These slides are from an event which looked at how businesses can benefit from the UK government's review of its spending on defence.

1. Strategic Defence and Security
Review:
The opportunities for SMEs

2. Introduction
James Turgoose, Director of Public
Policy JBP

3. Philip Dunne MP
Keynote Speech:
Strategic Defence and Security
Review: the opportunities for SMEs

4. Q&A chaired by
Professor Derek Braddon Emeritus
Professor of Economics, UWE

5. Steven Morgan, MoD Director
Commercial:
10 commandments for intelligent
clients

6. Steven Morgan, MOD Director Commercial and Supply Chain Champion
Ten Commandments for the Intelligent Client
Managing our Supply Chain
a New Way

7. MOD is a giant customer
 We are UK industry’s single largest customer
 MOD accounts for 45% of ALL HMG procurement spend
 MOD’s direct spend with SMEs was £822M
 Indirect SME spend through primes was around £3
billion

8.  47% of new contracts by number were
competed in FY 2014/15
 So over half are single sourced
 The value and scope of MOD’s equipment
programme limits the opportunities for SMEs
at Tier 1
 Many more opportunities within the supply
chains of major programmes
The problem

9.  Enable SMEs and non-traditional suppliers to bid
more easily for defence and security business
 Encourage SMEs to partner in bidding for
government contracts too big or complex to
manage alone
 Continue simplification of procurement
processes, making them shorter and more open to
innovative solutions
 Appoint a senior official in MOD as Supply Chain
Champion
Our intention: SDSR

10. The new MOD Supply Chain Champion
• Advocate competition-establish a network of
advocates across MOD
• Liaise with senior colleagues across MOD –
we need to be joined-up
• Challenge our policies and practices where
they make it difficult for SMEs to participate
fully in our business
• Engage with Cabinet Office in support of
wider government strategic supplier
management

11. Embed Network of Supply Chain Advocates across MOD
 Work on behalf of existing and new
suppliers
 Provide impartial advice and guidance
 Understand local requirements and
needs
 Perform dispute resolution at a local
level
 Identify trends (positive and negative)
and escalate appropriately

12. This is all fine, but…
…we need to be smarter in our
commercial management

13. The Ten Commandments
for the Intelligent Client
1. Define the Need
2. Specify the Requirement
3. Chunk the work
4. Select Ideal Source
5. Craft incentivised, Aligning
Contract
6. Support the Contractor
7. Enforce Contracts
8. Integrate Contractor Outputs
9. Commission Integrated Outputs into
Outcomes
10. Evaluate Effectiveness

14. Shared Benefits
 Improved efficiency and agility in responding
to MOD demands and requirements
 Potential for internal efficiencies in supply
chain
 Shared intelligence supporting management
of supply chain risk
 Access to wider market of potential suppliers

15. Supply Chain: MOD Leads
Lead Minister:
Philip Dunne
Minister for Defence Procurement
Supply Chain Champion:
Steven Morgan, MOD Commercial Director
Supply Chain Development:
Sim Carswell, Supplier Relations Team
defcomrclsrt-scd@mod.uk
07880 556433

16. And to summarise:
 A level playing field for SMEs
 Better overall VfM for MOD
 Behavioural change in MOD and across its
supplier base

17. Barbara Doornink, Senior Vice
President Leidos:
Leidos and LCST

18. JBP Defence Conference
An Introduction to Team Leidos
Barbara Doornink
Thisdocumentcontains informationthat is commerciallysensitive andproprietaryto Leidosandshallnot beduplicated,usedordisclosedoutsidethe Government foranyotherpurpose.

19. “Working together to
modernise and
transform LCS to
ensure we are fully
able to meet the
changing needs of our
Armed Forces”

20. Who is Team Leidos?
Storage, Distribution & Freight Commodity Support Services
Prime Contractor
•Support chain integration
•Information Systems /
Business Intelligence
•Storage, Distribution and
Freight worldwide
Inventory mgt of
• Defenceclothing
• Medical
• General commodities & food
•All commodity vendor
agreements
•Procurement

21. Team Leidos is
Investing in:
 Better infrastructure
 Better equipment
 Better systems
 Better flexibility
 People development
To provide the MOD with:
 Improved visibility & control
 Improved speed & reliability
 Improved service at less cost
To ensure that customer get:
 what they want, when they want it

