In light of a recent report conducted by the National Audit Office (NAO), the MoD must do more in the future to ensure the best value for money is being obtained for tax payers when signing new defence contracts.
The NAO have released a report entitled ‘Improving value for money in non-competitive procurement of defence equipment’. The report looks at how the MoD needs to crack down on suppliers that have not had to compete to win defence contracts.
It said that applying the new rules could save up to £1.7bn during the next 10 years, but warned that long-running tensions between the MoD, industry and the Single Source Regulations Office (SSRO), which monitors non-competitive procurement, risked undermining the potential savings.
“The [MoD] needs to eliminate disagreements between key stakeholders and the continued opposition to aspects of the regime from some defence suppliers,” the report concludes. The ministry and the SSRO should “be clear on their respective roles and how they will work together to ensure the regulations are implemented effectively”.
In January the NAO published its concerns over whether the MoD can afford its £178bn spending plans for 2016 to 2026 which include new Trident submarines, Type 26 frigates and F-35 stealth jets. MoD permanent secretary Stephen Lovegrove later put the shortfall at closer to £20bn.
But analysis by accountancy firm PwC said the military’s financial black hole is nearer £30bn, a level which could require major cuts to Britain’s defence capabilities.