[News] Statement on Defence Acquisition, 10 June 4.30pm (expected)

DOT

Old-Salt
#1
Note - This is an alert for upcoming business inside the Chamber of the House of Commons. We encourage debate and comments concerning the topic or content of the debate.

The statement will be streamed live on Parliament TV: Player

Statement: Defence Acquisition
Monday 10 June following the Urgent Question on Bilderberg and statement on GCHQ (Prism).

A statement will be given this afternoon by the Defence Minister - Mr Philip Hammond regarding Defence Acquisition.

To watch this statement live go to: Player

About Statements:
After Question Time (and any urgent questions that may have been allowed) a government minister may make an oral statement to the House. The statements usually relate to matters of policy or government actions. At the end of a statement MPs can respond or question the government minister on its contents.
 
#2
please note that the headline date for this thread was wrong (11th) - now corrected to the 10th.
 

DOT

Old-Salt
#3
This statement has just started within the Chamber of the House of Commons.
To watch it go to Parliament TV: Player

Transcripts of proceedings in the House of Commons Chamber are available three hours after they happen in Today's Commons debates - UK Parliament
 

DOT

Old-Salt
#4
This statement has just started within the Chamber of the House of Commons.
To watch it go to Parliament TV: Player

Transcripts of proceedings in the House of Commons Chamber are available three hours after they happen in Today's Commons debates - UK Parliament
For those of you who did not catch the Statement in the Commons yesterday, we now have the updated links direct to the Minister's statement and follow-up questions from MPs:
Player

The transcript of the session is also available:
House of Commons Hansard Debates for 10 Jun 2013 (pt 0002)
 

DOT

Old-Salt
#5
Some of you may have watched the TV programme with General Wall where he discussed the impacts of further savings. The Defence Select Committee recently drafted a report discussing their conclusions and recommendations on Defence Acquisition. They received a response from the government 2 months later. The recommendations and response are included here for you to read and comment on if you wish.

The Committee's recommendations are in bold, the government's response is in plain text:

1. The decision in 2010 to change to the carrier variant of the Joint Strike Fighter was the largest single procurement decision in the SDSR. It is clear that the decision was rushed and based upon incomplete and inaccurate policy development. It was taken without the MoD understanding how the change could be implemented. Perhaps the primary example of how little the MoD understood about this decision is the fact that it was supposed to improve interoperability. This turned out to be incorrect. This decision ultimately led to increased costs to the carrier strike programme and a delay in the in-service date of the carrier. It could also be argued that it provided a rationale for the early decommissioning of the Harrier. We urge the MoD to learn the lessons of this closed, rushed and flawed decision of 2010. (Paragraph 15)

The Government notes the Committee's concern about the decision, as part of the 2010 Strategic Defence and Security Review (SDSR), to purchase the F-35C Carrier Variant (CV) of the Joint Strike Fighter (JSF) and to operate it from a ship fitted with catapults and arrestor gear, instead of the F-35B Short Take-Off Vertical Landing (STOVL) aircraft. The policy decision taken in the 2010 SDSR to purchase the CV JSF was right, based on the information available at the time. However, as the programme matured so did the information available. As the Committee would expect for such a complex and high-value project, the strategic decision taken in the SDSR was followed by the commissioning of a detailed programme of work to look at all aspects of the proposed solution, the Conversion Development Phase (CDP), including the technical and financial risks involved in fitting catapults and arrestor gear to the carriers.

During the 18 month CDP study a number of the underlying facts on which the CV decision was based changed. As the conversion programme matured and more detailed analysis was conducted by suppliers, it became clear that an operational carrier strike capability, using the catapults and arrestor gear system, could not be delivered until late 2023 at the earliest, considerably later than the date envisaged at the time of the SDSR of "around 2020".

The conversion was hugely complex and challenging and, as the scale of the complexity became clearer through discussion with the US, it was apparent that the original schedule would extend, in turn leading to increased cost. In total 480 compartments would be affected (from an initial estimate of 80). Furthermore, we could not use exactly the same equipment configurations as the US (4 catapult system) because of the smaller size of our carrier; we needed a UK specific system, using the same component parts as the US, but in a different configuration (e.g. fewer catapults and different power conversion software).

The estimated cost of fitting the catapults and arrestor gear equipment to HMS Prince of Wales more than doubled to around £2 billion, with no guarantee that it would not rise further. This cost growth would have had an unacceptable impact on the rest of the Equipment Plan, distorting the equipment budget. It would also have extended the time period when our Armed Forces would be without a carrier strike capability by at least 3 years.

Further work with our allies on the best approach to collaborative operations has satisfied the Ministry of Defence (MOD) that multinational maritime task groups with co-ordinated scheduling of maintenance and re-fit periods, and an emphasis on carrier availability, rather than cross-deck operations, is the more appropriate route to optimising our alliance operational capabilities.

When the facts changed, the responsible thing for the Government to do, however inconvenient, was to re-examine the decision that had already been made. The MOD is involved in hugely complex acquisition projects---unlike anything carried out elsewhere in Government. It is essential that MOD continuously reviews its decisions and is prepared to change them as and when appropriate. The decision to reverse the choice of F35C over F35B is an example of the Department's new found commitment to openness in the management of the Equipment Programme and willingness to make difficult decisions that are in Defence's best interests.

The Government's decision to withdraw the Harrier Force was not taken lightly, and was an example of the very difficult choices that had to be made to bring the Defence budget back into balance. The withdrawal of an aircraft type delivers greater savings than partial reductions, owing to the fixed costs associated with supporting an aircraft platform. Although the Government recognised that the Harrier was a flexible and capable aircraft that had served the nation well, it was determined that we should sustain the Tornado fleet since it was able to provide continuous support to operations in Afghanistan and concurrent operations, such as in Libya, and deliver critical weapons capability unavailable on other platforms. This followed the decision taken in 2009 to reduce the Harrier fleet to 32 aircraft, which meant it was impossible to sustain operations in Afghanistan, and maintain an adequate contingent capability for the unexpected, with just the Harrier. The Government accepted that this decision would create a gap in carrier strike capability until the end of the decade.

2. We note that the problems leading to the overheating of the defence budget have been identified and the expressed willingness of the parties to address them. We shall be monitoring progress on this. (Paragraph 21)

The Committee's desire to monitor progress on the maintenance of a balanced budget is noted, and the MOD will assist as appropriate.

