In France, the armaments agency (Délégation Générale pour l’Armement (DGA)) and defence sector industries work to-gether to produce the weapon systems and other equipment used by the armed forces. However, cost, time-scale and quality targets are not always achieved, as evidenced by past cost increases and programme slippage. The aim of this arti-cle is to assess the execution of defence procurement con-tracts and to explain this using risk analysis. This has been achieved by analysing a database covering 48 contracts be-tween the DGA and 18 French or European companies in the period 1994-2005 with a mean value of e135 million. 

Through an in-depth examination of financial, time-scale and technical performance, the outcomes described here will help to identify the most significant events behind cost over-runs, delays and quality failings affecting French defence sys-tems.

Financial performance

The financial performance of a contract is the difference be-tween forecast and actual costs. Cost overruns have occurred in 87.5 per cent of contracts examined. The mean value of these overruns amounts to e6.03 million, which represents an average of 9.96 per cent of the initial contract price; the max-imum overrun found amounted to 45.68 per cent of the origi-nal contract price.