SubscribeThis articles content includes: The Ministry of Defence’s non-combat vehicle fleet, how the MoD runs 14,000 non-combat vehicles, why it lets its fleet provider call some of the shots, amd what can businesses learn from the MoD approach?
The Ministry of Defence employs 304,000 people across the Royal Navy, Army and RAF. The range of jobs carried out by MoD armed forces and civilian personnel are probably the most diverse of any organisation in the UK. That means their fleet is also the most diverse - not just Challenger 2 tanks, Land Rovers, nuclear subs and Tornado aircraft, but also, for instance, mobile dental surgeries to treat returning sailors at the dockside, mountain rescue vehicles for downed RAF pilots on training exercises, staff cars for senior officers, water tankers, passenger cars, motorbikes ...
So getting the right vehicle to the right people at the right time is no simple task. Then there's getting it to the right place. As well as its UK-based staff, MoD personnel are currently deployed in Sierra Leone, the Gulf, the Balkans, Afganistan, Cyprus, Georgia, the Democratic Republic of the Congo, East Timor, Germany, Gibraltar and the Falkland Islands. The MoD, therefore, is highly skilled in the logistics of complex fleet management. Which makes what follows all the more remarkable.
One's green, the other's white
The MoD has two vehicle fleets: the combat fleet, which it calls the Green Fleet; and the non-combat fleet, or White Fleet, which comprises 14,000 vehicles. The combat fleet is purchased outright, usually direct from the manufacturers, and any vehicle modifications are normally made before delivery.
The MoD also used to purchase all of its White Fleet vehicles, maintain them itself and manage all aspects of the fleet internally. In 2001 that changed dramatically.
Now the 14,000-strong White Fleet is hired from a single supplier, who is responsible for all maintenance, management reporting, accident management and for recommending improvements to efficiency. It is the largest contract hire deal in the UK.
When the MoD needs a vehicle, it gives the supplier a basic brief - say, mid-sized five-door car with a minimum of luggage capacity of X cubic metres - and the supplier chooses the make and model. The supplier is also free to replace a vehicle early if it chooses (typical contracts for cars are five years/100,000 miles, 10 years/200,000 miles for bigger, more specialist vehicles). In addition to supplying permanent vehicles, the supplier provides short-term hire vehicles for the White Fleet; the MoD books over 250,000 of these each year.
The benefits of outsourcing
This is outsourcing on a massive scale by any standards, but made all the more interesting because of the MoD's own considerable expertise in this area. The decision to outsourcing came about through the government's Private Finance Initiative, whereby the public sector works more closely with the private sector to improve efficiency and reduce costs. After tendering, the 10-year, £600 million, White Fleet contract was awarded to Lex Defence, which through other organisations in the RAC plc group, also provides additional support to the Armed Forces, such as supplying parts for the Army's Challenger 2 tank and fleet management software solutions.So has outsourcing been a good move?
It is certainly saving the MoD money. Cost savings for the last financial year were being calculated as we went to press, but a senior MoD official within the White Fleet said the figure was expected to run into five, perhaps even six figures. By going to a specialist in the field like Lex Defence, there have been significant reductions in risk taken on by the MoD, as well as improvements to cost, administration time, efficiencies of operation and fleet management, and so on.
The arrangement requires considerable trust between the MoD and its supplier, and the contract between the two parties is complex. But this outsourcing agreement on a huge scale is already paying dividends all round, and further improvements are expected before the contract comes up for renewal in 2011. For businesses who are contemplating involving a third party to provide and manage their fleet, it makes an interesting case study.
Not a lot of people know that
- Virtually all of the MoD's Green and White Fleet vehicles are diesel. Fifty-three per cent of its White Fleet are cars, the remainder specialist and commercial vehicles.
- White Fleet vehicles go into war zones only in exceptional circumstances. However, during Operation Telic in the Gulf last year, the MoD and Lex Defence sent 30,000-litre White Fleet water tankers to Iraq, to support the Armed Forces in theatre and, later, to supply water to the civilian population.
- When UK-based Green Fleet vehicles are deployed overseas on large-scale operations, their vacated UK duties, such as patrolling military establishments , are performed by White Fleet vehicles.
- In addition to the White Fleet project, ALC Vehicles - a partnership between Lex Defence and Amey, has recently been selected for the MoD's 'C' Vehicles Private Finance Initiative (PFI) contract. This project is to manage the construction vehicles, plant and equipment used by the military for engineering projects and materials handling, and is worth more than £500 million over 15 years. The vehicles include earth moving tractors, excavators, engineering construction plant, and rough terrain mechanical handling equipment.
