The Ministry of Defence has said it will decide what to do with the troubled Ajax programme by the end of the year.
MPs have called for the department to either fix or scrap the armoured vehicle programme by the end of 2022.
The department has said it will try to meet the Public Account Committee’s request to “decide the way ahead” by the end of this year but did not confirm whether it was considering scrapping the programme.
The MoD signed a £5.5bn contract with General Dynamics in 2014 to deliver 589 Ajax armoured vehicles but failures by the department and GD have led to safety concerns and delays.
PAC chair Meg Hillier said in June that the MoD “must fix or fail this programme, before more risk to our national security and more billions of taxpayers’ money wasted”.
The MoD said it “recognises the importance of limiting any longer-term effects from the delays experienced under the Ajax programme”, in its response to PAC’s June report.
“The department is focused on delivering Ajax to meet the needs of the Army and is actively taking steps to address the challenges the programme faces. The department expects to decide the way ahead on the programme by the end of 2022,” the department added.
MPs raised concerns that the Ajax programme woes means the MoD is “failing to deliver the enhanced armoured vehicles capability that the army needs to better protect the nation and meet its NATO commitments”.
But the MoD said the government will continue to meet its NATO commitments, which include spending 2% of GDP on defence and supporting allies and partners with troops and tanks, through “flexing the range of defence and army capabilities”.
The department was also resolute that the programme’s costs would not be going up. PAC said it was doubtful that the department could go ahead with the programme at the same cost, but the MoD said it has a firm £5.5bn contract that will prevent costs increasing.
PAC had also asked the department to review its commercial arrangements for the programme "to ensure they are appropriate to incentivise GD to deliver”.
The MoD said it accepted the recommendation, but instead of putting forward any new measures, contended that its current agreement “continues to protect its contractual and commercial rights under the contract with GD to deliver a value for money outcome”.
The contract has “a number of mechanisms to incentivise [GD] to meet performance, cost and time requirements, including incentivised critical milestones, liquidated damages and default and dispute resolution processes”, the department added.
The MoD has said Ajax is central to the Army’s vision for digital integration across land, air and sea. But the contract, agreed with GD eight years ago, has only delivered 26 vehicles, none of which it can use due to unresolved noise and vibration problems which may have injured soldiers.
The department said it will update PAC on its progress fixing the issues at the next Ajax evidence session.
In an interview with CSW earlier this year, then-Defence Equipment and Support chief exec Simon Bollom said the noise and vibration issues were not escalated quickly enough.
The MoD has paid £3.2bn for the programme so far but has halted further payments since December 2020 until the issues are resolved.
The department is “cautiously optimistic” that all 589 vehicles will enter service by 2030 but has no firm target for when the first vehicles will be ready, the NAO said.
The MoD has already missed three deadlines – 2017, 2020 and 2021 – and has said it has no confidence that the fourth – 2025 – will be met, according to the NAO.