DPRTE 2016: Marking an Important Time for Defence

BiP DPRTE 2014After months of anticipation and build-up, Defence Procurement, Research, Technology & Exportability 2016 is finally upon us. MOD DCB features writer Paul Elliott takes a look at what is in store for attendees at DPRTE – the premier defence procurement event of the year.

It is an important time in defence procurement, and the mood among businesses across the defence acquisition supply chain is more upbeat now than it has perhaps been for a number of years.

Businesses have good reason to be positive on the back of the National Security Strategy and Strategic Defence and Security Review (SDSR) 2015, which commits the UK Government to spending £178 billion on defence equipment and support over the next decade; the Chancellor’s NATO pledge to spend two per cent of GDP on defence and security until 2020; the MOD’s ongoing Ten-Year Defence Equipment Plan 2012-2022; and the impressive work of the Defence Growth Partnership (DGP) initiative between government and the defence industry. Opportunities for businesses in the highly lucrative and nationally vital defence marketplace are not just growing, but set to grow even further.

Defence Procurement, Research, Technology & Exportability (DPRTE) 2016, taking place at the Motorpoint Arena in Cardiff on 16 March, is an event that ticks all the right boxes at just the right time. The defence procurement showcase, now in its fourth year, is designed to facilitate even stronger linkage and communication between the Ministry of Defence, its prime contractor community and the extended defence value chain.

With high-level keynote speakers in the conference hall, over 100 exhibitors on the floor and big-name industry partners both supporting the event and actively participating in the many dedicated training zones and special feature areas, DPRTE promises to be one of the most important defence shows of the year.

So, exactly what’s on offer at DPRTE 2016? The Defence Growth Partnership, first announced at Farnborough Air Show in 2012, is probably a good place to start. A key partnership between the UK Government and the British defence industry, DGP is jointly led by the Department for Business, Innovation and Skills (BIS) and industry, with the support of the MOD as the UK customer. It is endorsed by the Prime Minister, David Cameron.

DPRTE 2016 has also embraced the work of the partnership, with the UK Defence Solutions Centre (UKDSC) – a DGP initiative – featuring as an official event partner. UKDSC is a new organisation formed to respond to international customers’ needs for innovative and tailored world-class defence solutions. It is a world-first approach that brings together the best of business, academia, R&D and government in a collaborative endeavour to help grow the UK defence industry as a world-leading centre of innovation.

At the Research & Technology Knowledge Transfer Zone at DPRTE 2016, Paul Winstanley from UKDSC will present a session on the role of innovation in defence exports. This is a great opportunity to hear from the heart of this new organisation, which is set to play such an important role in boosting the work of the DGP.

Industry commitment to the partnership comes from the likes of DPRTE 2016 event partners ADS, Airbus, Babcock, BAE Systems, NDI and QinetiQ, so delegates can expect to hear a lot about the work of the DGP going forward.

Also heavily involved in the work of both DGP and UKDSC is UK Trade & Investment’s Defence & Security Organisation (UKTI DSO), which is supporting DPRTE 2016’s Export & Business Growth Knowledge Transfer Zone.

Delegates have the opportunity to interpret customer requirements, identify business opportunities and develop their marketing activities. It is this kind of open access to such a prominent defence trade organisation that makes DPRTE 2016 an invaluable opportunity for firms seeking to drive strong business growth in export markets.

Howard Gibbs, Head of the Small Business Unit (SBU) at UKTI DSO, will present a session on support for SMEs, while Arfan Chaudhry, Assistant Director, Americas and the Caribbean at UKTI DSO, will present on regional marketing, looking at home and overseas support. Other UKTI DSO supported sessions include Military Support for Defence and Security Exports, presented by Captain Mark Burgess of the Export Support Team; and a presentation on Media Awareness by Senior Press Officer Adam Thomas.

