PAC calls on MoD to fix inventory management IT

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The Public Accounts Committee (PAC) has called on the Ministry of Defence (MoD) to urgently improve its inventory management systems.

The department already has a £2.5bn pan-defence programme in place to update its legacy IT systems and implement standardised processes across the MoD.

However, a report by the committee said that while the programme is a positive step, the PAC is sceptical that the department will be able to realise its ambitious plans.

“The MoD’s transformation plans are complex and ambitious, but its track record means we are sceptical about its ability to achieve them,” the report said.

“MoD’s inventory management has faced long-standing issues with its many legacy IT systems, which have limited functionality and reinforce the fragmentation of its inventory management.

“We remain concerned about the quality of the MoD’s inventory data; the MoD stated that while its visibility of its inventory is generally good, its system functionality can prevent staff from having a deeper understanding of it.”

The inventory management systems currently in use by the Army and the Navy are both nearly 40 years old, and while the department aims to move both onto the RAF’s newer system, currently, the system used by the Navy can only record that an item is damaged, but is not able to provide any further detail, making it difficult to know whether or not it can be fixed.

PAC chair Meg Hillier said that the country’s “brave armed forces personnel put themselves in harm’s way in defence of our nation, and deserve to expect that the equipment they require to do so will be there when they need it”.

“Our committee warned over a decade ago of waste and fragmentation in the MoD’s supply systems, and our report finds that many of those problems remain unresolved and without the right powers to address them,” she added.

The MoD has worked to upgrade its inventory management system for the past 14 years, with a project beginning in 2010 to reduce the number of logistic support systems. So far, the number of systems has been reduced from 250 to 89, however, there are still issues around data in particular.

When the project began back in 2010, the MoD signed a 12-year £800m contract with Boeing Defence UK for its Future Logistics Information Services (FLIS) programme. Due to delays, the MoD then signed a further five-year contract with the supplier, worth £515m in 2020, a deal which was awarded without going out to tender. This includes the move of the Army and the Navy onto the RAF’s system. However, the committee said it does not see “how this step alone will address the existing gaps in its data”.

Hillier said the committee was also “concerned to hear as part of our inquiry that a contract for a £515 million programme to address data gaps was awarded to a large defence prime contractor without a competitive tendering process”.

The new contract aims to bridge the gap between the old FLIS contract an a further long-term strategic solution. The MoD told the PAC that “that it intended to competitively procure the suite of contracts relating to its larger future transformation of its legacy IT systems, with its contract for engineering support and asset management software currently out to tender”.

The PAC report comes after a National Audit Office inquiry into the programme in September 2023 found that, despite a long-standing project to update the ageing IT, it was still putting troops at risk.

A prior NAO report cited the same issues around legacy IT systems. The report, which was published in March 2011, said the same, ageing IT systems – then around 30 years old – had a high chance of suffering catastrophic failure, which would have a huge impact on the ability to maintain frontline operation.

It is not just in inventory management that the MoD struggles with aeging IT. Details revealed following a Parliamentary question by MP Matt Rodda show that the department has 11 red-rated IT systems, as defined by the Central Digital and Data Office’s legacy IT risk assessment framework. The MoD said it has worked on creating “remediation plans at pace for any of [the systems] requiring immediate action”.

The MoD published its 10-year digital strategy in June 2021, aiming to invest an additional £1.6bn in digital, including establishing a “digital foundry”, a federated ecosystem of digital innovators and developers, and a defence-specific artificial intelligence (AI) centre. The strategy also aims to place a digital backbone at the heart of its approach, which will be the enabler for digital transformation.

However, a PAC report, published in February 2023, said the MoD was “not well set up to implement digital change at pace and scale” and that change was needed.

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