Member Article

National Audit Office report questions MoD procurement

The National Audit Office has found the Ministry of Defence is buying more inventory than it uses, and not disposing of redundant stock.

In its report on the MoD’s management of its inventory, the NAO has indicated that money spent on unnecessary levels of stock could be made available to be spent elsewhere.

According to the report, the amount of supplies and equipment held by the Department is increasing, and it is buying more inventory than it uses.

Between the end of March 2009 and the end of December 2011, the total value of inventory held by the armed forces in central depots of non-explosives increased by 13%, from £17.2bn to £19.5bn.

NAO estimates suggest that for raw material and consumable inventory, such as clothing or ammunition, it has spend £4bn between April 2009 and March 2011, but did not use £1.5bn worth.

It is also stated the Department has also not consistently disposed of equipment and supplies which it either no longer needs or does not use regularly.

Over £4.2bn of non-explosive inventory has not moved at all for at least two years and a further £2.4bn of non-explosive inventory already held is sufficient to last for five years or more.

The NAO found that few targets for monitoring the efficiency of inventory management were in place, leading to over-ordering.

Amyas Morse, head of the National Audit Office, said today: “In the current economic climate where the Department is striving to make savings, it can ill-afford to use resources to buy and hold unnecessary levels of stock, and it clearly does so.

“The root cause of excess stock, which the Department is seeking to address, is that management and accountability structures currently fail to provide the incentives for cost-effective inventory management.”

Responding to the report, Minister for Defence Equipment, Support and Technology, Peter Luff said: “Appropriate reserves of equipment are essential to be able to deploy our Armed Forces at short notice and sustain them on operations across the world.

“Afghanistan is our top priority and to ensure commanders are not constrained, we have rightly increased the amount of kit and spares available to support the front line.

“The challenge of managing and maintaining vast amounts of equipment, including explosive materials, around the world should not be underestimated but I know that the MOD’s assets must be more efficiently managed. That is why we are undertaking a number of initiatives to address this long-standing issue.

“We are changing the way we buy, store and dispose of equipment stocks and investing in IT systems to help us record the hundreds of thousands of items in our inventory. We are pleased the NAO recognises these changes are already making a difference.”

This was posted in Bdaily's Members' News section by Tom Keighley .