1 Performance to date delivering supplies
to the front line |
1. The military supply chain stretches from the
personnel on operations who identify their requirements through
to the manufacturers that supply the goods needed to satisfy them.
The Ministry of Defence (the Department) spent at least £347
million in 2010-11 transporting supplies overseas to staff carrying
out operations, on training or stationed in permanent bases. However,
this figure is understated because it does not include the costs
of military supply flights.
Following the reduction of troop numbers in Iraq, Operation HERRICK
in Afghanistan is the Department's largest overseas commitment.
The Department has engaged in military operations in Libya since
March 2011, which it estimates will cost £260 million if
the operations last six months.
2. In 2010, the Department sent 130,300 individual
deliveries into Afghanistan using two main routes: 31% of supplies
by tonnage were flown direct from the UK to Camp Bastion in Afghanistan,
with the remaining 69% transported by surface routes, usually
via Pakistan. Decisions
about what supplies are sent and how they are sent are made by
operational commanders at the front line. The Department considers
these commanders are best placed to identify what supplies are
needed and how urgently.
3. We agree with the Department that the critical
issue for the supply chain is ensuring troops are supplied with
the kit they need, when they need it. However, such operational
considerations should not prevent the Department from monitoring
and controlling costs.
While the Department collects some data on supply transport spending,
it does not have the data required to calculate the full unit
cost of individual deliveries - which means that it cannot compare
the relative costs of different delivery routes.
The Department cannot make informed choices about cost efficiency,
or identify financial savings, without good information on how
much its activities cost.
4. The Department does not routinely collect
basic data - for example, of the SA80 rifle deliveries the NAO
examined, only 8% had a departure date recorded.
The Department accepted that its management information systems
and underlying IT systems are not adequate for the task.
5. The failure to collect basic data about where
supplies are stored, either in warehouses or in theatre, has directly
contributed to the Department's financial accounts being qualified
for three consecutive years.
The Department told us that the main reason data is not collected
properly is due to the limitations of the data systems it uses
to store information.
Some data systems, such as the Visibility in Transit Asset Logging
system which tracks individual deliveries, can provide good data
on the movement of supplies if used properly. However, many data
systems, such as those used to track supplies in warehouses, are
much older and are not fully compatible with other systems across
defence - leading to problems knowing what supplies are held where.
More importantly, the risk of failure of these warehouse inventory
systems is extremely high and was recently rated as 'critical'
by the Defence Logistics Board. If these systems fail, then the
result could be shortages at the front line within as little as
6. For each operation the Department sets out
in Operational Sustainability Statements the levels of supplies
it needs to hold in theatre, and targets for how quickly supplies
should get there.
The targets for getting supplies to theatre vary with the length,
complexity and risks of the individual supply chain. For example,
the target for sending urgent supplies by air to Afghanistan is
five days. The Department is not meeting this target, as in 2010
two thirds of such deliveries were made late.
The Department told us that the target is very challenging and
may have been set too tightly, but that in any case 50% of items
arrive within a week and 90% of items arrive within a month. The
Department considers this is sufficient to maintain equipment
availability in theatre above 80%, which in turn is enough to
meet the demands of operations.
Bernard Gray told us that he would take personal responsibility
if the supply chain failed in such a way that front line troops
7. One of the main reasons for late delivery
of supplies is delays in receiving goods from manufacturers. In
the six months to November 2010, over 40% of deliveries from suppliers
were 30 days or more overdue.
Such delays directly affect supply chain reliability - half of
delivery delays in 2010 were caused by the item not being available
8. The Department told us that some of its contracts
contain clauses in order to penalise late deliveries, but there
is a very wide variety of contracts and many will not have clauses
that incentivise suppliers to deliver on time.
The Department suggested that fixed contracts for the regular
supply of goods would have scope to incorporate penalties for
poor performance. However, it believes that entering into fixed
supply contracts of this kind will often not be sensible, given
the unpredictable nature of military operations and the difficulty
of forecasting needs in advance.
