Source · Select Committees · Public Accounts Committee
Recommendation 13
13
Acknowledged
Team Leidos contract for warehousing delivered £403 million in financial efficiencies.
Conclusion
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 May 2023, the MoD forecast that it would achieve financial efficiencies of £403 million by 2028, when the contract is due to come to an end.29 Through the contract, DE&S told us it has increased the agility of its supply operations, gaining greater efficiency in transporting inventory across the UK and Europe, reductions in its carbon footprint of around 28%, and reductions in commodity purchases through better forecasting. DE&S told us that this agility has also been useful in mobilising stocks for Ukraine.30
Government Response Summary
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.
Government Response
Acknowledged
HM Government
Acknowledged
4.1 The government agrees with the Committee’s recommendation. Target implementation date: July 2024 4.2 The department’s implementation of the Defence Command Paper (Refresh) will lead to a closer collaboration with Industry. Specific activity will be delivered through several routes including the Munitions Strategy, Supply Chain Capability Programme and improved digital processes through BMfS which will enhance inventory management. The Supply Chain Capability Programme will develop a defence capability to jointly design Supply Chains with industry early in the Capability Development process. 4.3 With regards to the latter action, there have been several reviews of the LCST contract, and a formal contract reset between all parties in 2022 implemented several lessons learned to generate mutual benefit for the department and contracted delivery partner. Over this past year a formal assessment of the lessons learned from the LCST contract has been shared with the Future Defence Support Services programme which is scheduled to replace LCST in 2028. These lessons will be forwarded to the Committee together with confirmation on plans to implement.