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The MoD equipment programme is £35bn over budget.
The defence contractors are delighted that not a single equipment programme has been cancelled.
The ministry's Future Force 2020, of which the equipment programme is part, requires spending increases of 1-2% a year in real terms from 2015.
His rushed defence review was not properly costed and is being reopened to find an additional £1bn cuts to the equipment programme".
It adds that last year's strategic defence and security review had to address the £42bn gap between the defence budget and forecast expenditure, including spending on the equipment programme.
Mr Gray, who became head of defence materiel in 2011 (and thus boss of DE&S), lambasted a "sclerotic" system which had resulted in a "substantially overheated" equipment programme.
Similar(39)
Targets identified for the £500m cut include consultants' fees, travel expenses and recalibration of some equipment programmes.
They should look at all 19 of the large equipment programmes and decide what we need and what we can afford.
10.44am: Core equipment programmes should have changed to reflect the fact that the emergency situation of fighting two wars had become routine, Dannatt says.
Equipment programmes that should run at an average of £16bn over the next 10 years are now expected to soar to more than double that at £35bn.
Large-scale equipment programmes like the two big aircraft carriers will go ahead, though over a longer period, as they cost too much to cancel now.
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