Select Committee on Defence Eighth Special Report

Summary Progress Report on significant DIS Milestones: as at 7 July 2006
DIS Commitment MilestoneThe Current Position
MARITIME (1)We will immediately start negotiations…to achieve a programme level partnering agreement with a single industrial entity for the full lifecycle of the submarine flotilla. This will be matched by the implementation of a unified submarine Programme Management organisation within the MOD. For the award of the contract for the fourth and subsequent Astute class submarines. MOD is engaged in detailed discussions with industry on the scope of a possible Programme Level Partnering agreement and remains convinced of the need for consolidation in the industry. Improved supply-chain management must also take place to safeguard capability and to incentivise better performance and we continue to negotiate with the key elements of industry on this basis. Given the number of industrial players in the submarine market, consolidation to one entity may not be possible; other solutions are also being examined.

The MOD's Submarine programme management has recently been unified under Director General Nuclear, responsible to both the Chief of Defence Procurement and the Chief of Defence Logistics for managing delivery of the submarine acquisition programme through-life.

MARITIME (2)For surface ship design and build, we aim within the next six months to arrive at a common understanding of the core load required to sustain the high-end design, systems engineering and combat systems integration skills… Within six months from publication Work is being undertaken to assess the Core Work Load required to sustain maritime Key Industrial Capabilities (KICs). Although good progress has been made in developing our understanding of a Recognised Maritime Industrial Picture, which is an essential first step, the overall task which has links to the submarine and support programmes is highly complex and is taking time to get right. Industry has been, and will continue to be, involved.

The June 2006 deadline for production of a sustainability strategy for the key maritime equipments has not been achieved. This is linked to, and will flow from, the work to determine the core workload and KIC sustainability plans. We are working hard to ensure that this work is completed as quickly as possible.

MARITIME (3)For surface ship support, we will start immediate negotiations with industry with the aim of exploring alternative contracting arrangements and the way ahead for contracting the next upkeep periods, which start in the autumn of next year. Key maritime equipment industrial capabilities will be

supported by the production of a sustainability strategy for these key equipments by June 2006.

June 2006As announced last December, the Department is moving forward quickly with the three dockyard companies (Babcock Support Services Limited, Fleet Support Limited and Devonport Management Limited) to put alternative contracting arrangements in place, initially for a package of surface warship upkeep work (refits and docking periods) which is currently planned to begin in autumn 06. This work will be managed through the exploratory phase of the new surface ship

support alliance announced by the Secretary of State on 14 Feb 06.

During this exploratory or 'transition' phase, which could last up to 2 years, competition policy has been suspended (an exclusion order to the 1998 Competition Act was tabled by Department of Trade and Industry on 8 Mar 06 and came in to force on 4 Apr 06).

FIXED WING (1)…we will work with BAE Systems and the other companies in the defence aerospace sector so that it can reach the appropriate size and shape for demand…we aim during 2006 to agree the way ahead - which will be challenging given the scope of the scale of the transformation that is required - and to implement it from 2007. Agreement of LTPA in 2006. Implementation from 2007 onwards MOD is negotiating with BAE Systems the terms of a business rationalisation and transformation agreement required to facilitate the effective sustainment of the industrial skills, capability and technologies needed to operate, support and upgrade our fast jet combat aircraft through life. Our aim is to identify the way ahead by the end of 2006 and to implement it from 2007.

In time this work will need to expand to embrace the wider defence fixed wing sector, including other companies besides BAE Systems.

FIXED WING (2)…we intend to move ahead with a substantial Uninhabited Aerial Vehicle Technology Demonstrator Programme in 2006. In 2006MOD and Industry continue to make progress towards initiating a UAV Technology Demonstrator Programme. .
AFVsWe will be working hard with BAE Systems…to give effect to the long term partnering arrangement… We intend to establish a joint partnering team within the early part of 2006 and to establish a business transformation plan underpinned by a robust milestone and performance regime. Early part of 2006 An AFV Partnering Agreement between MOD and with BAE Systems Land Systems was signed on 15 Dec 05.

A Joint Partnering Team has since been established. A briefing on the scope of the Partnering Agreement for wider industry was held in March 06.

A Joint Business Plan is being developed and work has commenced on the detailed transformation plan to facilitate better in-service support to the current AFV fleet.

HELICOPTERSWe hope that by the Spring 2006, subject to value for money having been demonstrated, we will have reached agreement on a Strategic Partnering Arrangement (SPA)… Spring 2006A Strategic Partnering Arrangement with AgustaWestland was announced on 22 June.
COMPLEX WEAPONSWe [will establish] a multi-disciplinary team charged with working with all elements of the onshore industry to establish how we might together seek both to meet our ongoing requirements and sustain in an industrially viable manner the critical guided weapons technologies and through life support capabilities that we judge to be so important to our operational sovereignty… Our intention is that we should have a clearer way ahead by mid-2006. Mid-2006A joint MOD / Industry team has been established and progress is being made to identify the impact on the retention of critical skills in the industrial base in the context of our declining demand for new weapons. The joint team consists of the key members of industry; MBDA, Raytheon Systems Limited (RSL), Thales Air Defence Limited, BAE Systems UWS and QinetiQ.

We are aiming to announce at Farnborough the results of our work so far and our plan for ensuring the delivery of a strategy for the sector at the end of the year.

