The Ministry of Defence (MOD) has received stern criticism from the public spending watchdog over its handling of major equipment projects.

The National Audit Office (NAO) said large-scale contracts had fallen a further 96 months behind schedule this year - leaving them more than 40 years late overall.

Costs rose by £205m and two more projects were no longer on course to meet all of their "key user requirements", the NAO's annual analysis of major MOD projects found.

The report comes in the wake of last week's announcement that the planned construction of two aircraft carriers will be delayed by at least two years and that Bernard Gray – who led 1998's strategic defence review – would be conducting a study of major spending projects.

NAO head Tim Burr said the department had made progress in improving procurement practice but performance remained "variable".

"Until the MOD and the defence industry improve their decision making processes and show sustained learning from previous projects, value for money will not be consistently delivered," Burr said.

Edward Leigh, chair of the Commons public accounts committee, said the "same old failings" were leaving British troops potentially unprepared for frontline action.

"This is about more than money. This kit will sooner or later be operated, perhaps in anger, by our men and women in the forces - and it is not good enough, to say the least, if it is late coming into service or does not do what it was originally supposed to," he said.

The longest delay recorded this year was to the Terrier armoured combat engineer vehicle, which was pushed out by two-and-a-quarter years because test prototypes were delivered late and then failed reliability tests.

The NAO found that the MOD had "broadly kept costs under control" this year on all but two projects: the Beyond Visual Range Air-to-Air Missile system and Mark 4 Nimrod aircraft.
Shadow defence secretary Liam Fox said the report illustrated that the government had failed to "properly manage" long-term procurement projects.

"The collapse of sterling will add hugely to MOD's costs, and further delays in the Aircraft Carrier programme will ramp up further costs," Fox said.

Liberal Democrat defence spokesman Nick Harvey said: "This is further evidence of the culture of incompetence at the MOD."

"Miscalculations and hopelessly unrealistic expectations have taken a massive toll on Britain's already overstretched defence budget."

But defence procurement minister Quentin Davies said the report examined only 20 out of 350 projects being managed by the department.

"In the last year we delivered equipment valued at £5.8bn to our armed forces, from C17 aircraft transporting our goods and equipment to the new Panther vehicles that are now operating in Afghanistan," Davies said.

"We continuously respond and adapt to emerging threats, something the report acknowledges, procuring new equipment for urgent operational use in Iraq and Afghanistan, including £700m for a suite of Protected Patrol Vehicles and last week we announced £70m to upgrade 12 Lynx Mk 9 helicopters to boost our helicopter capability in Afghanistan."