3. We sympathise with the impatience of the defence industries in the face of the slow timescale for producing promised information and urge the MoD to accelerate the publication of further material to flesh out the bones of the White Paper. The Equipment Plan should be published as a matter of urgency without awaiting any NAO input or commentary. (Paragraph 28 )

The MOD Equipment Plan was published on 31 January 2013, and was accompanied by a NAO report. It was appropriate to wait for the accompanying NAO report to increase public and industry confidence in the deliverability of the Plan.

4. We believe that the absence of a defence industrial strategy which supports appropriate national sovereignty puts the UK at a disadvantage against competitor countries. Furthermore, we do not understand how we can have confidence in a national security strategy which does not show a clear grasp of what is needed for the defence of the United Kingdom, and how this can be ensured. We recommend that the Government reconsider the wisdom of not having a defence industrial strategy. (Paragraph 41)

The Government rejects the Committee's conclusion that the UK lacks a defence industrial strategy. The National Security through Technology White Paper, published in February 2012, replaced the Defence Industrial Strategy (DIS) 2005 and Defence Technology Strategy 2006, and sets out our approach to purchasing equipment, support and technology for the UK Armed Forces.

Nor do we agree that the White Paper's approach puts the UK at a disadvantage against competitor countries. As the White Paper makes clear, we will work to enable UK-based industry to be sufficiently competitive to provide best value for money in meeting our defence and security needs and to export successfully, but also to protect our technology advantage where this is essential for national security.

The National Security Strategy sets out the national security 'ends' for the UK; the 2010 SDSR outlines the 'means' we require to deliver them and the White Paper articulates the 'ways' in which we will acquire them. There is therefore a clear link between what is needed for the Defence of the UK and how this is delivered.

5. The White Paper accepts that there are some capabilities possessed by defence suppliers that are critical to our national sovereignty and must be protected on-shore. We expect the MoD to be clear about the capabilities that fall into this category and to have a clear sustainability plan developed with UK industry. (Paragraph 45)

The Government agrees about the importance of identifying those capabilities which underpin our freedom of action and operational advantages. In National Security through Technology, we commit to protecting these capabilities and describe the four broad cases in which an exception to our commitment to the principle of open procurement is most likely to apply:


  • Where a capability is by its nature fundamental to our freedom of action as a nation - the leading example is secure information and communications transfer at a national level.
  • Where the fulfilment of our requirement, or the operation of the resulting capability, is heavily dependent upon a supplier having access to highly classified intelligence information or technologies. The weapons and propulsion systems for the UK's nuclear deterrent are the leading example of this.
  • Where operational circumstances mandate changes to an in-service capability that can only be met by having an assured ability to respond—particularly in terms of technical expertise and knowledge—at the highest levels of speed and agility. Electronic warfare and associated defensive aids, or responding to cyber security threats would be examples.
  • Where the nature of the UK's potential operational advantage when using a particular capability means we need the highest confidence in one or more aspects of its performance. For this, we need to be an intelligent customer across a number of dimensions. Aspects of complex weapons are an example.
This approach forms part of the MOD's capability management guidance and acquisition operating framework.

We consider it more sensible to describe the principles of our approach than to produce a list of capabilities that we will protect, given that this is a dynamic environment: requirements change; resource constraints vary; threats and technologies emerge and dissipate; opportunities to work with allies develop; there is rapid technological innovation; and changes occur in the supply chain with an increasingly global distribution of manufacturing.

Our intent in National Security through Technology is to be as precise as is practicable in defining our operational advantage and freedom of action requirements, early in the acquisition process. This enables us to maximise the value for money for defence which can be derived from open procurement while allowing us to focus scarce resources on protecting those aspects of capability which really are essential to national security. How we choose to protect these capabilities will always involve a balance of risk and innovative thinking about the most cost effective approach to maintaining those elements (for instance, working with Allies, sharing military capabilities, and entering arrangements to ensure appropriate levels of technology sharing and security of supply).

These judgements are concerned not only with 'where' a particular capability is built, but also about 'how' it is used and what level of knowledge is required to meet our operational advantage and freedom of action requirements.

6. We recommend that the MoD work with industry and other Government Departments to ensure that where it is appropriate to use open standards these should be consistent, widely publicised and promoted as a matter of course. (Paragraph 53)

The Government is committed to the use of open standards where these are available and appropriate to the application. TheNational Security Through Technology White Paper commits MOD to greater use of open architectures in our capability development. This will allow the MOD to maximise the use of open competition and create more scope for in service upgrades and ease interoperability with new capabilities. This is reinforced by the MOD policy (JSP 906 'Design Principles for the Acquisition of Capability') that requires solutions to 'be designed with open standards in a manner that is not detrimental to security, innovation and operational superiority'. The 2013 Defence Strategic Direction requires these principles to be promoted in order to 'maximise agility and effective management of dependencies'. An MOD team is tasked with further developing and embedding the use of open standards as part of the Systems of Systems Approach (SOSA).

Where open standards are applied, the MOD has a preference for international, commercial standards for the reasons cited by 'Intellect' in the Committee's report. There are numerous examples of this approach, such as the specification of Internet Protocol for MOD Information Systems. Where international and commercial open standards are not available, the MOD has developed bespoke standards such as the Generic Vehicle Architecture Defence Standard 23-09, which is an application of SOSA. In developing such standards, the approach taken is to encourage industry to develop and use the standard and to work with NATO and other nations to seek broader adoption.

7. We recommend that the Department reviews and benchmarks itself against the US 'Fast, Inexpensive, Simple and Tiny' initiative. (Paragraph 58 )

The potential for de-risking high-technology complex MOD projects through 'incremental / evolutionary / spiral acquisition' was highlighted in the 2009 Gray Report. MOD policy (JSP 906 'Design Principles for the Acquisition of Capability') is for solutions 'of modular design … responsive to changes in acquisition and operations' and that 'where possible, solutions will be Off the Shelf (OTS)'. There are examples, such as the Land Open Systems Architecture, in which open systems are required in order to achieve evolutionary, modular acquisition and agility. However, these principles are not universally applicable in the MOD, particularly in large programmes.

The MOD has undertaken to use a SOSA for capability acquisition, based on the application of JSP 906 principles. The promotion of this approach is required by Defence Strategic Direction 2013 and is being set as a foundation of capability acquisition and management through Defence Transformation. Broad application of these principles will lead to greater use of modularity, re-use of proven solutions (including OTS) and evolutionary acquisition.

The MOD SOSA team is exploring the "Fast, Inexpensive, Simple and Tiny" (FIST) initiative with the US Department of Defence. If appropriate, we will formally review and benchmark MOD acquisition against FIST during the 2013/2014 financial year.

