MoD waste £118m on binned IT stock control system

The Ministry of Defence has written off £118 million on a computerised stock control system that was binned before it was ever brought online.

The sophisticated Defence Stores Management Solution was expected to save £65 million-a-year by providing a modernised stock inventory system for the armed services' equipment stores, but the £130 million system was scrapped three years into development when it was apparent that the system would not deliver the anticipated savings.

The Head of the National Audit Office, Sir John Bourn, reported to Parliament that the MOD has "improved the accuracy" of its accounting for stock and spares which contractors use, claiming that one of the two issues which contributed to the audit qualification last year has been rectified.

The £118 million project was cancelled after the MOD concluded that other projects had a "greater priority". The report noted that "weaknesses" in the Defence Logistics Organisation's business change programme and management were being "addressed".

Sir John said: "Although I have qualified my opinion on the Ministry of Defence's 2002-03 Resource Accounts, this represents another significant improvement on the previous year. The MOD has successfully cleared one of the two substantive issues which were the basis for the qualification of my opinion on the 2001-02 Accounts and is progressing the remaining issue as fast as it can."

However, Sir John reported that he was unable to confirm the accuracy of some £1.1 billion adjustments to operating costs relating to movements in RAF consumable stock and capital spares.

Concluding that this was "because the MOD had many old stock management systems that are not entirely suited to producing accruals based financial information".

(SP)