Source · Select Committees · Public Accounts Committee
Recommendation 20
20
Accepted
Complex reasons for MoD stock build-ups include repairable unserviceable items and strategic contingencies.
Conclusion
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 take them. Other items appear as excess stock, but are deliberately overstocked for contingency scenarios, for example, anthrax vaccines or other critical medical supplies. Items beyond their service date may be useable on other platforms or have sale opportunities to other governments, so will be held until other governments confirm they no longer wish to buy them.45 The MoD also stated that activity supporting the front line will always take priority over managing disposals, and the move towards building resilience will increase the level of inventory being held in future.
Government Response Summary
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.
Government Response
Accepted
HM Government
Accepted
6.1 The government agrees with the Committee’s recommendation. Target implementation date: July 2028 6.2 The department continues to tackle the challenge of identification and disposal of excess and obsolete inventory. Over the past 10 years, DE&S has established a series of successful standalone projects. Using learning from these projects, the department is creating a single centralised disposal team, tasked with processing disposals from depots. This will utilise existing suitably qualified and experienced staff and exploit best practice. 6.3 Forming up in 2024, this team will expertly manage disposal services intelligently targeting problematic areas of the Defence inventory. The introduction of the single Base inventory system across Defence in 2024-25 will be a critical enabler ensuring process alignment across environments, improved visibility, and assurance of disposal candidates. Annual corporate targets will remain ensuring consistency in the forecast and processing of disposals; targets for the financial year 2023-24 stock reduction are on track to be met. Initial effort will concentrate on removing obsolete and excess inventory from non-explosive storage depots; later phases will turn to explosive storage and front-line command units. 6.4 The challenge presented through the disposal of unserviceable equipment (items currently unfit for issue) requires the department to take more risk on disposal decisions. This conflicts with the increasing emphasis on resilience, which is likely to be a limiting factor in the efficiency that can be achieved in inventory holdings. The department may need to re-assess its stock metrics and be more conservative in disposals, which would lead to the department potentially keeping more inventory in the future, as a lesson from Ukraine.