22. The total LCS spend in each of the Commodity
areas varies according to demand
Defence Clothing
Spend £74M
Contract £67.7M
Non Contract £6.3M
Total Spend 14/15 - £302M
General Supplies
Spend £82.1M
Contract £71.2M
Non Contract £10.9M
Medical Supplies
Spend £47.4M
Contract £24.4M
Non Contract £23M
Food £98.8M
Contract £86.6M
Non Contract £12.2M
Thisdocumentcontainsinformationthat iscommerciallysensitiveandproprietarytoLeidosandshallnotbeduplicated,usedordisclosedoutsidetheGovernmentfor
anyotherpurpose.
5

23. Thisdocumentcontains informationthat is commerciallysensitive andproprietaryto Leidosandshallnot be duplicated,usedordisclosedoutsidethe Government foranyother purpose.
Supplier and SME numbers
6
MEDICAL
Total , 127
140
No.ofsuppliers
120
100
80
60
40
20
0
Total
20
1
DEFENCE
CLOTHING
Total , 24
15
1
GENERAL
SUPPLIES
Total , 5
0
0
FOOD
Total , 45
15
1
SUPPLIES
Total , 19
8
0
OLG
58
3
Totals
Total 34 24 5 45 19 127
SMEs 20 15 0 15 8 58
SW SMEs 1 1 0 1 0 3
Axis Title
Leidos Suppliers
Total SMEs SW SMEs
A significant minority of our suppliers are SME’s, with Defence Clothing and General Supplies particularly well
represented*
Team Leidos is actively looking to enhance the supplier base and we have already hosted two conferences
with current MOD suppliers and plan to include additional suppliers and industry groups at future events.
* On-contract supplier dataonly
6

24. Thisdocumentcontains informationthat is commerciallysensitive andproprietaryto Leidosandshallnot be duplicated,usedordisclosedoutsidethe Government foranyother purpose.
What we willdo
 Adopt consistent SRM principlesacross
all our product groupings
 Ensure the right data is provided to our
suppliers to enable them to make theright
decisions
 Invite and encourage innovation
How we will doit
7
 Real-time, accessible information
 Available through a state of the artSRM
portal
 Develop continuous improvement and
development plans with each of our
suppliers
Benefits to us all
 Consistent application across allcommodities
and categories
 Proactive issue management to improve SRM
 Engaged, informed suppliers making better
decisions and delivering change
Mutuallybeneficial
relationshipswhichoffergreat
opportunitiestoour suppliers
Supplier Relationship Management Solution
7

25. EU Public Contracts Directives (2015) – Some
Key Points
• The updated Regulations are intended to make the procurement process
faster, less costly, and more efficient for suppliers and procurement
organisations
 More modern, with some outdated or superfluous provisions removed
 Less bureaucratic
 More flexible and commercial
• SME (Small and medium enterprises) participation should be
encouraged by breaking exercises into lots
• Greater use of supplier self-declaration encouraged, with the winning
bidder(s) only to produce required documentation/certification
• Poor performance on previous contracts now permitted as grounds for
exclusion
• New requirements for contracting authorities to put safeguards into
contracts against conflicts of interest.
Thisdocumentcontains informationthat is commerciallysensitive andproprietaryto Leidosandshallnot beduplicated,used ordisclosedoutsidethe Government for anyotherpurpose.
8

26. real cost reduction
− volume-buying (demand
aggregation)
− competitive sourcing
process efficiencies
− standardised processes
− centralised platform, storage,
documentation
risk management
− standardised legal clauses
− clause deviation control
− compliance documentation
− supply risk management
− control and monitoring reports
Our processes and systems are what will set us apart
9
Thisdocumentcontainsinformationthat iscommerciallysensitiveandproprietarytoLeidosandshallnotbeduplicated,usedordisclosedoutsidetheGovernment
foranyotherpurpose.
Procurement
Contract Management
Finance
Inventory Management
iProcurement
P2P
eCatalogue
Advanced Reporting / MI
Management of KPIs & SLAs

27. 10
SUPPLIER SELF-REGISTRATION
Thisdocumentcontains informationthat is commerciallysensitive andproprietaryto Leidosandshallnot be duplicated,usedordisclosedoutsidethe Government foranyother purpose.

