Suppliers complain of MoD order backlog

Ministry of Defence says it has processed 90 per cent of outstanding invoices following roll out of new end-to-end procurement system

The Ministry of Defence says it is close to resolving a backlog of unpaid supplier invoices caused by its introduction of a new procurement system.

Multiple IT suppliers CRN has spoken to have encountered payment issues with the MoD's Contracting, Purchasing and Finance (CP&F) system, which went live on 5 December following a short delay.

The new "end-to-end" system is designed to improve supplier interaction with the department and replaces the previous P2P system, which was managed by Capgemini.

Although the MoD warned that suppliers could face "minor disruption for up to two weeks" after the switchover, IT suppliers we have spoken to complained that they are still experiencing major issues with the system two-and-a-half months later.

One mid-sized IT supplier told us: "It doesn't seem to be working at the moment. There's a lack of orders flowing through the system. We've got a fair amount of bills outstanding, but there's a workaround we are exploring - they are aware of the issue."

The issue could have "formed a hole" in the balance sheet of smaller suppliers that have delivered a significant amount of goods to the MoD, the supplier said, but added that cashflow at his own firm was not an issue due to its scale.

In a statement to CRN, the MoD said it had processed 90 per cent of outstanding invoices and is dealing with "the last few", adding that it was confident any delays will be "resolved rapidly"

"The MoD is striving to rectify any issues urgently through a series of focused activity to ensure swift transaction processing," an MoD representative said.

"Suppliers have been contacted with information on how to resolve any problems."

With CP&F, all new contracts will be developed and managed electronically, with supplier support and guidance switching from Capgemini to the MoD Defence Business Service.

Since the start of the transition to CP&F, the MoD told us it has paid over £6bn to suppliers, with 83,000 invoices processed, and 24,000 requisitions and 23,000 purchase orders raised.

"Suppliers have been contacted with information on how to resolve any problems," the MoD added.

The MoD wants a quarter of defence spend - or about £4.9bn - to go through SMEs by 2020, up from 19.4 per cent in the last parliament.

"SMEs are a key part of the defence supply chain and we are committed to ensuring that we continue to support their important work," the MoD representative said.

"Now the new CP&F system has been implemented, business with the MoD will be far more efficient."