For example, the Mastiff armoured vehicle proved more resistant
to improvised explosive devices than anticipated, which meant
more vehicles were able to be repaired rather than simply replaced
- a good outcome overall, but one which meant that more spares
were required than initially expected.
In general, however, given that forces have been in Afghanistan
for 10 years, much routine activity must be capable of being reliably
predicted by now.
9. When supplies and spare parts are not available
from suppliers or are not delivered to theatre in time, front
line troops often obtain them by cannibalising vehicles and planes.
Our previous reports have found cases where RAF Typhoons and Jaguars
had been grounded because they had been raided for spare parts
for other aircraft.
In March 2011 we heard that three Typhoon aircraft had been grounded,
which led to some pilots being unable to train for ground attack
missions. The Department
told us that in its view cannibalisation of assets was not seen
as a problem because it was not occurring often in statistical
terms (three aircraft out of a fleet of 107). Furthermore, the
cost of holding sufficient spares of all types to deliver 100%
availability of equipment at all times would not always be justified.
However, we remain concerned that the Department does not know
whether it would be better value for money instead to ensure its
parts supply contracts are operating effectively - rather than
relying on the ability to cannibalise existing assets.
10. Risks to supply routes can arise unexpectedly:
for example, the Department told us that it had increased its
target for delivering supplies to Afghanistan through Pakistan
from 77-87 days to 120 days due to industrial disputes and increasing
security risks. The
Department conceded that falling confidence in the reliability
of the surface delivery route has led them to increase the amount
of deliveries sent by air.
However, this is not a long-term solution. Some military supplies
are simply too bulky to be transported by air, so if the surface
delivery routes into Afghanistan were closed then military operations
could be seriously affected.
11. In order to reduce costs and increase the
reliability of the supply chain to Afghanistan, the Department
has experimented with alternative routes for delivering supplies.
For example, the Department is now shipping supplies to Riga,
Latvia and then transporting them south by train, although it
cannot deliver weapons and ammunition by this route at the moment.
It is also operating the Sail-Fly programme which involves shipping
supplies to Cyprus then flying them into Camp Bastion.
However, without cost data of sufficient detail, the Department
is not in a position to make good decisions about the most cost-effective
12. One way in which the Department compensates
for deliveries being late is to hold extra stock in theatre. It
told us that it holds several days' worth of supplies for many
items as a buffer against unexpected events (such as disruption
to the supply chain) or new threats.
However, the Department acknowledged that holding stock at these
levels ran the risk of supplies deteriorating, especially if left
out in the open. It further accepted that it would be a good idea
to measure deterioration rates, in order to determine whether
stocks were being held at cost-effective levels.
2 C&AG's Report, para 1.6 Back
C&AG's Report, para 2.1 Back
C&AG's Report, para 2.2 Back
Ev 19; HC Deb, 23 June 2011, col 24WS Back
C&AG's Report, para 2.5 Back
Qq 19-20 Back
Qq 20-23, 87-88 Back
Qq 86-87 Back
Q 21 Back
Q 94 Back
Qq 125-131 Back
Qq 87, 94 Back
Qq 72, 90, 93 Back
Q 8 Back
C&AG's Report, para 2.6 Back
Qq 6-7, 17 Back
Qq 26-27 Back
C&AG's Report, para 2.8 Back
Q 6 Back
Q 149 Back
Qq 149-151 Back
Q 147 Back
Q 148 Back
Q 36; Committee of Public Accounts, Thirtieth Report of Session
2010-12, Management of the Typhoon project, HC 860 and
Twenty-Sixth Report of Session 2005-06, Assessing and reporting
military readiness, HC 667 Back
Qq 36, 49 Back
Qq 41-51 Back
Qq 47-48 Back
Qq 57-64 Back
Q 77 Back
Qq 66-71 Back
Qq 66-67 Back
Qq 14-15, 55, 88 Back
Qq 22, 88 Back
Q 8 Back
Qq 9-13 Back