Other interesting sessions in the Export & Business Growth zone include Export Licensing Demystified, presented by Claire Harrison, Head of Business Awareness at the Export Control Organisation (ECO) in BIS; and an introduction to the Australian defence market presented by Brian Hickey from the Defence Materiel, Capability Acquisition and Sustainment Group (CASG) within the Australian Defence Staff London. Australia is a market of opportunity for UK businesses so those with the ambition to export there have the perfect opportunity to found out how at this session.

DPRTE is well known for its focus on innovation and technology, as a further look at the Research & Technology zone’s agenda confirms. The Defence Science and Technology Laboratory (Dstl), techUK and Cranfield University are all lending their support for the zone, just as they have in the past.

Presentations here include on how the UK defence R&D community can better align its priorities; agility in defence procurement; the US Department of Defense’s Foreign Comparative Testing programme; SBRI’s role in the defence sector; and innovation for defence and security, from the expert perspective of the MOD’s Centre for Defence Enterprise (CDE).

The ever-popular Buyer Excellence Zone makes a welcome return in DPRTE 2016. With the recent publication of the new UK Public Contracts Regulations 2015, the procurement process that all MOD buyers must follow has changed. There isn’t an area of defence procurement that is unaffected, including changes to the procedures, the OJEU proformas, advertising, timescales, selection and award criteria, terms and conditions and more.

One of the stand-out sessions in the Procurement & Supply Chain Knowledge Transfer Zone agenda focuses on the Defence Infrastructure Organisation’s (DIO) commercial strategic direction, presented by new DIO Commercial Director Sean Balmer. This session aims to provide delegates with an insight into the challenges and issues that DIO faces in the commercial arena and the strategy being formed to ensure that it is in a better place to manage these challenges in the future.

Other supply chain focused presentations will be delivered by Airbus, BT Defence, the Crown Commercial Service (CCS), Defence Cyber Protection Partnership (DCPP) and Royal United Services Institute (RUSI).

Arguably the main attraction at DPRTE 2016 is the Live Keynote Arena. Speaking are Tony Douglas, Chief Executive Officer, Defence Equipment and Support (DE&S); Steven Morgan, Commercial Director, MOD; Morag Stuart, Director Contract Management, Assurance and Controls, MOD; Mike Stone, Chief Digital and Information Officer, MOD ISS; Andrew Caldwell, Dstl; and Keynote Arena Chair Les Mosco, Chief Executive, Commercial Strategies and former MOD Commercial Director. It’s a strong list of speakers and the information they will share on the day should not be missed by delegates attending the event.

For more information visit the DPRTE website.

Changes to the procurement regulations: a decision that will keep Britain secure

Secretary of State for Defence The Rt Hon Philip Hammond MPNew proposals could save the taxpayer hundreds of millions of pounds by changing the rules governing how Ministry of Defence contracts are awarded. Here, MOD DCB outlines the main points contained within the Government’s recent Better Defence Acquisition White Paper.

New proposals have been announced that could save UK taxpayers hundreds of millions of pounds by changing the rules which regulate the award of Ministry of Defence contracts. The motion will see the creation of a new body to replace the existing Defence Equipment and Support (DE&S) organisation and the strengthening of the arrangements governing the procurement of equipment where the MOD is unable to source its requirement through open competition.

Set out by Defence Secretary Philip Hammond, the proposals to revise the single source procurement regulations form part of the Government’s newly published White Paper, Better Defence Acquisition. It is envisioned that the MOD will save up to £200 million a year by reforming its existing arrangements for defence equipment delivery, equipment support and logistics supply.

The White Paper outlines plans to establish a new, independent body to oversee contracts that are required to be awarded without competition, either because of specialist Armed Forces requirements or for national security reasons.

Mr Hammond said: “This White Paper represents another significant step in tackling the problems underlying defence procurement. I remain committed to driving structural and cultural change at DE&S to ensure that projects are delivered on time and on budget.”