8. While we commend the Government's commitment to encouraging defence exports it is clear that the playing field is not level. We recommend that the Government keep under review the reciprocation by other countries of the UK's commitment to open procurement. If it transpires that others are not prepared to give to UK industry the opportunities the UK gives to theirs, it might become necessary for the Government to reduce its open procurement. (Paragraph 68 )

While the Government continues to make the case for more open markets generally, our policy on open global competition is driven essentially by our requirement to ensure our armed forces have the best war-fighting capability delivered at greatest value for money. Similarly, we consider this the best way of ensuring our defence industry is best placed to compete globally. That said, the UK is committed to working continually with our European and US allies in particular to consider ways in which we can cooperate to facilitate more open procurement.

European Union Engagement

In the EU we continue to support efforts to open up the defence market to more competition including through proper implementation of the Defence and Security Procurement Directive (Directive 2009/81/EC). We would expect this in time to eliminate economically driven "buy national" policies in the defence market, while respecting Member States' right to maintain certain strategic industrial capabilities for reasons of national security.

If a UK supplier believed it was discriminated against in a procurement procedure it has the right to mount a legal challenge against the procurement decision. Directive 2009/81/EC provides a number of remedies that could, for example, result in the procurement being stopped and opened up to fair competition. An aggrieved supplier also has the option of complaining to the European Commission, which we would expect to investigate any such complaint.

UK/US Engagement

In the case of the US, while the issues are somewhat different, not least through our privileged access to US technology which benefits our Armed Forces and industry, we continue to promote UK industry's access to the US market, including through the recently adopted UK/US Defence Trade Cooperation Treaty. This Treaty removes the need for US International Traffic in Arms Regulations (ITAR) export licenses for certain technologies (that are not listed as exempt) destined for a US or UK government end-use that is within the scope of the Treaty (combined operations, cooperative programmes or defined Government projects). As a result, the Treaty generates potential opportunities for those members of UK Industry that are part of the Treaty's Approved Community to solicit for US Department of Defence contracts that have been declared as within scope of the Treaty.

9. The overriding reason for the purchase of any item of defence equipment must be its quality and the requirements of the Armed Forces. We consider nonetheless that the Government should take into account in buying equipment the enhanced opportunities for export of equipment in use by UK armed forces. Defence equipment sales carried out within all the constraints of national and international law bring with them significant benefits to the UK in terms of employment opportunities, economies of scale and enhancement of influence. (Paragraph 69)

The Government welcomes the Committee's acknowledgement that the principal reason for buying any kind of defence equipment has to be its quality and the requirements of the Armed Forces. That said, the Government values highly the important role of defence and security exports in strengthening the UK economy and is clear in its commitment to promoting them overseas. The MOD strongly supports exportability, including by creating opportunities for export potential to be built early into its own equipment and support requirements. The advantages of responsible defence exports are laid out clearly in the National Security Through Technology White Paper published in February 2012, which states that exports can:


  • be in the national interest;
  • enhance bilateral relationships;
  • build capability amongst friends and allies;
  • increase their capacity to contribute to regional and international security;
  • reduce the cost of programmes to defence; and
  • increase the long-term viability of our suppliers[1].
However, procurement in the defence and security areas is fundamentally different from other forms of procurement, so we will also take action to protect the UK's operational advantages and freedom of action, but only where this is essential for our national security.

10. Defence Equipment and Support should be directed to take account of tax revenues when conducting investment appraisals and this should form part of a rounded government decision-making process. (Paragraph 70)

The Government does not agree. The interdependencies in a large, open economy like that of the UK are far too complex for our best interests to be served by such a narrow focus. Moreover, there is the possibility that such direction could be open to legal challenge, on grounds of discrimination, by EU or other foreign-registered suppliers. The MOD's primary aim, and for which it is financed, is to provide our Armed Forces with the best capabilities we can afford, and in doing so, to obtain the best possible value-for-money. Given our focus is to deliver defence capabilities as efficiently as possible we do not consider the tax revenues the exchequer receives within our investment appraisal process. Nonetheless, the MOD spends a significant amount of resources with UK industry, in the region of £20 billion per annum, sustaining many highly skilled jobs, and thus supporting the generation of significant revenue for the UK exchequer.

11. We believe that the UK strategy for defence acquisition should be based on a coherent level of commitment to a requirement for an ability to act nationally, to an understanding of where a level of mutual interdependence or partnership is acceptable, and where the risks of dependence on the US are acceptable to our national interest. A government with the ambition for the UK to retain its status as a major international power enjoying considerable operational sovereignty should address these issues in that order. (Paragraph 77)

The 2010 SDSR recognised that we need a balanced and adaptable Armed Forces in order to meet the broad range of risks and threats we may face in the future at home and abroad. It also recognised that, internationally, the UK rarely acts alone and that alliances and partnerships would remain a fundamental part of our approach to defence and security. However, there are a few scenarios in which the UK might need to act alone or with a more limited number of allies and partners. This judgement was reflected in the decisions that the SDSR made about the capabilities that Future Force 2020 would require. The Committee is therefore right both to stress the importance of the UK retaining the ability to act nationally when required, and to highlight the benefits that interdependence and partnerships can bring when interests are aligned.

These principles are embedded within the National Security Through Technology White Paper, which sets out our approach to fulfilling the UK's defence and security requirements, and the circumstances where we will protect independent UK capabilities. Judgements about what constitutes operational advantage and freedom of action will, by definition, need to take into account the level to which the UK needs to be able to act nationally, or where dependence upon others, including the US, may be acceptable.

12. We recommend that when entering into contracts, the MoD pays due regard to the need to effectively understand and manage risks originating with private sector partners and in the supply chain, especially the practicality of the placement of civilians, and in particular civilians who are non-UK nationals, into harm's way. (Paragraph 85)

The Government takes its responsibilities towards contractors' employees very seriously, whether they are engaged on routine duties or within an operational environment. It is also recognised that the use of contractor support is an enduring element of today's operations and a key element of the National Security Through Technology White Paper; indeed there are just under 6,000 contractors in Afghanistan directly supporting UK Armed Forces. Policy and procedures for Contractor Support to Operations (CSO) is contained in Joint Service Publication (JSP) 567 that also incorporates Sponsored Reserves and Private Security Companies. The JSP seeks to provide common guidance to Contract Sponsors considering the use of CSO.

