MoD spends £600m on consultants instead of kit

Defence officials spent nearly £600 million on technical advice which was intended for equipment, an internal report has revealed.

The audit of defence contracts found control of budgets at the Ministry of Defence was “poorly developed or non-existent”, with little attempt to ensure value for money.

The findings come as the MoD looks to cut thousands of military and civilian personnel, but sources insist stricter rules are now in place to make sure the problem does not happen again.

Under Labour, the rules were changed to allow civil servants to bring in technical advice and support without ministerial approval as it sought to carry out shipbuilding programmes and other major projects. But spending spiralled, with figures showing the MoD spent £564m in the last two years on contractors.

Currently, 380 firms are being employed for technical support. It spent just £6m in 2006.

A source at the MoD said: “Clearly, under Labour the system was very loose and controls were not in place.

“This is another example of defence spending getting out of control under the previous government. The new Defence Secretary [Philip Hammond] is aware of this and is cracking down on it.”

A spokesman for the MoD said: “The framework ensures that equipment programmes can access a range of technical support services such as independent airworthiness certification to ensure our military aircraft meet the very highest safety standards, something civil servants cannot provide.

“This summer the government instigated an internal audit to assess the procurement of this technical assistance. As a result of the findings of that report, we are tightening the approvals process to ensure proper scrutiny of spending under this framework.”

Mr Hammond said later that rules had not been followed, but he blamed ten years of poor financial management in the Ministry of Defence.

He said: “The fact is that nearly £600m has been spent over two years on technical support to equipment programmes. It’s perfectly legitimate to hire technical specialists in dealing with these major, complex programmes. They are technical consultants to do, for example, design validation, to make sure that the specification being proposed by equipment suppliers are appropriate, air worthiness, that kind of thing. Have the guidelines and procedures been followed properly? On the evidence of this report, they have not.”

Matthew Elliott, chief executive of the TaxPayers’ Alliance lobby group, said: “It’s appalling that the MoD has been managing its budget so catastrophically badly. This level of spending on consultants is disgraceful, and worse still is the fact that correct procedures were allowed to be so consistently ignored.”

The union Prospect, which represents 7,000 specialists in the MoD, said the revelations showed how badly plans to cut civilian staff has affected the department’s ability to manage its equipment programme.

Prospect national secretary Steve Jary said: “The internal MoD report into the misuse of the Framework Agreement for Technical Support clearly shows that the department’s political imperative to shed 25,000 civilian staff by 2015 and then another 8,000 by 2020 has seriously affected the ability of the department to undertake its role as an intelligent customer.

“The coalition cannot simply blame the previous government. It is MoD that is at fault. It has been cutting its in-house capability without cutting its outputs. It has had no choice but to get this work done elsewhere at huge additional cost.”

Mr Jary added: “When the department is faced with swingeing, across-the-board cuts, the last thing it needs is a bill for £600m for outside technical assistance.”