The 296-page secret dossier, obtained by the Sunday Times, claims that incompetence at the British Defense Ministry "is harming our ability … to conduct difficult current operations."
Written by business and military expert Bernard Gray and commissioned by former Defense Secretary John Hutton, the report says that today's military procurement projects are $58 billion over budget and on average five years behind schedule.
"How can it be that it takes 20 years to buy a ship, or aircraft, or tank? Why does it always seem to cost at least twice what was thought? Even worse, at the end of the wait, why does it never quite seem to do what it was supposed to?" Gray writes. Enemies like the Taliban "are unlikely to wait for our sclerotic acquisition systems to catch up."
Hutton's successor, Bob Ainsworth, backed by Prime Minister Gordon Brown, buried the report because of a row with leading military officials over equipment shortages, the newspaper writes.
Experts have blasted London for not outfitting its troops in Afghanistan with enough helicopters and armored vehicles to protect them against roadside bombs.
The report blasts the Labor Party for not updating its military strategy or spending programs.
"In corporate life, no enterprise would persist with a 12-year-old strategy without at least re-evaluating it fully on a regular basis," Gray writes. "Few who would expect to prosper would even try to do so."
The report comes as Britain is in intense discussions about the way forward in Afghanistan. Officials in London are divided on whether to increase or reduce the British military presence in Afghanistan, where the country has nearly 10,000 troops -- the second-largest contributor to the NATO mission behind the United States.
British Foreign Secretary David Miliband last month called for a strategy change, urging authorities in Kabul and NATO representatives there to engage in diplomacy with moderate Taliban.
Violence has escalated since the expanded campaign by the U.S.-led coalition to regain control of the southern Afghan regions from the Taliban.
Notable deaths of 2014 [PHOTOS]