Recommendations & Conclusions
21 items
2
Conclusion
Eighth Report - Improving Defence Inven…
Accepted
The MoD’s inventory management systems remain outdated, and the quality of its data limits its ability to understand its inventory. MoD’s inventory management has faced long-standing issues with its many legacy IT systems, which have limited functionality and reinforce the fragmentation of its inventory management. While it has reduced the …
Government response. The government agrees and commits to informing the Committee by letter within six months about the lessons learned from its review of the LCST contract and how they will be implemented. It also describes ongoing initiatives like the Munitions Strategy …
HM Treasury
3
Conclusion
Eighth Report - Improving Defence Inven…
Accepted
The MoD’s transformation plans are complex and ambitious, but its track record means we are sceptical about its ability to achieve them. The MoD has put in place the £2.5 billion Business Modernisation for Support (BMfS) programme to upgrade its legacy IT infrastructure and introduce aligned business processes across its …
Government response. The government agrees and provides detailed progress updates for its Support transformation programmes, including BMfS (first deliverable autumn 2024) and FDSS (key investment decision by year-end). It also details ongoing process improvements for medical materiel and strategic engagement with DHSC.
HM Treasury
4
Recommendation
Eighth Report - Improving Defence Inven…
Accepted
MoD will need to work closely with industry to ensure resilience in its supply chains. The MoD outsourced its central warehousing and the procurement of some of its commodities—food, clothing, general and medical supplies—to a consortium under the “Team Leidos” banner through the Logistics Commodities and Services Transformation (LCST) contract …
Government response. The government agrees with the recommendation and commits to providing further details related to supply chain resilience within 12 months, coinciding with a key investment decision milestone for the FDSS programme.
HM Treasury
5
Conclusion
Eighth Report - Improving Defence Inven…
Accepted
The MoD failed to consider the needs of its medical operations in outsourcing commodity procurement to Team Leidos and this has created significant risks for front-line personnel. Since the LCST contract began, the inventory needs of front-line medical personnel have not been well served. In particular, units have faced poor …
Government response. The government agrees and details specific actions taken, including a £13.2 million investment and process changes, which have led to sustained 92% medical availability since September 2023. It commits to future strategic engagement with DHSC for medical stockpiles and introducing …
HM Treasury
6
Recommendation
Eighth Report - Improving Defence Inven…
Accepted
While the MoD has reduced the amount of stock it holds, it still holds large amounts of excess and unserviceable inventory. From 2011 to 2023, the MoD told us it achieved a 25% reduction in the net book value of its inventory, which it reduced from £16 billion to £12 …
Government response. The government agrees and is creating a single centralised disposal team, forming in 2024, to manage inventory disposals more expertly. It states that annual corporate targets for stock reduction remain, and 2023-24 targets are on track, with the new single …
HM Treasury
1
Conclusion
Eighth Report - Improving Defence Inven…
Accepted
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Ministry of Defence (MoD) about its inventory management, with witnesses from MoD centre, Defence Support, and Defence Equipment and Support (DE&S).7
Government response. The government outlines specific actions to enhance defence logistics and support, including a Defence Design Review starting detailed design by March 2024, a refresh of the Defence Support Strategy by November 2024, and a Support Function Narrative to be issued …
HM Treasury
7
Conclusion
Eighth Report - Improving Defence Inven…
Acknowledged
MoD’s inventory management has faced long-standing issues with its many legacy IT systems, which have limited functionality and reinforce the fragmentation of its inventory management. Each Command has its own core inventory management system, and there are other systems used across the Support function for managing other types of inventory, …
Government response. The government agrees with the committee's observations and will provide an update within six months by July 2024. It also provided corrected data on inventory stockpile holdings, claiming more success in managing them down than previously reported.
HM Treasury
8
Conclusion
Eighth Report - Improving Defence Inven…
Rejected
We remain concerned about the quality of the MoD’s inventory data; the MoD stated that while its visibility of its inventory is generally good, its system functionality can prevent staff from having a deeper understanding of it. For example, the Royal Navy’s base inventory system can record that an item …
Government response. The government acknowledges the committee's concern but states there was an error in previous reporting, providing corrected data that demonstrates greater success in managing inventory holdings and thus challenging the premise of the committee's concern.
HM Treasury
9
Conclusion
Eighth Report - Improving Defence Inven…
Acknowledged
However, we do not see how this step alone will address the existing gaps in the MoD’s data. For instance, when new systems were introduced in DE&S’s central warehouses through the Team Leidos contract, DE&S stated that it had to engage a private company to do a lot of work …
Government response. The government agrees with the committee's observations and will provide an update within six months by July 2024. It primarily provides corrected inventory stockpile data to demonstrate better management than reported, rather than directly addressing concerns about data gaps or …
HM Treasury
10
Conclusion
Eighth Report - Improving Defence Inven…
Accepted
The MoD has put in place the £2.5 billion Business Modernisation for Support (BMfS) programme to upgrade its legacy IT infrastructure and introduce aligned business processes across its bodies. This programme is intended to resolve many of the historic issues the MoD has faced in managing its inventory, however, it …
Government response. The government agrees with the committee's observation and provides updates on the progress of the BMfS and FDSS programmes, including BMfS's first major deliverable in autumn 2024 and FDSS's key investment decision milestone at year-end.
HM Treasury
11
Conclusion
Eighth Report - Improving Defence Inven…
Accepted
The MoD’s track record in delivering business and digital transformation is patchy; when we reported on The Defence Digital Strategy in 2022, we found that the MoD was struggling to deliver its largest and most transformational digital programmes. We also observed that the MoD faced challenges recruiting all the digital …
Government response. The government agrees with the committee's concerns, providing a January 2025 target. It outlines the status of four ongoing Support transformation programmes addressing digital delivery and skills, with some progress dependent on team growth approvals.