GENERAL MUNITIONSWe will be taking forward Project MASS, with a view to making decisions on how best to sustain our required access to general munitions in the summer of next year…We are also actively pursuing partnering arrangements with other [non BAES] suppliers. Summer 2006We are building on the DIS commitment (in Chapter B6.45), and will pursue that option which provides the operational capability that we need combined with best long term value for money.
RESEARCH AND TECHNOLOGY (1) We will [complete] the ongoing Science and Technology Capability Study…by Summer 2006. Summer 2006.This work has gone well and the internal study has been completed. Publication for a wider audience is expected in by the end of summer 06. The methodology is now being employed on a wider study looking at MOD's spend on Research and Development.
RESEARCH AND TECHNOLOGY (2) We will conduct further work better to understand the underpinning technologies that the UK must have…by Autumn 2006. Autumn 2006Looking across the scientific and engineering disciplines, this project aims to identify those underpinning technologies that have and are likely to have a significant impact on defence capability and must be retained in the UK for security and sovereignty reasons. In achieving this aim, the project will determine the process by which future assessments of this kind can be co-ordinated. The results of the study will be included within the Defence Technology Strategy, to be published in autumn 06, alongside a separate report explaining the methodology utilised.
RESEARCH AND TECHNOLOGY (3) We will by mid-2006 update our Defence Technology Strategy   Mid 2006.A core MOD/NDIC Research & Technology Sub-group has been established to oversee the required work.

A series of productive Technology Strategy workshops, involving representatives of MOD and the industrial supplier base have been held and cover each of the main Defence Industrial Strategy sectors. We expect to publish the revised strategy in autumn 06.

RESEARCH AND TECHNOLOGY (4) We will develop a better understanding of the innovation process and map out the technology trees for major capabilities, systems and platforms in a report, which we aim to produce by the Autumn of 2006. Autumn 2006Under the direction of the NDIC R&T subgroup a dedicated joint MOD/Industry working group has been established to conduct this work.

Three joint MOD/industry workshops looking at the innovation process have been completed and range of technology trees has also been collated from industry to help enable the analysis work.The final deliverable will be produced in September, findings to be included in the Defence Technology Strategy.

INTERNAL CHANGE (1) We will work with industry to develop, roll out and implement a joint plan for embedding the Defence Acquisition Values throughout the acquisition community. We expect to be in a position to launch this within three months and will apply the real commitment of resource, time and effort that will be required to effect lasting change through 2006 and beyond. April 2006The Defence Values for Acquisition have been launched across the MOD acquisition community. Action has been taken to embed the values via incorporation into staff performance appraisal and bonus arrangements. A joint plan to embed the values has been developed and was discussed at the last NDIC meeting on 29 June.
INTERNAL CHANGE (2) We are currently scoping two Pathfinders programmes to test and de-risk a programme approach to through-life capability management with the intention that the Pathfinder programme teams will launch in the first half of 2006. First half of 2006 We have launched two Pathfinder programmes this year: Sustained Maritime Combatant Capability (SMCC) and the Sustained Armoured Vehicle Capability (SAVC) - led by the MOD but with significant industrial input. These programmes are testing tools to deliver through-life capability management, such as techniques for capability trade-off and integrating projects across the Defence Lines of Development.
INTERNAL CHANGE (3) We will address the shortages in Project Delivery Skills within the Department by building on our existing Project Delivery Skills Strategy to deliver an accelerated pan-Defence Project Delivery Skills programme…Key milestones are to be achieved by April 2006. April 2006This is an ongoing programme now subsumed within the Skills & Behaviours element of the DIS Acquisition Change Programme. Early milestones, such as an initial skills assessment of the skills required for Programme & Project, Commercial & Procurement, Logistics, Resource, and Engineering & Science Management have been achieved
INTERNAL CHANGE (4) An evaluation of current incentivisation initiatives will be completed by October 2006. October 2006A stocktake of current incentives structures in the MOD and their ability to meet the needs of the DIS is now underway.
INTERNAL CHANGE (5) The DPA will be piloting the operating framework during 2006, working in conjunction with the other areas of acquisition to ensure consistency and alignment. During 2006The DPA has completed development work regarding the Project and Programme management element of the operating framework, drawing on industry best practice. This work will form the basis of a wider Acquisition Operating Framework encompassing all of the Department's acquisition business.
INTERNAL CHANGE (6) We will review - so that we are in a position to make judgements about this by May 2006 - the extent to which the current process and organisational construct supports, encourages, hinders or obstructs the delivery of excellence in acquisition. This would allow us to commit to changes that are required this side of the summer recess. May 2006Officials have reviewed the Ministry of Defence's current acquisition arrangements, the Enabling Acquisition Change (EAC) review. The outcome was announced on 3 July, and the results communicated separately to the Committee.
INTERNAL CHANGE (7) We are looking forward to discussing further with Industry - in the first instance through the commercial policy sub-group of the NDIC early in the New Year - our ideas about alternatives to competition as a means where appropriate of assessing value for money, with a view to developing a concrete action plan for taking them forward. Early in 2006The Joint Commercial Policy Group (CPG) meeting on 6 Feb agreed to the formation of a joint MOD/Industry working group. This group agreed a joint action plan which was discussed at the most recent CPG meeting on the 9 June.
INTERNAL CHANGE (8) We will start with immediate effect, to deliver on our revised policy of providing industry with a better and longer term understanding of our future plans. ImmediatelyBesides the increased openness in the DIS itself, we have already run several briefings to industry setting out more detail of our forward plans.  Lessons identified from these have informed guidelines on the conduct of information release to embed the revised policy into normal business, and these will be discussed with industry in the next month.

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