Recommendation 18

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 Leidos hit time targets and was able to deliver new projects and equipment faster. This did yield improvements; for example, the number of new medical equipment projects increased from six a year to around 36.40 However, performance for medical had still not improved to the required level, and in 2023, the MoD approved further improvement initiatives which will ultimately require it to pay the supplier a further £13.2 million.41 This includes bringing in 35 more people with medical experience into the Team Leidos and the introduction of a specific performance target for fast-moving commodity medical items, which the MoD stated Team Leidos was now reaching on a regular basis.42 Excess and unserviceable stock