Source · Select Committees · Public Accounts Committee
Recommendation 15
15
Accepted
MoD plans £2.4 billion investment to strengthen defence supply chain resilience.
Conclusion
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 clearer signal to all of industry about the demand from across NATO, through which the UK’s contribution was the development of an overall munitions strategy. In doing so, it involved industry in classified discussions to give them a clearer understanding of demand and the issues they are planning to. The MoD told us that it plans to invest around £2.4 billion over the next couple of years to strengthen the supply chain through a combination of orders and improvement of resilience. In the longer term it intends to create an “always-on” demand pattern to create a more robust supply chain.35 The MoD accepted that it might need to pay for the increase in resilience in terms of production capacity and future surge capacity.36 28 Team Leidos is a consortium composed principally of Leidos Europe, Leidos Supply, Kuehne and Nagel and TVS Supply Chain Solutions. 29 Qq 73–74 ; C&AG’s Report para 10 30 Q74 31 Qq 75–77 32 Qq 60, 100–103 ; C&AG’s Report para 3 33 Ministry of Defence, Defence Supply Chain Strategy, 15 November 2022 34 Qq 60, 100, 103 35 Q 103 36 Q 102 14 Improving Defence Inventory Management Medical inventory
Government Response Summary
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.
Government Response
Accepted
HM Government
Accepted
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.