MoD spent £140m on shelved plan

The Ministry of Defence (MoD) has admitted that the cost of a suspended project to create a single armed forces asset management system was £120m more than original estimates.

Development of the Defence Stores Management System (DSMS) was suspended in January due to pressure on resources.

In a written answer to a Parliamentary question last week, armed forces minister Andrew Ingram revealed that expenditure on DSMS was £140m, not £20m as the MoD originally claimed.

'The project was suspended on grounds of affordability at the time,' said Ingram. 'The requirement, including the continuing need for a deployed inventory management capability, will be addressed as part of a wider end-to-end review of the logistic process.'

DSMS is managed by the Defence Logistics Organisation (DLO), set up following the Strategic Defence Review in 1998 to reduce the MoD's £4.6bn purchasing and logistics budget by 20 per cent by 2005.

DSMS was expected to save the MoD £650m over 10 years. Its future is now under discussion and its continuation depends on the outcome of an MoD-wide review, due to be completed by spring next year.

'DSMS is on suspend and we are not in a position to say what will come of it,' said a DLO spokesman.

Shadow defence minister Keith Simpson says the project again raises the issue of the government's poor record on big IT projects.

'Until we get a grip of this it will be like flushing money down the loo. Equally I'm concerned the private sector frequently is unable to deliver,' he said.

The DLO selected IBM Global Services to lead a consortium of systems integrators, including KPMG and EDS, to implement DSMS.

The project would have provided a common inventory and logistics system for the Royal Air Force, Navy and Army covering 40,000 users.IBM declined to comment on DSMS but a spokesman says the company is 'fully supportive of the DLO's business plan execution'.