Committee of Public Accounts

Press Notice No. 13 of Session 2002-03, dated 11 April 2003


Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, said today that the Ministry of Defence needed to take radical action to tackle its long-standing problems in managing stocks.

Mr Leigh was speaking as the Committee published its 13th Report of this Session, which examined how effectively the Ministry of Defence has addressed its inventory management problems; the scope for the Department to make better use of the private sector to manage stocks; and wider lessons from the Department's stock reduction target for the Department's other key targets.

The Committee found that the Department still needs to take radical action to tackle its long-standing inventory management problems.  The Department's inventory still contains large amounts of obsolete and very slow moving stock.  Yet other reports from the National Audit Office have revealed shortages of key items on exercises and deployed operations and instances where the stock issued has been of poor quality.  The Department needs to get a grip on its inventory, ensuring that it holds what it genuinely needs and gets rid of what it does not.

The Department should make better use of industry in the future.  It needs to be smarter in the management of its stock and work more closely with industrial suppliers. Better information on its stock holdings will allow the Department to identify which parts of its inventory can be managed by industry, for example through 'just in time' direct delivery to military units and contractorisation of storage functions. At a local level, the Department needs to exploit the arrangements being put in place by the Non-Project Procurement Office and extend its use of the Government Procurement Card.  

In future target-setting the Department needs to ensure that there is a clear baseline against which to assess progress and a consistent methodology for measuring achievement.  Neither of these requirements was in place for the stock reduction target: their absence prevented the National Audit Office from verifying that the target had been met.  The Department should apply these lessons to its Public Service Agreement targets.  The Treasury should also disseminate wider lessons on validation to other departments.

Mr Leigh said today:

"The Ministry of Defence has a long history of holding too much stock of the wrong type or which is obsolete, and of shortages of key items required on deployed operations. It is high time that the Department took radical action to tackle its inventory management problems. It needs to sort out its information systems, bringing them up to the standards required by modern supply chain management, and work more closely with industrial suppliers."

Click here to view the Report