Selecting Excellence: Clyde Commercial Framework sets billion-pound transformation in motion

The Defence Infrastructure Organisation (DIO) has announced a comprehensive £1.3 billion funding package to establish HM Naval Base Clyde as the new home of the Royal Navy’s contingent of hunter-killer submarines by 2020, and the future home of the forthcoming Dreadnought Class of nuclear deterrent submarines. 

Clearly, this will be a landmark transformation; one which promises to significantly boost the regional economy over the coming decade, and generate upwards of 1000 construction-related contracts in the process. But as the hunt for construction partners intensified, DIO took the radical step of revolutionising its selection process. 

Principally, the decision to shake things up was driven by two questions any procurement specialist worth their salt will have asked themselves. How do you choose between suppliers whose skills and experience are comparable, and how can you be sure that today’s construction partner will be capable of delivering a project on time and to budget ten years down the line? 

With these questions in mind, DIO’s commercial branch consulted with procurement specialists from Mott MacDonald and Jacobs to create its own bespoke approach; the Clyde Commercial Framework. Given the project’s considerable size, the team opted for a framework of multiple contracts rather than a single consolidated offering. This would give key stakeholders the opportunity to build long-term relationships while also encouraging a degree of competition between the three chosen construction partners. 

But for DIO, it quickly became clear that any one of the five prequalified companies could deliver the works from a purely technical standpoint. Instead, the differentiator became the people themselves, the relationships between them and their ability to work collaboratively. Behavioural experts were drafted in to observe and analyse interactions as part of a wider evaluation of each applicant. Workshops and interviews took place during which each bidder outlined their own approach to collaborative working and mapped out how they would go about implementing development objectives and plans. 

This criterion allowed DIO to form a fuller picture of each organisation’s working practices and, crucially, who they felt they would work best with over the course of a decade. The three chosen companies were VolkerStevin, Kier Graham Defence and Morgan Sindall, it was later announced. 

“We are thrilled to have been appointed to the DIO’s new Clyde Commercial Framework working in joint venture with Graham,” said Brian McQuade, Managing Director for Kier Construction in Scotland. 

“Kier was one of the first companies to sign the Armed Forces Corporate Covenant in 2013, putting it at the heart of its policy, and understanding the importance the construction industry plays in supporting the nation’s defence and security. Together we look forward to providing highquality buildings and infrastructure to HMNB Clyde, which will allow the Ministry of Defence to continue to carry out its vital operations effectively.” 

According to Gary Holmes, Regional Managing Director at Graham: “The DIO’s pioneering new approach to this major contract stresses the necessity for collaboration, transparency and trust. Securing our place on the framework in the face of major competitors is testimony to the seamless nature of the Kier Graham Defence partnership. 

“Together we understand the complexities of working within secure environments and this appointment underlines our expertise within the defence sector and builds on our combined success in delivering first-class projects throughout the UK.” 

The ten-year transformation will require each construction partner to take on a variety of project types, with values ranging from £10 million to £90 million. These could be standalone, new builds – accommodation or training facilities, for example – right the way through to complex refurbishments of nuclear infrastructure in high-security, operational areas. 

Ian Arbuckle, DIO Assistant Head of Commercial Services, added: “We are incredibly pleased to launch our new framework for the Clyde. We have successfully selected three reputable industry partners who have demonstrated a commitment to delivering better value for defence.” 

Already, preparatory work has begun. DIO recently oversaw the wholesale refurbishment of 34 Service homes in nearby Helensburgh. High-quality housing will be especially important if some 1400 Royal Navy submariners are to relocate from Plymouth to HMNB Clyde. Currently, the naval base accommodates 6800 personnel, though the working population is expected to swell to 8500 by the transformation’s end. In the future all submariners can expect to serve their entire military careers at HM Naval Base Clyde, ensuring stability for them and their families. 

“The expansion of activity at Clyde and growth of our Service population over the next few years means that we need to make best use of all available accommodation,” said Captain Craig Mearns, HMNB Clyde’s Captain of the Base. 

“It is important that what we have to offer is of a high standard, not only because that is what our people deserve, but also because we aim to encourage an increasing number of Service families to relocate to this area. The offer of good housing, coupled with the excellent amenities and quality of life on offer here, are significant attractions for those considering such a move.” 