Considerable further detail is contained in Defence Standard 05-129 (Contractors on Deployed Operations—CONDO) which covers operational processes and Defence Condition 697 which provides detailed contractual guidance. A detailed examination of CSO was carried out in March 2010 and enhancements have been made in terms of governance, compliance and assurance. This work was overseen by the CSO sub-group of the Defence Suppliers Forum. CSO policy is under constant review in order to best meet the needs of the community and further, iterative changes to the CSO system can be expected.

The Government acknowledges that it is not always possible to transfer to industry the risk of overall project success. This is particularly true in projects where there is a high degree of risk, complexity and/or financial exposure, including those contributing to the success of deployed operations. The MOD already provides a range of indemnities to industry (e.g. war, nuclear, aircraft flight and taxiing trials, shipbuilding) where it has been determined that it is either not practical, or value for money, for industry to bear the financial consequences of specified risks impacting.

However, transferring to industry those project and financial risks over which it has control contributes to project success by incentivising the contractor to play an active part in assessing and mitigating those risks. In all cases, the allocation of risks and financial liabilities are set out and agreed with industry in the contract. This ensures that contractors have the opportunity to understand and accept those risks and to price and manage them appropriately.

The MOD continues to work together with industry, both directly with suppliers and through the major Trade Associations, to better understand the risks associated with CSO and how they might best be apportioned and mitigated to deliver operational success.

Prior to developing a contract requirement which may require CSO, the MOD carries out a risk assessment and investment appraisal to determine the type of Contractor support appropriate to the task. Where this indicates the task can be delivered by civilian CONDO, the MOD maintains a contingency plan which can be implemented should the risk/threat situation change and civilian support becomes unsustainable. The contractor retains a duty of care to its employees and is responsible for conducting and maintaining its own in-theatre risk assessment which is supported by MOD information wherever possible. Because the MOD maintains its own contingency plans, where an adverse risk assessment provides sufficient justification for the contractor to decline or withdraw from a task, MOD permits them to do so without contractual sanctions. Operational experience to date has shown how resilient contractors are, and MOD has not experienced a contractor declining or withdrawing from a task.

Where an operational environment is assessed to be higher risk or the contracted service is critical to operational success and needs a level of certainty greater than civilian contractor support can provide, the MOD will contract for Sponsored Reserves. Under the Reserve Forces Act, Sponsored Reserves are contractor employees who have a legal obligation to train, respond to call-out, don military uniform and activate. Once activated, they come under military command and control, rather than that of their civilian employer, and must obey orders to deliver operational objectives, even if this puts them into harm's way. The MOD provides Sponsored Reserves with the training necessary for them to effectively carry out the military aspects of the contracted task.

13. We recommend, therefore, that the MoD, industry and the Treasury develop collaborative behaviours and methodologies for delineating the competitive and collaborative phases of defence acquisition. This should overtly identify and manage risks where they arise and as they are identified so that less emphasis is placed on the, sometimes flawed, concept of risk transfer. We also note that the movement of personnel, especially at the senior level, can be effective for defence, but recommend the promotion of a culture of overt openness, visibility and transparency so that public confidence in defence leaders does not wane. (Paragraph 94)

The Government agrees that it is important to build collaborative behaviours and methodologies, especially to achieve effective risk management, and it recognises that collaborative working with our industry partners delivers wider joint benefits. The Department's commitment was demonstrated by its engagement in 2010, alongside industry partners, in the design and establishment of a British Standard 11000 that encourages and builds high performing collaborative business relationships. These best practice BS11000 principles are being used by the MOD to improve partnering relationships with industry by sharing knowledge, skills and resources to deliver improved performance.

The MOD requires all large projects to fully consider partnering as a procurement option. If partnering is decided upon, then the MOD requests and evaluates evidence relating to the bidders' partnering approach to ensure that the MOD can work effectively with the selected partner. During this procurement process the MOD identifies, evaluates and selects partners based on key criteria, that includes their approach to joint risk management and corporate attitude to collaboration.

As the relationship matures all parties establish, document and manage a joint risk management approach, creating an environment where risk is managed effectively to achieve the joint objectives of the organisations involved. This will include transferring to industry those project and financial risks where industry is best positioned to manage them. In all cases, the allocation of risks and financial liabilities is set out and agreed with the supplier in the contract. This ensures that suppliers have the opportunity to fully understand the risks involved, so they are better able to price and manage them.

The Department's collaboration successes using BS11000 include:


  • MOD Logistic Network Enabled Capability and BOEING UK (BDUK) joint BS11000 accreditation. An 11-year contract between the MOD and BDUK, which will sustain, integrate and develop the MOD's Logistic Information Services.
  • The Defence Information Services Team Architecture Design Authority and Microsoft which have also achieved accreditation to the standard. This supports the management of the long term relationship and contract with Microsoft to provide lifecycle support for Microsoft products deployed by the MOD.
The work of the MOD in supporting partnering and collaboration has been commended by industry, including Microsoft and Boeing, and by the Institute of Collaborative Working.

The Government agrees that it is in the public interest that those with experience in government should be able to move into business or other areas of public life. It is equally important that in the taking up of an appointment, the process is transparent and there is no cause for suspicion of impropriety. That is the purpose of the Business Appointments Rules issued by the Cabinet Office. These were revised and reissued in February 2011.

All Crown Servants, including Service staff and Civil Servants, are subject to the Business Appointments Rules. The Rules apply to all appointments within two years of leaving office or Crown service. For more junior appointments, these are administered within the MOD. For the most senior levels, the independent Advisory Committee on Business Appointments advises on applications. The Committee also advises on applications made by former Ministers and Special Advisers, at all levels.

In advising on an application, the MOD or the Committee considers the public interest in light of the Government's Rules and the law on restraint of trade. A range of specific conditions may be applied in relation to any appointment.

For the more senior appointments, once the individual has taken up the appointment, the Committee makes public the advice and any conditions imposed by publishing details on its website.

14. We recommend that the MoD include in its annual report and Accounts information about the number and value of contracts awarded to SMEs, by both the DE&S and prime contractors. (Paragraph 97)

It is not currently feasible for the MOD to produce figures for either direct or indirect spend with Small and Medium-Sized Enterprises to a level of reliability appropriate for the Annual Report and Accounts. We will contribute information that is available to cross-Government reporting.

15. We were told that the requirement to bear unlimited liability is a disincentive to SMEs to bid for Government contracts. We expect to be told in the response to this Report what action has been taken to ease this burden on business. (Paragraph 103)

Liability for actual loss due to breach of contract exists in law unless modified or limited by the specific terms of the contract. In MOD business, we do not have a general requirement for suppliers to bear unlimited liability but instead a requirement for any limit to liability to be justified on value for money grounds. The MOD can, and already does, agree limits of liability in cases where justified.

