When a company that makes a bit of equipment for the MOD and then can charge the MOD £105 for a basic computer mouse (Tesco £4.99 would do just as well) you realise where the money goes. The MOD has a fear of buying 'off the shelf' kit that has been proven and tested and seem to waste X amount of millions on kit that very soon becomes 'obsolete' and needs replacing. Anyway, that my two pence worth, best stop there cos I could soon be onto 10 pounds worth!!!!!!!!

  • Comment number 39.

    Sorry, forgot to mention that if you look at the advisors to many of these companies you then realise how many used to be 'high ranking miliatry or even ex MP's' who decided that there was more to be made as an 'advisor' to some companies, but perhaps thats being far to cynical

  • Comment number 40.


    "When a company that makes a bit of equipment for the MOD and then can charge the MOD £105 for a basic computer mouse (Tesco £4.99 would do just as well) you realise where the money goes. The MOD has a fear of buying 'off the shelf' kit that has been proven and tested and seem to waste X amount of millions on kit that very soon becomes 'obsolete' and needs replacing."


    I remember the saying that "an elephant is a mouse that was designed to government specifications"...

  • Comment number 41.

    Who would ever believe Quentin Davies, a turn coat of the first order? A POMPOUS politician only interested in his own OPINION and proved untrustworthy when he crossed the floor to join the Government benches, much to the annoyance of his constituents.
    Mr. B. Gray's report will be a 'bomb shell' if published in its unedited form and a gross embarrassment to this dysfunctional Government.
    I do hope the BBC can remain independent on this matter and not follow its 'old form' of being apologists for the Labour Party.

  • Comment number 42.

    Laura - an excellent replacement review which has attracted due attention from re-invigorated comments above and in the 'blogosphere' - please continue in same investigative realist vein here or initiate your own - resist all pressures to kow-tow to political/managerial sycophancy. Is an interview with Bob a Jobsworth and yourself likely over this report - I'd pay good money.

  • Comment number 43.

    Congratulations on stating the bleeding obvious. As someone who has sold into the defence sector for many years it is utterly frustrating to see the waste which occurs on a daily basis due to either incompetence, political issues or even corruption. To see our offering rejected with "Yes, you could save me a lot of money but you're not one of my mates" is truly depressing.

    Mind you, why stop with the MoD. Most of the civil service operates in the same way and, increasingly, larger companies within the private sector.

  • Comment number 44.

    Excellent work Laura. At the end of a governements life, managing the news and report releases can make a lot of difference. More so when its about somethimg as fundamental and important as defence. Labour seem all at sea in policy and committment in this area and its beginning to have serious impact.

  • Comment number 45.

    I believe the problem is people rather than systems based. The MOD procurement staff are incompetent because they were not recruited with job competence as the primary requirement.

    The entire procurement organisation needs to be disbanded and those employed dismissed. This will allow a reformed procurement agency run by a private management team to take over, re-employing only those it wants to and trawling private industry for the very best engineering and procurement professionals who every day deliver major projects on time and to budget.

    These are people who usually don't go near the MOD or if they ever do, get eliminated at interview stage because their track record and job competence is far superior to those assessing them. And of course, they are probably valuable enough to their current employers to be on salaries of £40,000 plus, which the MOD would never pay, ignoring the obvious point that 10 incompetent people do nothing except make work for their boss, whereas a single skilled professional delivers first class results with minimum outside input.

    After all, if a manager is second rate, Parkinson's law demands that subordinates are 3rd rate so as not to show the management up ! Overall numbers could be cut by 70% and work output increased if recruitment was based on job competence.

    This isn't a dig at the Civil Service generally though. The Department of Transport seems to manage road building throughout the country on a very limited budget far better than the MOD manages its affairs.

  • Comment number 46.

    "Is an interview with Bob a Jobsworth and yourself likely over this report - I'd pay good money."

    I second that emotion !!


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