While still in its infant stages, the Clyde Commercial Framework has so far proven a runaway success. As a framework that prioritises collaborative working right the way through the supply chain, it may even become the blueprint for larger, long-term DIO schemes going forward. 

DIO: Changing the face of procurement through innovation and engagement

The Defence Infrastructure Organisation (DIO) plays a vital role in supporting the UK’s Armed Forces by building, maintaining and servicing the infrastructure needed to support defence and is responsible for enabling defence people to live, work, train and deploy at home and overseas. 

DIO Commercial Director Jacqui Rock spoke with Defence Online Editor Matt Brown to discuss her ambitions to make it easier for the supply chain to do business with DIO. 

Appointed Commercial Director in December 2017, Jacqui Rock is responsible for putting in place and maintaining the commercial and procurement strategy and management control systems necessary to manage all commercial commitments made by the Defence Infrastructure Organisation, as well as personally negotiating and awarding the largest of DIO’s contracts.  

One of her first tasks was to oversee the launch of DIO’s Commercial Strategy, which outlined the steps to be taken to make it easier for the supply chain to do business with the organisation.  

Jacqui was keen to make the document as visible as possible. She explains: “We launched it in early January 2018 across industry and suppliers, with extensive communication across defence and the media. It’s really crucial if you’re going to cut a commercial strategy like this that as many people see it and understand it as possible and that it is in as simple a language as it could be.” 

The response to the document was a positive one, but many within the industry were concerned that it would prove to be little more than empty rhetoric and would not effect the changes it outlined. 

Following her address at Defence Procurement, Research, Technology & Exportability (DPRTE) 2018, where she spoke about the execution of the strategy, a number of suppliers sought Jacqui out to express their concerns. 

Jacqui says: “It was interesting that at DPRTE, various suppliers asked me the same question. They felt they had seen this kind of thing before across defence and other ministries in terms of intent to transform and modernise and wanted to know what is going to be different this time. 

“It’s been very important for me to keep communicating the message throughout the year that isn’t just intent and this time we are delivering against it.” 

The strategy contains five guiding principles to support the delivery of DIO’s vision and outline how the organisation will improve to better serve its customers and work with suppliers. 

These principles – We will be easier to do business with; we will work faster and smarter for our customers; we will have a broader and more diverse supply base; we will engage meaningfully with our stakeholders; and we will focus on value, not price: or the ‘We wills’ – define the vision for the commercial strategy, and already significant progress has been made in their delivery. 

On the first – We will be easier to do business with – Jacqui explains: “I met with our supplier base and asked how it feels to do business with defence and with DIO. By gaining this understanding, I was able to put a programme in place to make sure that we are consistent, proportionate and transparent with how that end-to-end process works.  

“We want to be open and transparent in procurement. This is going to increase our choice of suppliers and I absolutely believe we can reduce the cost of business because of the bidding activity.” 

We will work faster and smarter for our customers centres around early engagement, not just with the Front Line Commands but also with suppliers. 

Jacqui says it’s about working “smarter and faster”, and looking strategically and collaboratively at longer-term plans and putting those business cases at the front of the process. To facilitate this, a new cost and price analysis capability is to be introduced by 2020, which Jacqui envisages will increase DIO’s price data capability. 

The principle of We will have a broader and more diverse supply base is all about SME engagement and reaping the rewards that this brings. 

Jacqui explains: “It is one of my key objectives to increase the diversification in the supplier base. It’s about delivering a range of services and the different innovation that it brings to defence. With a more diverse supplier base we will increase the value to taxpayers and growth by generating true competition and opportunity that is unhindered by a supplier’s size and experience with DIO.” 

DIO’s shift from a contracts administration business to a value added commercial function with Front Line Commands and suppliers is at the forefront of We will engage meaningfully with our stakeholders. 

“It is our job as commercial experts to bring innovation and new ideas in partnership with our suppliers into our stakeholders. When it comes to procurement, I want to exploit technology to make that process as streamline and as automated as possible. This would allow us to focus a lot more on adding strategic value up-front and carrying out effective contract management,” says Jacqui. 

In the past, procurement was focused on cost and driving down the price. We will focus on value, not price sets out to change this mentality. 

