MoD spent £600m on external technical help last two years

The Ministry of Defence has spent over half a billion pounds from the military's equipment budget in the last two years to hire hundreds of outside specialists and consultants, routinely breaching.

The Guardian newspaper has used the Freedom of Information Act to uncover a £564m spend by the MoD on external technical consultants from 380 suppliers in the last two years, something it says breaches government guidelines controlling this type of expenditure.

That figure seems to have skyrocketed since 2006 - when the equivalent figures was a mere £6m.

The documentation obtained - which includes an internal audit - also underlines recent Parliamentary concerns over out of control budget practices in the Ministry, going so far as to say control of the MoD purse appeared to be "poorly developed or non-existent" and that there is an ongoing disinterest in the 250,000 strong body to look for value for money.

Given that the overspend is coming at a time of redundancies of armed forces personnel and cutbacks to military projects leading to contractor job losses, the leak is proving highly controversial and is the subject of much press comment this morning.

Secretary of State for Defence Philip Hammond, confirming the figures, told the BBC ╥on the evidence of this report "guidelines and procedures had not been properly followed".

"Culture of sloppiness"

"There is a culture of sloppiness in the MoD over financial discipline and financial controls and a legacy of mismanagement," he added.

But he also said it was "perfectly legitimate" for the MoD to bring in "technical support" for equipment for things like design validation and testing for airworthiness - and that while it was a slow process, "the oil tanker is turning round".

He said evidence of such progress was the fact that in a 2010 outlay of £261m on management consultancy had been slashed "in the most recent year" to just £21m.

Labour's fault?

The rise is being put mainly on the last administration's doorstep as Labour brought in rules in 2009 that let defence officials hire specialist, short-term help for "niche" tasks without Ministerial sign-off. In the first year of the new laxer structure, such spending rose by £130m, to £297m and will only decline slightly, to £267m.

The audit covered the Framework Agreement for Technical Support (FATS). A senior civil servant apparently found numerous financial holes in the thing, from lack of adherence to spending guidelines, "significant weaknesses" in the cases submitted for money, "weaknesses in the robustness of scrutiny" by those in charge of the accounting, contract extensions were approved when they probably should have been rejected, insufficient attempt to see if the work could be done in-house and so on.

Perhaps worst of all, in 75% of the cases examined contracts were awarded without any kind of competition, meaning that the "ability to demonstrate value for money was compromised".

MoD unions are up in arms. One, Prospect, told the media, "We need to know what this money has been spent on and at what cost to the equipment programme. We need to know how much of the ú250m-plus spent on FATs has been spent wrongly, without proper scrutiny and without ministerial approval? Thousands of engineering and scientific jobs have gone in pursuit of arbitrary headcount reductions.

"Their work now has to be contracted out, and FATs has been a way to do this while hiding the extra costs."