Neither the Sale of Goods Act, nor the Supply of Goods and Services Act, set a limit on a supplier's liability should they breach a contract. However, the fact that a contract does not set a limit on a supplier's liability does not mean that the quantum of his liability is unlimited. In the event that a supplier breaches a contact then the other party to the contract is entitled to claim damages, and if the breach is material to treat the contract as repudiated. The awarding of damages is not designed to punish the party in breach, but to compensate the injured party for his actual loss (which he has a duty to mitigate). The calculation of damages can be complex and very much dependant on the details of the specific case. However, there are two fundamental principles; the losses suffered by the victim must be caused by the defendant and not be too remote. In practice, therefore, damages are likely to be limited to those losses reasonably foreseeable by the defendant.

Except for certain circumstances (e.g. excluding or limiting liability for death or personal injury resulting from negligence) parties to a contract are allowed in law to seek to limit their liability under the contract. However, to prevent a limit potentially being struck out in court under the Unfair Contract Terms Act, the party seeking to limit their liability under a contract must demonstrate that it is reasonable to do so. Two key elements of demonstrating whether a limit is reasonable are; the resources available to the party for the purpose of meeting the liability should it arise, and the ability of the party to cover itself by insurance.

The MOD has engaged with a number of defence companies on this matter (including several Trade Associations representing SMEs on 26 June 2012). The MOD has used these events as an opportunity to explain the approvals process that HM Treasury require the MOD to follow before accepting a limitation to a supplier's liability that would result in a potential contingent liability to the Crown in excess of £250,000. These events have, without exception, been welcomed and well received by industry. The MOD policy and guidance in this area has undergone a major review and revision to make it easier to understand (for both MOD and industry) and this was issued on 1 April 2013. A series of briefing events and new training for MOD staff is being introduced. Briefing events will also be made available for all defence suppliers.


Continued on the next post
 

DOT

Old-Salt
#6
Continued:

16. We expect to learn in the response to this Report what the MoD is doing to encourage prime contractors to speed up the process of engaging with SMEs as potential suppliers. (Paragraph 105)

17. The emphasis placed on SMEs by the White Paper is welcome in principle, but more needs to be done in detail. It should not be to the detriment of larger concerns: both have a role to play, both singly and in combination. We look forward to learning what has been done to address the specific difficulties faced by SMEs. (Paragraph 106)

The Government agrees with the Committee that, since a large proportion, by spend, of its contracting is necessarily done with prime contractors who are not SMEs, its pursuit of the aspiration to increase the value of work throughout the supply chain going to SMEs must involve prime contractors.

This activity has to strike a careful balance with the principle of non-interference in the business procedures of our major suppliers and maintaining our prime goal of achieving best value for money in all of our commercial transactions. It would be illegal to discriminate positively in public procurement in favour of a particular market sector. Our intention is to understand better the current supply chain; to encourage regular refreshing of the participants in that supply chain; and to remind our suppliers of the benefits of optimising SME involvement.

We do not have any record of concerns having previously been raised with MOD about the length of time it takes for prime contractors to accept SMEs as accredited suppliers. We will engage with industry through the SME sub-group of the MOD Defence Suppliers Forum to understand the extent of any problem and what MOD can do to assist in resolving it.

Regarding activities to address specific challenges faced by SMEs, initiatives already adopted by the MOD include:


  • reducing by 75% (to £10,000) the threshold for advertising defence contract opportunities free of charge to the market;
  • using Central Government's new common core Pre-Qualification Questionnaire (PQQ), and minimising the use of PQQs for the low value requirements;
  • revising internal guidance to ensure that SMEs are not rejected at pre-qualification on the basis of rigid turnover-to-contract value ratios without proper assessment of companies' actual capacity and potential;
  • creating a dedicated SME group in the new Defence Suppliers Forum, chaired at Ministerial level, to provide a better 'voice' for small suppliers. It meets quarterly with participation from trade associations (such as ADS, NDI and FSB) as well as SMEs;
  • appointing an MOD SME Champion—the Defence Commercial Director;
  • through stronger interaction between the MOD Centre for Defence Enterprise (CDE) and the Small Business Research Initiative, targeting SMEs in supporting our priority requirements in innovative technologies;
  • using electronic procurement tools to roll out simplified, streamlined contract templates for lower value procurements, reducing the volume of paperwork and improving consistency;
  • expanding utilisation of our e-procurement system to speed-up invoicing and billing, which will particularly benefit SMEs, for which we recognise cash flow is critical;
  • other measures to help improve cash flow, including prompt payment and greater use of instalment payments;
  • adding 'SME awareness' as a new topic within the MOD's key procurement training programmes for senior acquisition decision-makers in project teams, including giving SMEs or their representative bodies the opportunity to present on the issues they face and counter any misconceptions about SMEs; and
  • developing new contract requirements for contractors to provide the MOD with more information about their supply-chain covering, for example, details of all sub-contractors (and whether they are an SME) and the value of work to be placed with each sub-contractor;
These measures will also benefit larger companies with staff numbers or turnover/asset levels above the SME definition.

18. It is important that spending by the MoD on defence Science and Technology is increased. The reduction in this spending in recent years (even though it has now been halted), together with the emphasis on off-the-shelf procurement and open competition, offers a serious threat to the technical skills base, specifically though not exclusively to the defence skills base, within the United Kingdom. This in turn threatens the defence body of knowledge and may come to threaten the UK's ability to defend itself. (Paragraph 111)

The Government welcomes the importance the Committee attaches to continued investment in Science and Technology and the need for the Department to have access to advice to ensure it remains an intelligent customer. These are key points within the National Security through Technology White Paper, where the prioritisation of science and technology within the defence budget is recognised despite the difficult financial position.

The continued expansion of our Science and Technology engagements with other technical sectors through the Centre for Defence Enterprise and strategic arrangements with the Technology Strategy Board and Research Councils UK, provides efficient access to innovation from the UK supply base, and opens exploitation routes for these new suppliers into the defence sector.

19. We do not regard the Minister's suggestion that additional science and technology spending could be funded from the departmental unallocated provision as likely to be fulfilled, given the number of conflicting demands on this resource. There are two distinct but separate purposes to a Government funding research and development. Firstly, to provide our Armed Forces with the most up to date equipment, and secondly, to support indigenous military industrial capability. We believe that the UK Government should therefore commit to a target of 2% of MoD budget being spent on UK based R&D. (Paragraph 114)

In spite of budgetary constraints, the Government has committed to sustain investment in defence science and technology at a minimum of 1.2% of the defence budget. This investment is to access and deliver cutting edge technology into our future systems and equipment to provide operational advantage. We will focus this investment to achieve critical outcomes.