28. Three year transition plan
1st August 2015: Service
Commencement Date
Gain a full understanding
of the current business
and commence seamless
transfer
Build and fit out a new
Defence Fulfilment
Centre (DFC) at
Donnington – openNov
2016
Redistribute stock and
reconfigure transport
network
Introduction of new IS
infrastructure and
improved processes
2015
2016
Transformation and Continuous Improvement (CI)
2017
On-going training and
people development on
new systems and ways of
working

29. 12
Thisdocumentcontainsinformationthat iscommerciallysensitiveandproprietarytoLeidosandshallnotbeduplicated,usedordisclosedoutsidetheGovernment
foranyotherpurpose.
Thank you
For more information:
Email - newsupplierinfo@Leidos.com
Website – www.leidos.com/uk
“Proud to be delivering the MOD’s Logistic
Commodities and Services (Transformation) contract”

30. Mark Cook, Executive Chairman
Stirling Dynamics:
How can SMEs take advantage of
the SDSR?

31. stirling-dynamics.com
Innovation and engineering excellence
Aerospace
Marine
Energy
© Stirling Dynamics 2016
Challenges and Improvements
MoD Procurement – A SME Perspective
Mark Cook, CEO Stirling Dynamics
1 February 2016

32. © Stirling Dynamics 2016
● Perspective of a SME – focus on “small”
o Stirling Dynamics - £10m, 80 employees – aerospace & marine technology
and consultancy services
o Datong £10m, 70 employees – surveillance technology
o Persides £6m, 40 employees – video technology & consultancy services
● Experience covers start-up and large defence prime contractor
● Summary
o SDSR 2015 reinforces the importance of SMEs in the supply chain and
promises improvements to come
o Policy direction is sound but needs more teeth
o Today though, the practical implementation falls short
● Challenges faced and suggestions for improvements, covering
o The procurement process
o FATS
o Technology development
Introduction
32

33. © Stirling Dynamics 2016
● No mechanisms to support contract award to a SME consortium
o A consortium of small companies can deliver a cost-effective capability but
contracting agencies will still seek a single company with sufficient financial
capacity to assume the prime contract
o Where SMEs partner with larger primes their influence on direction is
diminished and, potentially, innovation is restrained
● Typical business development activities conducted within industry not
uniformly accepted by PTs (e.g. cold contact, capability briefings)
● Significant work to respond to RFQs
o Not always proportional to the contract value
o Much more paperwork than working with prime contractors
● Inconsistent approach to declaring available budget
● Other bidders not always declared by PT – hinders opportunity for
teaming discussions
● RFQ response times can be prohibitively short
o Favours those companies with established relationships
o Difficult for other companies to form consortium and prepare a response
The Procurement Process (1 of 2)
33

34. © Stirling Dynamics 2016
● Security clearances
o Certain projects need DV clearance which lapse when the sponsoring project ends
o The time delay to apply for re-instatement on a new project can be prohibitively
short resulting in loss of opportunity
● Questions & Answers
o Response times for Q&A needs improving
o Sufficient time needs to allowed to accountant for answers once provided
● Constructive feedback from PTs to an unsuccessful tenderer
o Inconsistent between PTs
o Ranges from none to defensive posturing
o Restricts ability to learn for next time
● Value for money
o The drive for “Value for Money” usually comes down to cheapest
o Through-life costs considered but rarely overturn cheapest up-front procurement
price
● Terms and Conditions of contract
o Vary markedly between PTs – inconsistent approach
o DEFCONs – can be overly onerous for small companies and the detail is unlikely to
be fully understood
The Procurement Process (2 of 2)
34

35. © Stirling Dynamics 2016
● New entrants and capability updates for registered companies only
allowed periodically
o Can be multiple years if FATS is continuously renewed rather than re-
tendered
o Can exclude new talent unless they team with a FATS registered
company (which will increase cost as that company applies its mark-up)
o Benefit of capability updates not recognised until next FATS tender
● To be accepted as an approved supplier the company needs to
provide evidence of previous contracts in the relevant capability
category
o For startups or rapidly growing companies that track record of previous
contracts may not exist
o It’s the skill and experience of employees, associates and consortium
partners that will deliver a capability
o Business with MoD is therefore excluded until track record is
established with industry contracts
● Completing the FATS tender is a major (expensive) task for SMEs
FATS (Framework Agreement for Technical Support)
35

36. © Stirling Dynamics 2016
● The UK continues to generate great ideas but could improve on
commercialisation with the right level of government funding
● Improvements
o Approach to IPR has improved
o R&D tax credits work well
● Grant funding
o Many different approaches, but few cover essential core labour and
overhead costs
o So the investment by SMEs is proportionally more significant than for
larger companies
● Full financial support for R&D is essential to SMEs if the UK is to be
competitive in the global market
o Without this a SME will, by necessity, focus on the core business
imperative of keeping the cash flowing in through other routes
Technology Development
36

