February 2, 2018

WE’RE NOT THE ONLY ONES WITH PROCUREMENT ISSUES: Auditors say Britain can’t afford its 10-year defense equipment plan.

“The Ministry of Defence is facing a minimum affordability gap of £4.9 billion. There is an additional affordability gap of £15.9 billion if all identified financial risks of cost growth materialise and the Department does not achieve any of the savings assumed in the [equipment] plan. Overall, the potential affordability gap is £20.8 billion,” the government spending watchdog said Jan. 31.

The NAO report on the affordability of the MoD’s rolling 10-year equipment procurement and support programs said it was assuming that the £6 billion of contingency funds set aside in the plan to supplement budgets will also be swallowed up by spending requirements in the 2017-2027 plan.

Optimistic project costs, exchange rate problems, failure to achieve efficiency cuts and the spiraling bill for nuclear submarine programs are some of the reasons identified by the NAO for the lack of affordability of the British equipment procurement and support programs over the next decade. The report confirms a risk previously noted by a parliamentary Public Accounts Committee investigation into the financial viability of the plan.

Even without needed reforms, a £16 billion shortfall over ten years isn’t all that much compared to £485 billion each year in social spending.

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