Contract dispute solicitors kept busy as MoD cancel equipment contracts
Contract dispute solicitors are likely to be kept very busy as the Ministry of Defence tries to cancel over 500 complex equipment contracts.
Analysis by Jane’s, the defence journal, suggests ministers have seriously underestimated how difficult and expensive it will be to cancel the 500 equipment contracts specified in last year’s strategic defence and security review.
Only a handful of the contracts identified have so far been successfully cancelled. All 500 are supposed to be ended by 2015. Only 30 of the contracts, attached to two of the UK’s biggest defence programmes, the Harrier and Nimrod aircraft, have been terminated so far.
Guy Anderson, chief analyst at Jane’s said: “By any measure, progress has been slow. The main problem is that the MoD needed to find out exactly what it was committed to, what the terms were, and what stages the contracts had reached. They have spent the last year going through the paperwork.”
The process is also likely to cost the taxpayer hundreds of millions of pounds because of rules governing equipment contracts handed to British companies. Many companies are retaining the services of specialist contract dispute solicitors to assist in their fight to claim every penny they are due under the terms of their initial contract. Whereas most used to settle early and on favourable terms to stay on-side with their main customer, they now have less incentive to do so as they know that the coalition’s austerity drive means there are few new contracts in the pipeline.
Jim Murphy, Labour’s shadow defence secretary, attacked the department for refusing to release precise figures on how many contracts had been cancelled and how much money had been set aside to settle contract disputes.
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