American officials have issued strong warnings about a Ministry of Defence plan to privatise its procurement arm, a move that has forced the Pentagon to establish an inspectorate to ensure there is no damage to US national security.
Cameron has repeatedly pledged to increase spending on defence equipment by 1 percent after 2015 Photo: AP
By Damien McElroy
2:27PM BST 14 May 2013
A number of close allies including the US, Australia and Canada, have told British officials they will impose safeguards to limit the risk to their own systems by the establishment of GoCo, a contractor operated entity that will be responsible for military purchases.
The move threatens to curtail the Special Relationship status that Britain's armed forces enjoy its America counterpart.
GoCo has been set up to eliminate deep-seated problems in the Ministry of Defence procurement that have led to cost over-runs and systems failures.
Frank Kendall, the US undersecretary for defence acquisition, told the Wall Street Journal that the establishment of GoCo would affect co-operation between the UK and US. The two countries have set up a joint watchdog to handle issues arising from the move.
"We do have some concerns over an option that would put contractors in roles normally filled by government employees and the effects this would have on ongoing and future co-operation," Melinda Morgan, a Pentagon spokesman said.
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Australia also said it had put co-operation with Britain on watch and Canada is also believed to be scrutinising the move.
The warnings came as MPs warned the defence budget may lack an adequate reserve against cost overruns, possibly resulting in troop reductions and deeper cuts.
Three years after Cameron’s Conservative-led coalition promised to balance the military’s budget, Parliament’s cross- party Public Accounts Committee said “we do not yet have confidence the equipment plan is affordable.”
Balancing the defence ministry’s books will “depend on the Treasury delivering on its commitment to a 1 percent annual increase in the equipment budget in the next spending review,” Margaret Hodge, chairwoman of the committee, said. “It also depends on savings in the wider defense budget, including cutting staff numbers.”
Cameron has repeatedly pledged to increase spending on defence equipment by 1 percent after 2015, accounting for just under half of the military budget. Chancellor of the Exchequer George Osborne, who will announce cuts to departmental spending on June 26, has said the defense ministry will have to find further savings elsewhere to reduce the nation’s deficit.
While the committee welcomed the publication last year for the first time of a 10-year equipment plan by Philip Hammond, the defence secretary, it expressed concern that he took an “over- optimistic approach” to risk management, with a £4.6 billion contingency provision amounting to just 3 percent of the total budget of £159 billion that may be insufficient to cover fully any cost overruns.
“We now have a fully funded and affordable equipment plan totaling £160 billion pounds which includes risk provision in each project and, for the first time, over £4 billion of contingency to guard against cost growth,” defense-equipment minister Philip Dunne, the defence equipment minister said.
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