The commitment to sustain investment in science and technology at a minimum of 1.2% of the Defence Budget follows extensive work at the time of the Strategic Defence and Security Review and in development of National Security Through Technology. This sets out our priorities for science and technology and recognises that we risk losing important operational advantage and freedom of action in the future unless we invest in the right technologies now. The publication of the 10-year Equipment Plan, and a balanced defence budget, will enable industry to plan future investment with greater confidence.

20. We recommend also that, when the Government publishes its defence and security themes, it should provide sufficient guidance to industry to enable it to focus its research spending. (Paragraph 115)

The focus of defence and security investment in science and technology is clearly stated in National Security Through Technology to achieve six critical outcomes. Detail of both the balance of science and technology investment across these outcomes and the work-specific research required have been published, and discussed with potential suppliers at a national conference.

The MOD's future equipment programme has been published in the Equipment Plan enabling UK-based industry to focus its investment in technology and development work.

21. We recognise that there is a need for flexibility with defence capital expenditure and we look forward to receiving information on the results of the dialogue between MinDEST and the Treasury. (Paragraph 116)

The dialogue between the MOD and HM Treasury led to the budget exchange facility granted by HM Treasury in the 2012/13 financial year, which we welcome.

22. We accept that the decision on the future of DE&S, while urgent, is too important to be rushed. It is clear that a GoCo is not universally accepted as the best way forward, and that there are particular concerns about how the MoD's overall responsibility for acquisition could be maintained within a GoCo. In particular, we believe problems might arise if a non-UK company were given responsibility for UK defence acquisition. We further believe it is vital that consultations are satisfactorily concluded with allies, to ensure that there is no adverse impact on co-operation, before any proposals are implemented. We expect to be given more detail about the GoCo proposals once the further inquiries requested by the Secretary of State have been concluded and before any decision is taken. Much of this will depend on the detail of what is proposed—and on the other possibilities of dealing with the constraints currently experienced by DE&S. (Paragraph 133)

The Government welcomes the Committee's agreement that the current constraints on Defence Equipment & Support (DE&S) are hampering its ability to operate effectively. We concur, and are moving forward as quickly as possible to find a better solution that will ensure the best possible result for the Armed Forces, the MOD, and the taxpayer. As we announced on 25 April 2013, the Matériel Strategy programme has now moved forward into the assessment phase, which we expect to last about a year. This will compare two options; a GOCO and public sector comparator, known as 'DE&S+'. This will allow us to make a true comparison between the two options and make a final decision about the future of DE&S, which is expected in summer 2014.

The imperative for making changes to DE&S is to deliver best value equipment, service and support to the Armed Services when it is needed; this objective has not changed. Under a GOCO model, the MOD would, in any case, remain responsible (as now) for deciding what should be bought and when. The GOCO would manage the delivery of defence equipment procurement, support and logistics. This would involve the provision of accurate information to MOD to enable the MOD to construct a robust and affordable Equipment Plan. The Secretary of State for Defence would continue to be accountable to Parliament for DE&S business under any GOCO arrangement, with the Permanent Under Secretary acting as the Accounting Officer for the associated expenditure. The accountabilities, limits of responsibility and associated governance of the GOCO would be defined in the contract.

Any company engaged in the management of DE&S would have to demonstrate to the satisfaction of the MOD that it is free from conflicts of interest. The policy on conflicts of interest, which is being developed in advance of any commercial process, includes consideration of national security issues.

As the Committee would expect, we are working closely with our international partners to assess any impact of potential changes and will continue to do so.

We will, of course, also continue to keep the Committee and Parliament updated on progress as the Matériel Strategy programme develops through the assessment phase.

23. We recommend that, in order to recruit and retain particular staff with the requisite skills and experience, the MoD urgently develop and bring forward proposals for making the terms and conditions of civil servants and uniformed staff at DE&S more flexible pending the full implementation of the Defence Matériel Strategy. (Paragraph 136)

The Government agrees that it is important to recruit and retain staff with requisite skills and experience. As the Committee's report notes, the MOD may not simply re-engage Service staff who complete their careers in the Armed Forces as Civil Servants. The fundamental reason for this is the long-standing principle, now enshrined in the Constitutional Reform and Governance Act 2010, that entry to the Civil Service must be through fair and open competition, except in circumstances where the Civil Service Commissioners decide to authorise exceptions in the interests of the Civil Service.

In many cases, the skills of former Service staff may often be of high value to DE&S, and competition with other employers for those skills significant. The MOD is taking action on two fronts to improve its ability to retain former Service staff whose skills it needs. First, DE&S is managing a coordinated recruitment campaign so that recruitment needs are foreseen and planned ahead, enabling competitions to be held in good time to minimise the chances of delay. Secondly, the MOD has sought agreement from the Civil Service Commissioners for a limited exception from the requirement for fair and open competition to enable a defined number of former Service staff with the most important specialist skills to join the MOD through an internal rather than a full open competition. The Commissioners have not agreed to make such an exception, but are working with the MOD to identify a number of routes through which former military staff with key skills may transfer without competition within existing principles, including cases where tasks are transferring from military to civilian staff, and the use of short-term non-competitive appointments. The case for a wider exception will continue to be explored as part of the assessment of options for the future DE&S under the Matériel Strategy.

24. We realise that the staff reductions required of DE&S are likely to necessitate either outsourcing or reduced output or both. We expect to be informed in detail of what has been decided. Nonetheless, we commend Bernard Gray on his determination to optimise the new structure and ensure that safety should not be put at risk. (Paragraph 140)

In order to ensure that safety is not compromised in managing our staff reductions, we have conducted an intensive exercise to identify all those positions critical to safety ensuring that the highest priority is placed on filling them with suitable, qualified people.

25. We commend the government's plans to bring together military capability and finance branches as an important way of shortening and simplifying decision-making. We also commend the decision to rebuild the MoD's Cost Assurance and Analysis Service, whose function is to enable the MoD to make better value for money decisions through life, and we expect the work to continue. We expect to be updated on progress on these points. (Paragraph 145)

The Government welcomes the Committee's recognition of the way we are implementing Lord Levene's Defence Reform proposals. The New Operating Model, including the empowerment of the Commands and Top Level Budgets, stood up on 1 April 2013. A detailed description of the operating model, which sets out in detail how it works to deliver delegated responsibility for the generation of capability and creates the right structures and business processes to ensure accountabilities and risk are balanced is published at:

https://www.gov.uk/government/publications/the-new-operating-model-how-defence-works.

