THE Ministry of Defence has taken steps to stop the cost of the Eurofighter spiralling further out of control and is now being urged to impose them on all major weapons and equipment contracts.

It has imposed "maximum price contracts" on the main suppliers - including British Aerospace which will do much of the work at its Lancashire Military Aircraft Division factories.

These prices cannot be changed for five years and then can only be uprated according to specialist price inflation.

And now Parliament's main financial watchdog wants the MoD to take similar steps to stop costs on other major contracts rocketing.

The House of Commons Public Accounts Committee (PAC) was alarmed to find that the total cost to the UK of the Eurofighter had risen by more than ten per cent by £1.5 billion from £13.4 billion to £15.9 billion.

This was almost half the £3.1 billion cost overrun of 25 major defence procurement contracts examined by the National Audit Office on behalf of the PAC which says the MoD's cost controls on the schemes are "weak in almost every aspect".

But asked by the PAC whether Eurofighter costs were likely to rise further as the aircraft entered production, it said it was "now protected by maximum price contracts and therefore protected against further cost overruns."

It said it could not guarantee that there would be no specification changes or work on obsolescence over a 14-year production run but expected that any extra cost be offset by lower costs arising from better manufacturing techniques.

The MoD said costs would be controlled because the maximum prices agreed with the main contractors for Eurofighter were firm for five years and would then be adjusted for inflation.

The all-party PAC said cost overrun of more than £3 billion on the 25 projects including Eurofighter was "unacceptable" and blamed lack of financial control and late changes to specifications.

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