Jacqui explains: “I committed to change and to modernise the way DIO procures, and feedback would indicate that our suppliers are now starting to feel this difference. 

“The way we manage the tender process is changing. There will be a lot more site visits, a significant number of workshops at framework level and lots of face-to-face senior executive meetings.  

“The key message is we are changing how we procure and the award criteria to increase focus on collaboration and behaviours.” 

Another key aspect of the strategy is the shift to a more regionalised approach; something that Jacqui believes has enhanced DIO’s ability to engage with SMEs. 

“It made a lot of sense in terms of the categories to go regional, but from a commercial perspective the advantage for me is to encourage SMEs within the region. I have a clear ambition to facilitate getting more SME suppliers to work in defence. Certainly, infrastructure is one of those key categories which facilitates this. Going regional allows SMEs to bid on smaller tenders more local to their region. It works well because they have that local knowledge and are able to mobilise incredibly quickly. 

“We are finding that where we are awarding and working with local SMEs, it is having a positive impact resulting in high standards of delivery,” Jacqui adds. 

Certainly, the response from SMEs to the implementation of the strategy has been positive as DIO looks to improve accessibility for smaller firms. 

Jacqui concedes that attempting to break into DIO’s supply chain is no easy task; this is something she is determined to address.  

She says: “These are SMEs that really want to do business with DIO. As a small company, if you haven’t done this before it can be a bit of a minefield. You can come in under a prime or one of various frameworks – there’s quite a few different avenues in and it’s really quite difficult. 

“That was one of the key objectives of the procurement plan and one of the reasons we listed contracts as low as £100,000. This is to demonstrate to SMEs that lower value is equally as critical.  

“I have made a commitment to work with SMEs and have set up a unit within the commercial team to do this – when they reach out to us we can walk them through how to actually engage with us.” 

DIO Changing the face of procurement through innovation and engagement

DIO followed the Commercial Strategy with the recent release of its Procurement Plan, outlining its strategy on construction and infrastructure. This marks the first time the organisation has outlined its priorities to existing and potential suppliers. 

Jacqui explains: “This is something that all of our suppliers were asking to see. From a supplier’s point of view, it’s very difficult to be able to go to your board and work out what you want to do with defence when you have no long-term view on strategy.” 

It is envisaged that the plan will need to be refreshed at least every six months, and some movement on it is inevitable; but Jacqui hopes her plans to invite both large and smaller companies to engage with her and other members of the Executive Committee will refine their requirements and open up new opportunities. 

“I am throwing the challenge back to suppliers and asking where they see the opportunities for collaboration and innovation. It’s really enabling us to have that dialogue and this is a really exciting, positive move for us.” 

Now a year into her role as DIO Commercial Director, what has given Jacqui the most satisfaction? 

“It has been seeing that shift in culture – the empowerment of our DIO teams – and for them to understand that we are going to modernise and change things, and that’s ok.” 

This new ethos and the delivery of the Commercial Strategy and Procurement Plan are important milestones – and understandably a source of pride for DIO. 

“We have delivered some significant initiatives and pieces of procurement over the course of the year using the principles of the Commercial Strategy, such as the Clyde Commercial Framework. We have also signed off on the United States Visiting Forces (USVF) F-35 Capital Works Programme.  

“These represent substantial capital works operations and we got those contracts awarded in pretty much half the time we would normally do. This was achieved through the principles and guiding strategy and the challenging of the process.”  

Looking ahead to 2019 and beyond, Jacqui hopes to see DIO continue with its transformation programme and introduce some key aspects of capability, which will help in the delivery of the ‘We wills’. 

This is set to include a robust category management operating model and the refining and enhancement of the contracts and supplier management programme. 

Jacqui says: “There will be a lot of introduction of new technology and process, which is going to enable us to enable suppliers to work more effectively with us.” 

Jacqui is as keen to challenge people as she is to challenge processes and instil a new, innovative mentality and sense of pride. 

She concludes: “I’m challenging the team to be more lateral and extrovert in our thinking – moving with greater pace and agility and changing the culture of ‘that’s the way it has always been done’.  

“One of the key things is to keep that sense of pride and recognise the reason we all work here; and whilst we are undergoing significant change, to continue to offer support to people. I want to keep sharing that vision on why we are doing this and what we are going to get when we get there.”