26. We commend the MoD on the creation of the Major Projects Review Board as a review and monitoring mechanism. (Paragraph 151)

The Government welcomes the Committee's endorsement of the role of the Major Projects Review Board (MPRB). The MPRB was established in June 2011 and has met quarterly, reviewing a number of acquisition projects.

27. We accept that not every threat can be predicted, and that therefore some system for urgent procurement will remain necessary. We recommend that further work be done to align the main equipment programme with the UOR system, to establish how the speed and other benefits of the UOR system can be imported into the main equipment programme. One method might be to consider and learn from the 'FIST' (Fast, Inexpensive, Simple and Tiny) process about to be considered by the US Government. (Paragraph 160)

The Government acknowledges the need for an enduring system for responding to unforeseen and urgent capability requirements and that further work should be done to establish how the benefits of the Urgent Operational Requirement (UOR) system, which is an efficient means of providing an equipment solution to a capability gap in a short timeframe, may be applied to the main equipment programme. The MOD has recognised this before and has committed, through the National Security Through Technology White Paper, to flexibility and agility in upgrading capability incrementally.

However, as the Committee's report identifies, there are pros and cons to the UOR system which must taken into consideration. The UOR system is designed to deliver the speed and flexibility necessary to respond to particular operational environments and emerging threats. UORs seek to provide solutions which are 'good enough, as fast as possible' and we will, where necessary, make compromises to ensure equipment gets out to an operational theatre as soon as possible. In practice this means that Time is the key driver, and that Performance and Cost, in addition to other lines of development such as training, support and infrastructure, are traded against the requirement. As a result, UORs tend to deliver a partial equipment solution quickly, but often at the expense of wider capability coherence.

The core equipment programme, which is necessarily more strategic, aims to trade Performance, Time and Cost in a more balanced way to get the best equipment solution, while meeting Government expectations regarding value for money and cost effectiveness. Experience suggests therefore that the UOR process, though faster, can be a more expensive and less effective way overall to buy equipment.

28. We note that some progress has been made on programme and project controls and applaud the Department's emphasis on costing, forecasting and the use of a broad range of performance indicators. However, it is unacceptable that major projects such as the A400M programme have slipped. Whilst it is still early days, this suggests that the Department's Major Projects Review Board is not performing especially well. We recommend, therefore, that Key Performance Indicators and communication protocols are reviewed to ensure that senior leaders receive early notice of project difficulties. (Paragraph 168 )

The Government welcomes the Committee's recognition of the progress made on programme and cost controls and its use of performance indicators. Since 2009 the MOD has used a project early warning system, known as Sentinel, which is designed to assist senior management in quantitatively assessing the overall health of its major projects based on a set of metrics. This has helped to indicate where the performance of major equipment projects is of concern and has proved to be an effective mechanism for driving improved project performance. The MOD continues to further improve its approach to performance management and will continue to develop Sentinel to exploit its full potential. The Sentinel scores for each major project are included and published regularly in the NAO's Major Projects Report.

The purpose of the MPRB is to review regularly the MOD's most significant projects and in particular those where performance against time, cost and key user requirements is at risk. Its aim is to ensure that projects remain within the performance, cost and time parameters agreed by the MOD Investment Approvals Committee and HM Treasury at the major investment decision point. The MPRB conducts thorough reviews and makes recommendations on several major projects each quarter. The outcome of its deliberations are not published, in order to protect commercial confidentialities and sensitivities and to ensure the continued provision of free and frank advice to Ministers.

The Government acknowledges the Committee's concern over the delays to A400M. An explanation of the project history, progress and reasons for the project delay have been provided in the Major Projects Report 2012, published by the National Audit Office:

Ministry of Defence – The Major Projects Report 2012 | National Audit Office

However the Department believes that the Committee's assertion that the MPRB process is not performing well on the basis of the slippage in this single project is unjustified. It should be noted that the delays on A400M emerged during 2009/10 and were reported in the Major Projects Report 2010. The MPRB was established in June 2011 and as no further problems were identified at that time on A400M, the MPRB has focused on other projects.

29. We note that there is acknowledged risk of single-Service stovepiping, with each Service looking only to its own needs without considering the programmes of the others, and acknowledge that the MoD is aware of this potential structural challenge to effective acquisition. We expect to be kept abreast of organisational mitigation plans to counter this tendency and would welcome examples of effective corporate intervention. (Paragraph 173)

Specialist military advice on military issues is deeply embedded in the new Defence Operating Model. The Head Office and the Command and Top Level Budget Headquarters will continue to be integrated military and civilian organisations. We have always recognised that its process, structures and embedding the required behaviours will need to mature over time. We therefore expect that we will want to make further adjustments to the model beyond its launch in April 2013, to reflect experience gained in operating it and bedding it down. That is likely to include further refinement of the new finance and military capability model, further development of the design of the interface with DE&S, aligned with the outcome of the Matériel Strategy programme, and longer term changes to the people model to reflect implementation of the New Employment Model for Service personnel, and Civil Service Reform for civilian staff. Progress will continue to be reported as appropriate against the MOD's Business Plan objectives, in the Annual Report and Accounts, in the Prime Ministers Annual Report to Parliament on the implementation of the National Security Strategy and the SDSR, and in Lord Levene's annual reports to the Secretary of State for Defence on implementation of his Defence Reform recommendations.

Empowerment of the Commands and Top Level Budgets under the new Operating Model operates within the wider context of the Strategy for Defence and Defence Strategic Direction set centrally by the Defence Board, which ensure that we have one coherent top-level strategic direction. The Strategy for Defence sets out how the long-term strategic direction established by the 2010 SDSR is implemented, outlines what we plan to achieve and how we intend to deliver that outcome. Defence Strategic Direction, which is classified, gives greater detail on how all of our objectives will be achieved. It provides the basis for the annual Defence Plan, which in turn provides coherent direction for the new Top Level Budget command plans which underpin the new Defence Operating Model by defining the Commands' and Top Level Budget organisations' outputs and activities. A fundamental part of the new Operating Model is that the Permanent Secretary, supported by the Chief of the Defence Staff on military outputs, will routinely be holding the seven Top Level Budget Holders[2] personally to account for the overall performance of their business and delivery of the outputs agreed in their Command Plans.

