Legacy tech shoots down Ministry of Defence's supply chain improvements

How to manage 740 million items of behalf of the Armed Forces?

The UK Ministry of Defence's efforts to better manage its £11.8 billion ($15 billion) of inventory hinges, in no small part, on a sweeping digital transformation program that involves modernizing legacy tech systems, but the department's track record is worrying MPs.

The Public Accounts Committee has reported on progress made and says that while some areas have seen marked improvement, the lack of stability around the world, underscored by Russia's invasion of Ukraine, has given the task added importance. The pandemic also highlighted the lack of resilience in global supply chains, it adds.

Historically, frontline commanders looked after their own equipment, and the Defense Equipment and Support teams managed the MoD's central warehousing and procurement of much of the stock. This created data gaps, a complex org chart, and inefficient working practices, the PAC says in its latest report on the matter.

In the Improving Defence Inventory Management document, the MoD's systems "remain outdated, and the quality of its data limits its ability to understand its inventory."

"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. While it has reduced the number of Support systems from around 250 in 2010 to 89 today, the two base inventory management systems used by the Army and Royal Navy respectively are nearly 40 years old."

Stock visibility is generally considered to be appropriate but the lack of system functionality can mean staff can't tell the working state of the kit, which includes more than 640,000 types of inventory, and 740 million individual items, with a book value of £11.8 billion ($15 billion). The department spent £1.5 billion ($1.91 billion) on inventory last year, including capital spares, raw materials, guided weapons, missiles, and bombs.

In terms of digital transformation and change programs, the MoD initiated a £2.5 billion ($3.18 billion) Business Modernisation for Support (BMfS) project in 2021 to update the aging tech infrastructure and instigate aligned business processes for all of the forces and various governmental bodies.

"This programme is intended to resolve many of the historic issues the MoD has faced in managing its inventory, however it is highly complex: transforming services for around 65,000 users across Defence whilst maintaining operations throughout," the PAC report notes.

"The MoD's track record in delivering business and digital transformation is patchy, and the Committee is concerned about the level of skills and personnel available to MoD to manage these programmes."

This is not helped by "staffing gaps of around 25 percent" across both BMfS and its Future Defence Support Services (FDSS) program, which aims to find the best commercial arrangements for inventory management from 2028.

"While the MoD told us it has brought in digital skills for BMfS, it acknowledged that the staffing gaps create risks for FDSS, though it is confident it can still meet the 2028 target delivery date through sensible prioritisation," the PAC says.

Legacy tech is endemic across the British public sector and just last week, Gareth Davies, the head of the National Audit Office, said the government could save £20 billion ($25 billion) by undertaking a thorough deep clean, though with a litany of failed big-ticket projects under its belt, who would trust government to oversee this? And just as worrying, would we trust the private sector to not profiteer?

Other areas of concerns highlighted by the PAC in the report include the £800 million ($101 million) contract awarded to Boeing Defense UK, called Future Logistics Information, that was due to run until 2022 but was extended in late 2019 at a cost of another £515 million ($654 million) to "bridge the gap" between retirement of the old system and the new one coming online with all the bells and whistles.

This contract was tendered without external competition so it's good to see it's not just Fujitsu winning awards in this way. ®

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