2 Improving future performance |
13. The Department's lack of information on its
supply operations and the cost of its activities is not a new
problem. Previous reports by this Committee, some going back as
far as 1986, have identified similar issues with tracking supplies
and collecting cost data.
Our 1997 report on operations in the former Yugoslavia identified
problems with keeping track of high-value equipment.
Meanwhile, our 2004 report on Operation TELIC in Iraq found equipment
shortages at the front line had occurred, in no small part due
to the lack of a credible consignment tracking system.
14. In response to these reports, the Department
promised that new systems would close the information gaps, but
it has not delivered on these promises. For example, in response
to our report on TELIC, the Department said that one new system
- Management of Materiel in Transit - would allow end-to-end control
of the process for consignment management, optimise the supply
chain, ensure that operational priorities dictate the movement
of supplies and improve the speed and certainty of consignments.
Yet the faults that this system was supposed to rectify have now
been identified again by the NAO.
15. The Department accepts that historic underinvestment
has meant its management information systems and the underlying
IT systems are not up to the task. In particular, its spending
on IT systems has not kept pace with the need to upgrade those
systems. The Department
told us that while it accepts it can do better, it believes it
is already doing things 'a hundred times better' now in Afghanistan
than in 2003 in Iraq.
16. The Department has made investments in new
data systems - for example £66 million has been spent on
the Management of the Joint Deployed Inventory system which tracks
equipment in theatre - and more is planned.
In 2010, the Department signed an £803 million, 11-year contract
with Boeing for the provision of the Future Logistics Information
Services project. Under this contract, Boeing is required to bring
together 270 different data systems operated by 50 different contractors,
which should provide a complete and coherent set of data for managers
to use. Separately,
the Department has now approved an additional £75 million
to upgrade some of the defence base inventory management systems
that are now at critical risk of failure.
17. The implementation of the Future Logistics
Information Services project, including the additional upgrade
to the warehouse inventory management IT system, will not be complete
until 2014. The Department told us it would take a long time to
upgrade systems and data, in part because of the need to 'cleanse'
the data - otherwise the poor quality information the Department
currently holds would simply be transferred onto a better IT system.
We are very concerned that, until the systems are fully rolled
out in 2014, the high risk of system failure will remain in systems
that are critical to supporting front line troops.
To ensure that there is no further slippage in this critical area,
the Department has provided us with a plan of the scheduled projects
for improving data systems and has promised to report back in
six and twelve months on how it is performing against its milestones.
18. As with other defence projects, such as the
Future Rapid Effect System armoured vehicle, there is a risk that
funding for this project could be reduced as the Department seeks
to lower spending and balance its overall budget.
However, the Department assured us there were currently no plans
to cut back the investment that is planned for logistics IT systems.
It also told us that despite the need to reduce staffing by between
a quarter and a third following the Strategic Defence and Security
Review settlement, it would make sure it had people in post sufficiently
trained and experienced to use the systems effectively.
It is important that the Department safeguards this expertise,
as there is little point in investing money in advanced IT systems
if staff do not have the necessary skills and experience in supply
chain management to use them effectively.
19. One method for improving future performance
and identifying best practice is to benchmark against other relevant
organisations. The Department told us that it had begun to benchmark
its supply systems against those in the private sector and that
it was an active member of the Cranfield University Agile Supply
Chain Research Club.
However, there is scope to expand the range of organisations the
Department compares its performance against. In particular, the
Department has not carried out any benchmarking exercises with
the supply chains operated by the armed forces of other nations
of similar scale or complexity. For example, there is no comparative
cost data available for American or French forces against which
the Department's operations could be benchmarked.
38 Qq 89, 117 Back
Committee of Public Accounts, Twenty-Third Report of Session 1996-97,
Ministry of Defence: The Financial Management of Military Operations
in the former Yugoslavia, HC 242 Back
Committee of Public Accounts, Thirty-Ninth Report of Session 2003-04,
Ministry of Defence: Operation TELIC - United Kingdom Military
Operations in Iraq, HC 273 Back
Q 117 ; HM Treasury, Treasury Minutes on the Thirty-seventh
to Thirty-ninth Reports from the Committee of Public Accounts
2003-2004, Cm 6355, November 2004, pp 14-15 Back
C&AG's Report, para 3.6 Back
Qq 94, 98 Back
Q 117 Back
Q 100 Back
Q 166; C&AG's Report, para 4.4 Back
Q 91 Back
Qq 92-94 Back
Qq 93-94, 98 Back
Q 101 Back
C&AG's Report, The cost-effective delivery of an armoured
vehicle capability, HC (2010-12) 1029 Back
Qq 105-108 Back
Qq 2, 120-124 Back
Qq 122-123 Back
Qq 142-143 Back
Qq 143-146 Back