37. © Stirling Dynamics 2016
● An idea borne out of military operational
need to be developed by a consortium of
SMEs
● UK Police, Army and Air Force supported
the concept and proposed solution
● DSTL asked by government to review
solution – twice
● Each SME invested considerable sums to
develop the concept and initial designs
● Government funding lined-up to progress
to first flight, but…
o Funding diverted at the last minute to
support other government departments
● China now interested
● A missed opportunity for UK Plc?
R&D Example – Scorpion Gyrojet
37

38. © Stirling Dynamics 2016
● FATS – needs a major overhaul
● Mandate a proportion of procurement goes to SMEs
o For both direct procurement and through prime contractors
● Facilitate open engagement with industry at the working level
● Improve grant funding mechanisms, harmonise approach and
increase funding
o Linked to business size
● Widen the scope of CDE to include higher technology readiness
levels and create more SBRI projects linked to MoD needs
● Join up commercial and military aerospace R&D funding through,
for example, the Aerospace Technology Institute
● Address the practical procurement issues stated herein
Suggested Improvements
38

39. © Stirling Dynamics 2016 stirling-dynamics.com

40. Ian Tomlinson-Roe, HR lead for
Government and Public Sector, PwC

41. Can Small be Competitive?
JBP WEAF Conference
1st February 2016
Ian Tomlinson-Roe, Human Resources leader for Government
and Public Sector at PwC
www.pwc.com

42. PwC
The Future of Work
42
February 2016
Small is beautiful
Companies begin to break down into collaboration networks of
smaller organisations; specialisation dominates the world
economy
Orange
World
Companies Care
Social responsibility dominates the corporate agenda with
concerns about demographic changes, climate and
sustainability becoming the key drivers of business
Corporate is king
Big company capitalism rules as organisations continue to grow
bigger and individual preferences trump beliefs about moral
responsibility
Green
World
Blue
World

43. PwC
The Employee Life Cycle
43
February 2016
The role of
HR
The role of the
individual
The role of the
technology
The role of the
organisation

44. PwC
Corporations V SMEs
44
February 2016
Corporations SMEs
• Attract
 Presence at graduate fairs
 Wide range of opportunities (apprenticeships,
internships, graduate schemes)
 Jobs well advertised
• Develop
 Sponsored qualifications
 Mentoring programmes
 Internal placements and secondment opportunities
• Retain
 Competitive benefits packages
 Clear career paths
 Increased global mobility
• Deploy
 More opportunities for a varied career
What advantages do SMEs have?

45. Philip Margerison, Defence
Suppliers Service, MoD
Abbey Wood:
Selling to the MoD

46. Defence Suppliers’ Service
46
PHILIP MARGERISON
SELLING TO THE UK MOD
Email: defcomrclsrt-dss@mod.uk
Tel: 030 679 32844/32843/32832
Website: www.contracts.mod.uk

47. Defence Suppliers’ Service
47
What MOD spends to provide and sustain military
capability
• In FY 2014/15 approx. £19.6Bn spent with third parties on a wide
range of products & services – amounts to 40-45% of total
Government spend with third parties
• Direct spend with SMEs in FY 2014/15 of £832M with over 7,000
different SMEs
• This does not include business that SMEs have with MOD suppliers

48. Defence Suppliers’ Service
48
Contracts placed:
In FY 2014/15 approximately 2,000 new contracts
• 60% valued at less than £100K
• 7,500 contractors with extant contracts
• Approx 1,500 Commercial Officers in the overall MOD acquisition
organisation

49. Defence Suppliers’ Service
49
Approach
• Reasonable Opportunities to Compete
• Impartiality & Consistency
• Confidentiality
• EU Public Procurement Regulations
• Advertise Requirements

50. National Security through Technology: Technology,
Equipment & Support for UK Defence and Security
• White Paper published early February 2012
• Section devoted to SMEs – important aim is to make it easier for them
to do business with UK MOD
Defence Suppliers’ Service
50

51. Package of Measures to Increase Opportunities for
SMEs to Participate in Government Procurement
• Abolition of PQQs for requirements below £100K – adopted new common core PQQ
across Government
• Greater use of ‘lotting’ strategies and outcome-based specifications
• A ‘mystery shopper’ service so businesses can tell Government where there are still
issues
• Simplified template for contracts below £250K
• Flagging of opportunities that may be suitable for SMEs
• Creation of an SME panel
Defence Suppliers’ Service
51

