Thursday, June 17, 2010

HM Treasury announces freeze on two UK MOD Projects ahead of SDSR Review Outcome

HM Treasury announces freeze on two UK MOD Projects ahead of SDSR Review Outcome
June 17, 2010

Today the United Kingdom Treasury announced that two projects were being suspended pending urgent review.

1. Successor deterrent extension to concept phase long lead items £66 million. Its future will be included in the Trident value for money review.

2. The joint MoD/Department of Transport Search and Rescue helicopter (SAR-H), announced with some fanfare a few months back. Cost (lifetime cost?) £4,676 million from MoD, £2,338 million from Department for Transport. This single project makes up the bulk of the £8.0 billion suspensions. Its review is said to be a matter of urgency.

1. Deterrent decisions have to be made fast or else prices will skyrocket coupled with the laws of physics determining the life of the current V-Force. The Astute SSN program has suffered substantial cost escalation as the supply chain fearing the end of construction has ramped up the price of parts as the program progressed. Expect more defence inflation, and, in all likelihood a move to a stretched Astute hull as the Vanguard successor.

2. Some would say this program was all about getting more helicopter lift through the back door and having the Department of Transport (Coast Guard SAR) foot part of the bill - and PFI wiping the entire deal off the balance sheet at Main Building. Nice idea, unfortunately has taken too long to get past the IAB, so is now in jeopardy. To an extent the program has also been superseded by UOR decisions making this a 'nice to have' for MOD.

It could be suggested that the MOD Communications Team will be working overtime to convince the broader community that the SDSR defence review remains policy versus resource led.

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