Defence Contracts

This section presents an analysis of contracts placed, major equipment projects and payments made by the MOD to its suppliers. Table 1.15 shows the number and value of contracts placed by type during 2008/09 and earlier years. Table 1.16 presents more information on the MOD's major equipment projects. Table 1.17 provides a list, by broad-banded value, of organisations paid £5 million or more during 2008/09. Following requests from UK industry, Table 1.17a provides a further dimension on the data contained within Table 1.17 by presenting the individual subsidiary organisations "rolled up" into their holding companies. These data are based on information from the Financial Management Shared Service Centre (FMSSC) - who are responsible for setting up and paying the majority of the MOD contracts issued each year.

Information on Major Equipment Projects comes from the Major Projects Report. This details the largest post Main-Gate Approval Projects along with the largest pre Main-Gate Approval Projects. The full report provides a summary of each project's current status and progress to date. It also provides comparisons on current forecast costs and in-service dates. Smart Procurement stresses the importance of allocating appropriate resources in the early stages to reduce risk and increase confidence before the main investment decision is made. This is known as the Smart Procurement Acquisition Cycle. Under Resource Accounting and Budgeting all costs are at estimated outturn prices and include 'new' types of cost such as the cost of capital charge.

Main Findings

Contracts by Type (Table 1.15)

• In 2008/09 MOD HQ placed just over 24,000 contracts with a collective value of around £32.7 billion. This represents an annual increase of nearly 130% (£18.3 billion) when compared to the year before. This increase was largely due to a number of high value contracts which were let during the year, the most notable of which related to (a) the manufacture of the Future Aircraft Carrier (CVF) which was valued at some £3.1 billion and (b) the Future Strategic Tanker Aircraft with a contract valued at some £10.4 billion.
  
  
• The number of contracts placed in 2008/09 has increased slightly (by some 5%) compared to that reported for 2007/08. Please note that most contract payments are not made during the year in which the contract is placed.



• Of the total value of MOD HQ contracts placed in 2008/09 around 64% were priced by competition.
  
  

Major Equipment Projects (Table 1.16)

• The largest post Main-Gate equipment project by value is the Type 45 Destroyer (£6.5 billion). This is followed by the Astute Class Submarine (£3.8 billion) and the Nimrod Maritime Reconnaissance and Attack Mk4 (£3.6 billion).