Problems with the Army's troubled Ajax vehicle programme are so deep-rooted that they may never be resolved, a Whitehall spending watchdog has warned.
In a report, the National Audit Office (NAO) said the £5.5bn project was "flawed from the start", with the Ministry of Defence (MOD) failing to understand the scale and complexity of the work it was undertaking.
It said delays to the programme – which is already more than four years behind schedule – could now jeopardise plans to restructure the Army around a new generation of digitally-enabled armoured fighting vehicles.
Watch: What's gone wrong with Ajax?
Ministers publicly acknowledged last year that the programme was in trouble and have been making regular updates to Parliament on the situation.
They included excessive noise and vibration problems, which have left dozens of troops needing urgent hearing assessments after taking part in trials on the vehicles.
General Dynamics UK was contracted to supply 589 Ajax armoured vehicles, which were originally supposed to enter service in 2017. Yet, despite receiving more than £3bn, just 26 have so far been delivered.
The NAO said the concerns around noise and vibration have still to be resolved and continued to represent a "significant risk" to the programme.
The MOD and General Dynamics UK continue to disagree on the safety of the vehicles and whether contractual requirements have been breached – a dispute that is likely to take until late this year before being resolved.
While trials with Army crews have been halted, the NAO said General Dynamics has continued production without receiving any payment in 2021.
However, the MOD has yet to set a revised initial operating capability date and has no confidence that an April 2025 target for a full operating capability can be met, leaving the Army to rely on its ageing Warrior armoured fighting vehicles.
Watch: Defence Minister "horrified" with "serious failings" of Ajax.
The NAO said: "It is not yet clear whether the programme's issues are resolvable.
"The department will need to consider carefully whether the programme can deliver the intended capabilities but does not expect to be in a position to do so until late 2022."
The National Audit Office blamed the complexity of the programme – with about 1,200 capability requirements – for the problems, which had resulted in a series of disputes and delays.
Gareth Davies, head of the National Audit Office, said: "The Ministry of Defence and GD's approach was flawed from the start.
"They did not fully understand the scale or complexity of the Ajax programme and a series of failures have led to delays and unresolved safety issues that will have a significant impact on the Army's ability to use the vehicles."
The Commons Public Accounts Committee chair Dame Meg Hillier called on the two sides to resolve their differences as quickly as possible.
She said: "The NAO report reads like a checklist for major project failure where almost everything that can go wrong did go wrong.
"The Army is forced to continue using increasingly old and obsolete equipment which, aside from adding cost, reduces our capability at a time when dangers are only increasing.
"Both parties must find a way out of the deadlock, work together to rescue the programme, and ensure the Army gets the equipment it needs."
An MOD spokesman said: "As we have made clear, Ajax is a troubled programme, and we will not accept a vehicle that is not fit for purpose.
"As the NAO recognises, we are working with General Dynamics to resolve the noise and vibration issues with a view to Ajax being successfully delivered to the Army.
"We continue to meet our obligations to NATO and will mitigate any capability gap through a range of alternative reconnaissance capabilities."
In December, a review found "serious failings" in the Ajax programme, with Minister of State for Defence Procurement Jeremy Quin saying fellow ministers were "deeply concerned about progress on this troubled project which has been running for over 11 years".