Source · Select Committees · Public Accounts Committee
Recommendation 5
5
Accepted
Set out how MoD's future inventory management will properly address medical personnel requirements
Conclusion
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 availability of medical inventory and been supplied with items without sufficient shelf life for longer deployments. In 2022, the Royal Navy assessed that, if unresolved, the situation would present a significant risk to life for its personnel. This issue arose because the contract applied a general target across all commodity supply. This meant that lower performance in supplying medical inventory (which generally requires higher performance than other commodities) was masked by better performance elsewhere. Furthermore, there is granularity within what is needed for certain elements of medical inventory: the MoD cited 90%, 95% and 98% inventory level requirements for different medical equipment.4 For the average inventory of “fast-moving commodity type medical items”, the MoD told us that Team Leidos was now achieving the 92% level “on a regular basis”.5 From 2019, the MoD changed the incentivisation in the contract to hit time targets and deliver new projects and equipment faster, which improved the situation but still not to the required level. However, in 2023 because performance for medical had still not improved to the required level, the MoD approved further improvement initiatives which will ultimately require it to pay the supplier a further £13.2 million.6 Recommendation: In its Treasury Minute response, the MoD should write to us setting out how it will ensure that the requirements of medical personnel will be properly addressed in its future inventory management arrangements, and how it will resolve risks more quickly in future. This should include providing data on a quarterly or monthly basis of how performance in the supply of me
Government Response Summary
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 smarter stock maintenance, confirming the Permanent Secretary has also written to the committee.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. recent years including a £13.2 million uplift in staff employed inside the Delivery Partner (Team Leidos) together with additional staff established into key areas of UK Strategic Command. The primary aim has been to segment medical activity from the broader scope of LCST and strengthen customer-supplier integration across the range of forecast, planning and operational activity. This additional investment has been coupled with analysis and planning that has led to improved requirement definition of medical equipment, alternate routes to market and key changes to the end-to-end supply chain policy & process. This has resulted in a sustained period of above contractual target (92%) Medical availability performance since September 2023. Process improvements are in place to ensure that short shelf-life medical materiel can meet the challenge presented by long duration maritime deployments. Similar process improvement, ensuring speed of procurement, has already been made to aero- medical equipment. Next steps include strategic engagement with the Department of Health and Social Care to elicit access to medical stockpiles and the introduction of smarter ways in which contingent medical operational stock might be maintained at readiness to support Defence activities. The Future Defence Support Services programme (which replaces LCST in 2028) is already well advanced in understanding the specific needs of Defence Medical, and particularly medical devices. Equipped with greater contractual leverage and alongside a Defence customer who has learned, it will substantially redress the challenges encountered by LCST. The Permanent Secretary has written separately on this issue as part of follow up to queries raised in the Committee hearing.