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Cuts to the size of the army come with significant risks that could "significantly affect the army's ability to achieve its objectives and value for money", the public spending watchdog has warned.
The Ministry of Defence on Wednesday rejected scathing criticism from the government's public spending watchdog that it is seriously mishandling deep cuts in the size of the army.
The National Audit Office said the decision to cut regular forces from 102,000 to 82,000 by 2018 while doubling the number of reservists was "taken without appropriate testing of feasibility" and appeared to be running up to six years behind schedule.
The National Audit Office concluded that the MoD seriously underestimated how much might be saved as well as the feasibility of restructuring the army. The MoD target is to bring the army down from 102,000 regular soldiers to 82,500 by 2018, and to fill some of the gap by raising the number of trained reservists from 19,000 to 30,000.
Its report warned that the project was off course and that, without a " significant change in performance", the target may not be hit until 2025.
The heaviest criticism is over what the NAO sees as the MoD falling badly short of its recruitment targets, particularly much-needed reservists. Far from rising, the number has dropped by 10 in the last two years, from 19,410 to 19,400.
Amyas Morse, the head of the NAO, said: "Army 2020 requires an overall reduction in the size of the army and a fundamental change to its composition, with a significant reduction in the number of regulars and a substantial increase in the number of trained reserves.
Labour described the report as "devastating", one that pointed to a "litany of errors" at the MoD.
"Military judgment played an important role in decisions but committing to moving towards an army structure with fewer regular soldiers and an increased number of reserves within the planned timescale should have been subject to more rigorous testing of feasibility.
According to the NAO, the programme to reduce the size of the regular army and increase the number of trained reservists was taken without appropriate testing of its feasibility.
"The department and army must get a better understanding of significant risks to Army 2020 – notably, the extent to which it is dependent on other major programmes and the risk that the shortfall in recruitment of new reserves will up the pressure on regular units."
The NAO, which reports to parliament, said the new structure comes with "significant risks" that, if they materialised, could significantly affect the army's ability.
The report raised concerns that the new structure – which the Ministry of Defence says will help it save £10.6bn over 10 years – could end up being more expensive to the taxpayer.
The army is getting close to its planned reduction to 82,500. As of April, it stands at 87,180. But it is behind in recruitment, only taking on 6,366 against a target of 9,715.
Margaret Hodge, chairwoman of the Commons public accounts committee, attacked the "scandalous" £1m a month being spent to cover "incompetence" in the reservist recruitment process, which has been plagued by IT failures.
The NAO warned that, without a " significant change in performance", the target may not be hit until 2025.
"The Army 2020 programme is crucial for the future of our country's armed forces and is just too important to get wrong," the Labour MP said.
"The defence secretary, Philip Hammond, defended the MoD, saying: "The MoD has always been clear that the numbers in the reserves would fall before they increased, but we have now seen the trained strength of the reserves climb for the first time in nearly 20 years … While there is much still to do, we are confident of achieving the target of a 35,000 trained Reserve by the end of financial year 2018.
"The Ministry of Defence focused heavily on cutting costs rather than on recruiting, training and integrating a substantially increased number of reserves, something the army is already failing to do.
The shadow defence secretary, Vernon Coaker, said: "These ill-thought-out and badly prepared plans are in danger of collapse." He called for the plans to be revisited. "There should be a pause in any further redundancies until we see a significant increase in reserve recruitment. Otherwise, we risk leaving Britain's armed forces with a dangerous capability gap," Coaker said.
"The MoD went ahead with plans to reduce the number of regular soldiers and increase the number of reservists from 19,000 to 30,000 by 2019 without even investigating whether it was possible to do this by that time, or even whether it had 19,000 trained reservists to start with.
"Given this, it comes as no surprise to me that just one-third of the reservists have been recruited in 2013-14 and the size of the army reserve has not increased since 2012.
"The MoD's recruitment contract has been plagued by unreliable data and failure by the department to provide the necessary IT infrastructure.
"The MoD cannot tell how much of the recruitment problems are down to its own failings or to Capita, and so it has not been able to determine the exact cause of poor performance.
"It is scandalous that the MoD is paying out an additional £1m per month to cover the cost of this incompetence.
"Even after all this, I am astounded to find that reducing the size of the army will not alone deliver the financial savings required for the MoD budget. Unbelievably, it may even mean increased costs to the Treasury if the reservists are deployed."
MoD officials face a grilling over the project by the committee next week.
"I look forward to getting to the bottom of all this," Hodge said.
