MOD trade industry and contracts 2020

9 Oct 2020 01:39 PM

The MOD has released its updated Trade, Industry and Contracts statistics for 2020. These contain information on the department’s spending with industry, and set out the numbers, types and values of contracts placed, major equipment projects, and payments made by MOD to its suppliers during 2019/20. 

Please find a summary of the key information below: 

The Lightning II Programme is the most expensive major equipment project, closely followed by the Dreadnought and the Astute Boats Programmes. Generally, MOD major equipment projects have remained within budget, but certain large-scale projects, such as the Queen Elizabeth Class Carriers and the Type 26 Frigates have execeed the original forecast cost. The total current forecast of the 17 projects in the MOD’s Project Performance Summary Table is £55.9bn. 

Total expenditure for 2019/20 reached £26.6bn, an increase of £1.8bn from 2018/19. Of this expenditure, £10.4bn was placed on new contracts. 34% of expenditure was awarded on a non-competitive basis with a further 44% of expenditure competitively awarded. 23% of expenditure was unclassified, meaning that it was not stated whether the contract was awarded competitively.   

The MOD paid over 13,000 organisations throughout 2019/2020, with 340 companies awarded more than £5m throughout the course of the financial year. These 340 companies received 94% of the total direct expenditure and the top 14 companies received around half of the total procurement expenditure, a similar distribution to 2018/19. Additionally, 57 companies were paid more than £50m throughout the course of the year, with total spend across these companies reaching £18.4bn.  

The expenditure spent with the top ten companies is approximately as follows and combined these totals account for 44% of total expenditure:  

  1. BAE Systems – £3.7bn  
  2. Babcock – £2.1bn 
  3. Airbus – £900m 
  4. Rolls Royce – £850m 
  5. Lockheed Martin – £750m 
  6. Leonardo – £700m 
  7. Ferrovial SA – £700m 
  8. General Dynamics – £650m 
  9. Boeing – £600m 
  10. QinetiQ – £550m 

Of these top ten, QinetiQ, Babcock, BAE Systems and Ferrovial SA are the most dependent om MOD Business. For the other 6 suppliers, MOD sales accounted for less than 10% of their global revenue.  

New Contracts Placed 

The MOD Core Department placed 2,429 new contracts across 2019/20 with a collective value of £10.4bn. This is an increase of 390 contracts and £1.6bn compared to 2018/19. This continued rise is welcome given the decrease in new contracts between 2009-2016. Since 2016 the number of contracts has consistently been around 2,000 until this latest rise.  

Alongside Core Department spending, the MOD also made payments to 40 PFI projects, totalling £2.5bn. This is equivalent to 9% of the MOD Core Department payments.  

There is more information in the full version of the MOD Trade Industry and Contracts 2020 document which can be found here.