30. We commend the MoD's decision that in principle the terms of the Senior Responsible Owners of projects should be extended. We hope that this will include uniformed specialists, even though this may require changes to conventional military career patterns. We recommend that information on the average length of these terms be included in the Department's Annual Report. (Paragraph 175)

The MOD has long recognised the importance of stable tenure for Senior Responsible Owners (SROs). Since 2005, the MOD's formal policy and guidance has sought to ensure SROs remain in post either until the conclusion of a programme or—more usually given the lengthy timescales of many Defence programmes—until a distinct phase of the programme has been achieved. For the MOD's most significant programmes, SRO appointment letters highlight the expected milestones to be achieved during the post holder's planned tenure.

In practice, career events such as promotions or departures tend to interrupt SRO tenure. And extended postings for SROs can be difficult to sustain when career management policies more generally are based around regular moves involving shorter tour lengths, particularly for staff in senior posts. This issue was highlighted in Lord Levene's report on Defence Reform in 2011, which recommended that: "The Department should move to a model where most individuals stay in post for longer and the most senior civilian and military posts are held, as a rule, for 4 to 5 years."

For MOD civilian staff, it was agreed in June 2012 that the future model would be for Senior Civil Servants to stay in post for four to five years, with exceptions identified where relevant. These greater tour lengths are now being implemented and are taking effect as each new incumbent takes up post.

For military staff, the Levene recommendation is being taken forward as part of Defence Reform implementation, under the Joint Assured Model (JAM). This is seeking to align longer tour lengths with the needs of military career management and succession planning for the most senior military posts. Whilst this work continues, progress is being made on a case-by-case basis, with a number of recent appointments (ranging from OF5 up to 3-star) being made on 4-year terms.

Subject to completion of the JAM work, the expectation is that in future, MOD SROs should normally remain in post for four years and that there will be more effective linkage between SRO tenure and milestones to be achieved whilst in post. In the short term, a higher than usual turnover is expected as the MOD implements its new delegated Operating Model, with SROs changing as a consequence of responsibility for specific capability programmes moving from the MOD Head Office to the Front Line Commands.

31. It is important that emphasis on management skills in MoD is not allowed to sideline the contribution of military specialists, particularly now that the military, and indeed scientific, membership of the Defence Board has been reduced. (Paragraph 183)

32. We note also that reducing MoD staff, including DE&S staff while at the same time maintaining and improving the quality of the work carried out presents an intractable problem. The danger of a displacement of work from a reduced civilian staff to a reduced military staff would be unacceptable. Neither is it clear how the application of FIST and/or a new management construct for DE&S would provide any early alleviation of these problems. Particular consideration should therefore be given to both the pace and shape of civilian staff and military staff reduction, to avoid these problems and protect critical technical skill-sets. (Paragraph 184)

The Government recognises that the reduction to our military and civilian workforce carries risks to the business of defence, and that we must manage these very carefully. As we have set out previously to both the Defence and Public Accounts Committees, the three Services have well established and very detailed systems for planning for and managing the delivery of the skills required. We have been working hard to improve our ability to conduct strategic skills planning for our civilian workforce across defence. The Commands and Top Level Budget organisations also review very closely the skills and numbers of people they will need to deliver their outputs as part of the Annual Budget Cycle. From April 2013 the new Chief of Defence Personnel will also be driving forward the development of the Whole Force Concept to establish the optimal mix of military and civilian personnel for the future.

33. We recommend that the Department establish a clear knowledge of which equipment and support solutions are critical to national security and expect to be informed of the measures taken to secure supply. (Paragraph 188 )

As we explained in our response to Recommendation 5, we consider it more sensible to describe the principles of our approach to protecting independent equipment and support solutions for national security reasons, than to produce a list of capabilities that we will protect, given the dynamic environment in which we operate. Project teams are required to consider at the start of the procurement the importance of security of supply, notably the criticality of being able to use the goods or services without constraint to meeting our foreign and security commitments.

In support of this, the Defence and Security Procurement Directive sets out a non-exhaustive list of documents and commitments (e.g. export licence restrictions, providing additional supplies) that project teams may ask suppliers to include in tenders to reduce the risks to security of supply. Specifically, it addresses the need for a contracting authority to be assured that a supplier will be able fully to perform the contract in a range of unique defence circumstances. If the security of supply needs mean that we have to discriminate on the grounds of nationality or cannot treat all suppliers in the EU equally, then we have to apply an exemption such as Article 346 of the Treaty on the Functioning of the European Union.

In addition to ensuring security of supply is addressed fully in the commercial contract, there are a number of broader international agreements that build confidence in securing supply. These include in particular the UK/US Defence Trade Co-operation Treaty, the UK-France Defence and Security Co-operation Treaty and the Letter of Intent Framework Agreement, which is an international treaty signed by UK, France, Germany, Spain, Italy, and Sweden, and contains specific provisions covering security of supply. We also continue to support the European Defence Agency's efforts to improve confidence in security of supply across the EU, which should in turn support efforts to develop more cross border competition in the European defence market.

34. We recommend that when making acquisition decisions the MoD should explicitly bear in mind the need to preserve and regenerate the national skills base. (Paragraph 198 )

The Government partially agrees with the Committee. As we explained in our response to Recommendation 10, the MOD's primary interest is to provide our Armed Forces with the best capabilities we can afford, to enable them to protect the UK and to advance our interests, and in doing so, to obtain the best possible value-for-money. Whilst MOD does not consider wider employment, industrial or economic factors in its value for money assessments, we recognise that a skilled UK workforce is essential to delivering the capabilities we need, and that niche skills in industry are often critical to maintaining our operational advantage and freedom of action. Where this is the case—and the specialist skills associated with submarine design and manufacture are a good example—MOD acquisition decisions do take into account the extent to which those skills are available. However, increasingly these judgements are less concerned with 'where' the skills are based, and much more around 'how' we can access the skills and know-how in a timely way to design, develop, evaluate, support, maintain, and upgrade key systems and sub-systems to meet our operational advantage and freedom of action requirements.



[HR][/HR]1 The benefits are articulated in Section 5.2.1 of the White Paper, page 51.

2 The Chiefs of the Naval, General and Air Staffs, the Commander of the Joint Forces Command, the Chief of Defence Materiel, the Chief Executive of the Defence Infrastructure Organisation, and the Director General for Transformation and Corporate Strategy.



To read the full transcripts of the Committee's report and the government's response please go to the Defence Committee's webpages:


House of Commons - Defence Acquisition - Defence Committee

House of Commons - Defence Acquisition Government Response to the Committee's Seventh Report of Session 2012-13 - Defence Committee
 

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