Dockyard failures 'cost MoD £300m'

The Ministry of Defence was accused of a "hands off" approach to the building of the Royal Navy's new nuclear submarine re-fit facility, which has left the taxpayer with a £300 million bill for cost overruns.

The Commons Public Accounts Committee warned that there must be "tight controls" on the remainder of the project to complete the new facility at the Devonport dockyard.

The committee's report followed the disclosure last year that costs had spiralled to £933 million - of which the MoD will have to pay £890 million, £314 million more than originally expected.

The MoD had thought it had transferred the risks of any cost overruns to the private contractor, Devonport Management Ltd (DML).

However the need to have the facility ready to carry out an urgent re-fit of HMS Vanguard - one of the submarines carrying Britain's nuclear deterrent - meant it had no choice but accept the extra costs if the work was to be done on time.

In its report, the Public Accounts Committee said that the MoD had taken an "unrealistic" attitude to the risk transfer.

"As it considered that it had transferred the great majority of the risk to DML, it took a hands-off approach to the project's management," the report said.

The committee chairman, Tory MP Edward Leigh, said that previous assurances by the MoD about the cost of the project had proved "hollow".

"From a position where the great majority of risk was supposed to have been transferred to the private sector, it is unacceptable that the taxpayer is now picking up most of the bill for overruns," he said.

"It is vital that the MoD get a proper grip over the final phase of the project to avoid further cost escalation."

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