HM Treasury
12
Conclusion
Eighth Report - Improving Defence Inven…
Accepted
Nonetheless, the MoD acknowledged it faces staffing gaps of around 25% across both BMfS and FDSS. For BMfS, the MoD has contracted a delivery support partner and is looking to bring in a digital non-executive director to provide advice. CDLS himself also 18 Q 34 19 Q 27 20 WMS …
Government response. The government agrees with the committee's observations, setting a January 2025 target. It outlines the status of four ongoing Support transformation programmes, detailing current efforts to manage staffing gaps and ensure delivery, though some progress depends on departmental approval for …
HM Treasury
13
Conclusion
Eighth Report - Improving Defence Inven…
Acknowledged
The MoD outsourced its central warehousing and the procurement of some of its commodities—food, clothing, general and medical supplies—to a consortium under the Team Leidos banner28 through the Logistics and Commodities Services Transformation (LCST) contract in 2015. Managed through DE&S, this has been a successful contract overall, and as of …
Government response. The government acknowledges the committee's observation regarding the successful LCST contract and states that lessons learned have been shared with the Future Defence Support Services programme and will be forwarded to the Committee with confirmation on plans to implement.
HM Treasury
14
Conclusion
Eighth Report - Improving Defence Inven…
Accepted
The MoD is looking at incorporating the learning from the LCST contract into its Future Defence Support Services (FDSS) programme, which aims to find the best inventory management arrangements when the LCST contract comes to an end.31 Recent events such as the war in Ukraine and the impact of covid-19 …
Government response. The government agrees with the committee's observations, confirming that lessons learned from the LCST contract have been shared with the Future Defence Support Services (FDSS) programme and will be forwarded to the Committee with confirmed implementation plans.
HM Treasury
15
Conclusion
Eighth Report - Improving Defence Inven…
Accepted
Future conflicts may require sudden surges in demand and industrial capacity, which industry may then need support to provide. The MoD told us that the United Kingdom and other North Atlantic Treaty Organisation (NATO) members have put together a NATO defence production action plan. This was designed to create a …
Government response. The government agrees with the committee's observations, reiterating its commitment to closer industry collaboration and strengthening the supply chain through existing initiatives like the Munitions Strategy, Supply Chain Capability Programme, and enhanced digital processes.
HM Treasury
16
Conclusion
Eighth Report - Improving Defence Inven…
Accepted
Despite the broader success of the LCST contract, since it began the needs of front- line medical personnel have not been well served. In particular, units have faced poor availability of medical inventory and been supplied with items without sufficient shelf life for longer deployments. This has meant that, in …
Government response. The government agrees with the committee's observations, providing a January 2025 target. It details significant transformational changes to the LCST contract, including a £13.2 million uplift, improved medical availability (92% since Sep 2023), and process improvements for shelf-life, committing to …
HM Treasury
17
Conclusion
Eighth Report - Improving Defence Inven…
Accepted
This issue arose because the contract applied a general target across all commodity supply.38 However, this meant that lower performance in supplying medical inventory (which generally requires higher performance than other commodities) was masked by better performance elsewhere. In addition, best practice for other commodities is to bring forward stock …
Government response. The government agrees with the committee's observations, providing a January 2025 target. It details significant transformational changes to the LCST contract, including a £13.2 million uplift, improved medical availability (92% since Sep 2023), and process improvements for shelf-life, committing to …
HM Treasury
18
Conclusion
Eighth Report - Improving Defence Inven…
Accepted
The MoD explained that the incentives for the LCST contract were intended to prioritise efficiency, but that medical supplies are a difficult area in which to achieve efficiencies. From 2019, the MoD changed the contract’s incentivisation by taking back a portion of the fee and returning it only if Team …
Government response. The government agrees and details significant transformational changes already implemented within the LCST contract, including increased staffing and improved medical availability. They commit to further strategic engagement with DHSC for medical stockpiles and introducing smarter ways to maintain contingent medical …
HM Treasury
19
Conclusion
Eighth Report - Improving Defence Inven…
Accepted
When we last examined the MoD’s inventory management, we found that it was not consistently disposing of inventory it no longer needed and was purchasing items for which it already held sufficient stock.43 The MoD told us that from 2011 to 2023, it achieved a 25% reduction in the net …
Government response. The government agrees with the committee's observation and commits to establishing a single centralised disposal team in 2024 and implementing a new Base inventory system by 2024-25 to improve the identification and processing of excess and obsolete inventory.
HM Treasury
20
Conclusion
Eighth Report - Improving Defence Inven…
Accepted
The MoD argues that there are many complex reasons for these build-ups of stock. For example, unserviceable inventory may still be useful if repaired, and may be being held because the manufacturer no longer makes these items, or because a certain amount may be needed before a repair contractor will …
Government response. The government agrees with the committee's observation and commits to creating a single centralised disposal team in 2024 and introducing a new inventory system by 2024-25 to improve identification and disposal of excess and obsolete inventory.
HM Treasury
21
Conclusion
Eighth Report - Improving Defence Inven…
Accepted
Nonetheless, the MoD acknowledged that its decision-making needs to be informed by better data; for example, missing data within its Navy base inventory system on why inventory is unserviceable makes it difficult to understand what should be disposed of. The MoD would like to reach a situation in which it …
Government response. The government agrees with the committee's observation, confirming it is forming a single centralised disposal team in 2024 and introducing a new Base inventory system by 2024-25 to improve data quality, disposal decision-making, and consistent management of excess and unserviceable …
HM Treasury