52. Commercial Toolkit
• Available to MOD staff & industry
• Contains guidance on a wide range of commercial policy topics, DEFCONs,
DEFFORMs etc
• Available via the Acquisition Systems Guidance
• www.gov.uk/acquisition-operating-framework (free use, requires no-cost
registration)
• Commercial Toolkit;
https://www.aof.mod.uk/aofcontent/tactical/toolkit/content/defcons/defcon.htm
• Select either ‘Guidance Topics’; ‘DEFCONs’ or ‘DEFFORMs’
Defence Suppliers’ Service
52

53. Cyber Security
• From 1 January 2016 MOD will require supplier to have Cyber Essentials
certification in place. This will apply to all new contracts
• Covers transfer of MOD identifiable information, as defined in DEFCON 531, from
customer to supplier or generation of information by supplier specifically in support
of an MOD contract
• Requirement for all potential suppliers to have Cyber Essentials certificate by
contract start date & for annual renewal
• Requirement to be flowed down supply chain where sub-contracts satisfy same
criteria
• Trade Associations informed & will flow down requirement to members & their
supply chains
• Information on Cyber Essentials at www.cyberessentials.org.uk
Defence Suppliers’ Service
53

54. Advertising MOD’s Requirements
MOD routinely advertises:
• All its competitive and non-competitive, ‘warlike’ and ‘non-warlike’ requirements for
goods & services valued at £10,000 and above are advertised free of charge, on the
Defence Contracts Online (MOD DCO) portal (www.contracts.mod.uk)
• MOD DCB magazine available on subscription starting at £325 pa
• Requirements which meet the relevant criteria of EU Public Procurement Regulations &
are above relevant thresholds also advertised in Official Journal of the European Union
(OJEU) and ‘Contracts Finder’ portal as well as on the MOD DCO portal
• MOD requirements valued at below £10K are not advertised centrally and are generally
procured on a local or regional basis
Defence Suppliers’ Service
54

55. Email: bip@bipcontracts.com
Website: www.contracts.mod.uk
• Contract Notices
• Contract Bidders’ Notices
• Competitive/Non-competitive Contract awards
• Sub-Contract Opportunities
• Addendum
Defence Suppliers’ Service
55

56. Guide to Contract Notices
Contract Notices
Identification number
Expressions of Interest deadline
Issuing branch
Summary
QA Standards
Defence Suppliers’ Service
56

57. Guide to Contract Notices
Contract Bidder
Tender No.
ITT Issue Date
Deadline
Issuing Branch
Summary of Requirements
Issued To
Defence Suppliers’ Service
57

58. Guide to Contract Notices
Non-Competitive
Contract Awards
Issuing Branch
Summary of Requirements
Contract No.
Awarded To
.
Defence Suppliers’ Service
58

59. Guide to Contract Notices
Competitive
Contract awards
Issue date
Issuing branch
Summary of Requirements
Awarded to
Defence Suppliers’ Service
59

60. Defence Suppliers’ Service
60
Supplier Information Database (SID)
• SID accessed via www.contracts.mod.uk website
• Companies can submit their profiles free of charge
• SID available to MOD acquisition staff as a resource to help draw up a tender
list/source a product or service
• Over 8,000 companies have submitted their profiles to the SID
• By logging their profile on the SID, it does not guarantee that companies will be
invited to tender for MOD requirements

61. Defence Suppliers’ Service
61
Contracts Finder Portal
• Overseen by Crown Commercial Services (CCS)
• Search across central Government & wider public sector for contract opportunities over
£10K
• Find out future opportunities
• Search for details of previous tenders & contracts
• Free to use; easy search facility; provide free e-mail alerts
• £52Bn contract notices in last 12 months; £177Bn forecast contract opportunities over next
6 years
• Updated early 2015
• Accessed via https://www.gov.uk/contracts-finder
• Contact details – Service Support Team e-mail ContractsFinder@crowncommercial.gov.uk

62. Defence Suppliers’ Service
62
DEFENCE SUPPLIERS’ SERVICE
Part of Supplier Relations Team (SRT)
Help Desk
Email: defcomrclsrt-dsshelpdesk@mod.uk
Website: www.contracts.mod.uk
Tel: 030 679 32844/32843

63. Defence Suppliers’ Service
63
Defence Suppliers’ Service
• Explain UK MOD Procurement & Procedure
• Provide Information brochure
• Provide Product requirement advice
• Provide Contact points

64. Information Pack
Defence Suppliers’ Service
64

65. Amanda Deeks, Chief Executive
South Gloucestershire Council

66. Thank you for attending and do join
us for lunch