National Audit Office Report and MOD Response - Carrier Strike
The National Audit Office has expressed deep concern about risks to value for money from the changes to the aircraft carrier and associated Joint Strike Fighter (JSF) aircraft project made in the 2010 Strategic Defence and Security Review (SDSR).
The SDSR decision, in October 2010, was for the MOD to build two carriers but operate only one, pending the next SDSR. This ship will be converted, using catapults and arrestor gear, to fly a different, more capable, version of the JSF to the one previously planned. This carrier will be available at sea only for an average of 150-200 days each year and fewer of the carrier version of the aircraft will operate from the carrier initially, reducing the number of possible daily sorties by more than two-thirds. A decision whether to convert the other carrier will be taken in the next SDSR, planned for 2015.
The decision to fit catapults and arrestor gear to the carrier means that the introduction of Carrier Strike will be delayed by two years, to 2020. Given the decision to retire the Harrier aircraft and the existing aircraft carrier immediately, there will be a decade-long gap without aircraft carrier capability. The changes will save some £3.4 billion over ten years.
Today’s report highlights the complex inter-relationship between the various cost, short-term affordability, military and industrial factors involved in the Carrier Strike decision. From the papers it saw, the National Audit Office could not understand how those factors were brought together to enable the MOD to reach a judgement on value for money.
The NAO identifies two principal risks to value for money on Carrier Strike. First, the SDSR is unaffordable unless there is a real terms increase in defence funding from 2015 onwards. The National Audit Office is worried that the continuing difficulties the MoD is facing in balancing its budget leaves Carrier Strike vulnerable to further change.
Secondly, the SDSR decision has introduced more technical, cost and schedule uncertainty. Thinking on the way the carriers will be used in operation is still evolving; and there are major risks reconstituting Carrier Strike capability after a decade without it.
Michael Whitehouse, Chief Operating Officer of the National Audit Office, said today:
"The 2010 Strategic Defence and Security Review has radically changed the Carrier Strike concept. It generated £3.4 billion of savings but introduced significant levels of operational, technical, cost and schedule uncertainty. It will take two years for the Department to reach a mature understanding of the consequences of the decision. These consequences include a decade without an operational carrier and the risks after such a time associated with reconstituting the capability.
"The risks to the delivery of the new carriers are compounded by more generic problems with defence acquisition – notably the MoD’s continuing difficulties in balancing its budget."
Notes:
1.The Carrier Strike capability comprises aircraft carriers and the aircraft that operate from them. The 1998 Strategic Defence Review committed to the replacement of the then three Invincible Class aircraft carriers with two larger ones from 2012. In 2002, the MOD selected the Short Take-Off and Vertical landing version of the US-led Joint Strike Fighter as the preferred aircraft to replace the Harrier.
2.The original 2007 investment decision estimated the cost of both carriers as £3.65 billion. Post-SDSR that has risen to £6.24 billion for one carrier (and conversion to the carrier version of JSF). The original in-service dates for the carriers were 2014-16; and the in-service date for the one carrier and aircraft is now 2020.
3.The Comptroller and Auditor General (the head of the NAO) explained to the Committee of Public Accounts during his pre-appointment hearing that the carrier project is the only defence project where his level of engagement as a former MOD official raised the prospect of a conflict of interest. He therefore put in place arrangements to enable the NAO review of the project to be conducted without his engagement. This review has been led by Martin Sinclair, Assistant Auditor General for Defence, reporting to Michael Whitehouse, the NAO’s Chief Operating Officer. Sir Andrew Likierman, Chairman of the NAO, oversaw the arrangements to ensure that the review was fully independent.
In response to the National Audit Office’s report into Carrier Strike, Defence Secretary, Dr Liam Fox, said:
“I am disappointed that the NAO were not able to produce an agreed report. We inherited a massive Defence deficit which included a carrier project that was already £1.6BN over budget. The Strategic Defence and Security Review put this programme back on track and delivered £3.4BN of overall savings to Carrier Strike. The NAO has noted that our decision to build the second new aircraft carrier makes financial sense, supports UK industry and the significant cost and capability advantages of the aircraft we now plan to fly from it.
“Converting one of the Queen Elizabeth Class aircraft carriers to operate the more capable and cost-effective Carrier Variant of the Joint Strike Fighter fast jet will maximise our military capability and enhance interoperability with our allies. Operating the more cost effective Carrier Variant fast jet will also over the longer-term offset the conversion costs. In the meantime we have rightly assessed that we can rely on our extensive basing and over-flight rights as we are doing to great effect in Libya.
“In addition to the new carrier capability operating the fifth-generation Joint Strike Fighter, our vision for Future Force 2020 includes a Royal Navy operating seven new Astute class submarines, the new Type-26 Global Combat Ship and Type-45 destroyers.”
The Ministry of Defence’s Permanent Under Secretary, Ursula Brennan, said:
“I am concerned that the NAO have taken the unusual step of publishing this report without agreeing the final text with me, as Accounting Officer, as required by their own guidance.”
The full NAO report can be found at pdf.