MoDs storage costs come under fire

30 Jul 98
The Ministry of Defence came under pressure this week to reduce the £50m it spends annually on storing major equipment.

31 July 1998

The National Audit Office found that in July 1997 the MoD held in store 204 aircraft, 166 vehicles and 19 naval vessels. The total value of stored equipment stands at £10bn – greater than the department's annual expenditure on equipment procurement.

During 1996/97 the ministry secured receipts of over £52m from the sale of surplus military equipment previously held in store. But the public spending watchdog identified opportunities for extra revenue of £8m and consequently reduced storage costs of £1.5m.

The NAO criticised the defence department's information systems, which were so poor it was 'unable to provide a single statement of stored equipment holdings'. It had to conduct its own survey of defence ministry establishments for the report.

The report concluded: 'Currently management systems are not sophisticated enough to provide the department with the assurance they need to draw conclusions on their overall preparedness to mobilise war stock. There are clear indications the department would face difficulties in regenerating equipment in a single wave, for example, in the event of a general war.'

Under the strategic defence review, the department's aim is to hold only equipment which cannot be provided by other means – such as by arrangements with private sector companies – without breaching readiness targets, unacceptable operational risks or increased cost.

The audit body makes several recommendations. Firstly, the department should routinely forecast major equipment disposals and set out their projections in service management plans. The sale potential of all surplus major equipment should be thoroughly assessed when stock is being evaluated for alternative uses.

And the MoD should systematically weigh up the costs and benefits of continuing maintenance and anti-deterioration work. It should aim to reduce the time it takes to identify and dispose of surplus equipment.

PFjul1998

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