Almost half of the money spent on defence equipment every year is awarded through single source procurement under a system that has been largely unchanged since 1968. The current rules have made it difficult for the taxpayer to obtain value for money because of a lack of transparency and competition in single source contracts, leading to unreasonable profits for suppliers. In 2011, the MOD asked Lord Currie to carry out a review into the system, which resulted in a new framework being recommended.

Following extensive consultation with industry, the MOD has decided to take forward Lord Currie’s recommendations and create a Single Source Regulations Office that would independently oversee a system to provide a fair profit for companies alongside incentives to bear down on costs.

The White Paper identifies the three root causes of the problems that have been experienced with the current system: an over-heated Equipment Programme; an unstable interface between those parts of the MOD which request equipment and support services and Defence Equipment & Support, which delivers them; and a lack of business capability in processes, tools and skills, including management freedoms.

Head of Defence Equipment and Support, Chief of Defence Materiel Bernard Gray, said: “Starting the legislative process now means we will be able to implement the chosen model as quickly as possible once a decision has been made about the future of DE&S.”

The MOD has recapitulated that its preferred approach to procurement is through open competition in the domestic and global market, as set out in the National Security Through Technology White Paper published in February 2012. However, defence equipment often requires advanced and specialist technology, which means procurement options can be limited to a single supplier to ensure the correct capability is acquired.

Single source procurement has averaged over £6 billion a year over the last five years, as stated in Better Defence Acquisition,and it is likely that it will remain a significant proportion of MOD procurement in the future.

Trade organisation ADS welcomed the MOD’s decision to opt for change, arguing that a strong focus should remain on sustainability.

Paul Everitt, Chief Executive of ADS, said: “We recognise that the priority for the MOD is to balance value for money while delivering the capability the Armed Forces require and we welcome initiatives to reform and improve processes.

“When it comes to procurement, the focus should be on the long-term sustainability of the UK’s defence capabilities. The Single Source Regulations Office is intended to provide more transparency between the defence industry and the MOD, offering an opportunity for better project management and greater efficiency. It is important that the new framework is developed in collaboration with all stakeholders, including industry, to deliver the confidence suppliers require when tendering for single source contracts and the best advantage to the taxpayer and the Armed Services.”

The MOD also released plans within Better Defence Acquisition to reform the Defence Equipment and Support procurement organisation following the July 2012 announcement by the Secretary of State for Defence that DE&S could potentially become a Government-Owned, Contractor-Operated (GOCO) entity.

Work undertaken to date suggests that the strategic case for DE&S to become a GOCO is stronger than that for other options within the Materiel Strategy programme, following a Value for Money assessment. This has led to a focus on developing and testing the GOCO option further and, in parallel, consideration of a second option which seeks to deliver the identified benefits of the GOCO model while remaining fully within the public sector, known as DE&S+.

The MOD is proposing to let a contract with a contracting entity to operate on behalf of the MOD a limited operating company to which certain services currently being provided by DE&S (the ‘deliverer’ role) would be transferred, together with the employees providing those services; and to provide and improve the MOD’s defence equipment, support and logistics acquisition services, enhancing business capabilities by introducing best-in-class processes, tools and skills, and controlling the management and operation of DE&S.

The contract would be managed by a governor function, which will sit within MOD Head Office.

The contracting entity’s core role (through the operating company) would be to act as the deliverer and to inform and deliver the equipment and logistic components of each of the MOD requester’s plans. The contracting entity and the operating company would also provide delivery performance and financial reporting, including input to Parliamentary reports. They are likely to continue to play a key role in contributing to pan-MOD standards, policies and strategies (eg with respect to equipment safety, commercial operations and supply chain management, including the strategic industrial landscape), but ownership of such standards, policies and strategies would be retained in the MOD.

Defence Secretary Philip Hammond said: “For decades, MOD has been at a disadvantage in commercial negotiations and reforming single source procurement will radically change how MOD conducts a high proportion of its business. The new independent body will deliver a more effective and efficient way of providing the specialist capabilities our Armed Forces need to keep the United Kingdom secure, and at the right price.”

For more information visit: www.gov.uk