Industry and Regulators Committee
Tuesday 16th June 2026
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11:31
11:31
Speaker 2
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Speaker 2
As in a previous session, we heard about the culture of the body, and it seems to me that has the Mod recognised now, because the half life of these new products is in weeks or months, not years, that when they procure something, what they think they're procuring is not probably what they end up with because of the iterative process. And have you ended up in a situation whereby what what we end up with hasn't even been procured?Because what was procured wasn't even regulatorily possible anyway. So we're sort of in a loop here.
Have you discovered that?And is there a distinction between military, purely military or dual use stuff?Because I know you do maritime surveillance and and other areas. So so.
Have you discovered that?And is there a distinction between military, purely military or dual use stuff?Because I know you do maritime surveillance and and other areas. So so.
11:31
Speaker 3
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Speaker 3
I think again, on the kind of positive front, there's a recognition of, of the kind of change of the need to change in this kind of space, particularly around the kind of pace and, and be, be more comfortable around managing risk in this respect. And as you say, we've got platforms that have operating, uh. Delivering, I think, in Ukraine, we've done over 50,000 operational hours. For instance. It's a really interesting balance. Um, because I think traditionally we have tried to.
Over specify the exact perfect solution. And that in itself creates its own risk in respect to, uh, timeframes, to move that into, into actual operational capability, as you say. Um, our experience of, of the world is capability needs to continuously evolve and we are still changing our platforms in Ukraine, um, through a fortnightly engineering cycle. So really rapid, um, iteration. So I think what, what would be, I guess the, the next stage is perhaps mod becoming more comfortable for contracting for the unknown and uncertainty.
We know um, after our. Our, our products are delivered throughout the life of those products. They are going to have to change what we can't necessarily specify at this moment in time is what those changes will exactly look like. Um, so contracting for, for uncertainty and unknown in that space. And I think that that will. That will come through industry delivering and a kind of building of trust in that partnership relationship.
Over specify the exact perfect solution. And that in itself creates its own risk in respect to, uh, timeframes, to move that into, into actual operational capability, as you say. Um, our experience of, of the world is capability needs to continuously evolve and we are still changing our platforms in Ukraine, um, through a fortnightly engineering cycle. So really rapid, um, iteration. So I think what, what would be, I guess the, the next stage is perhaps mod becoming more comfortable for contracting for the unknown and uncertainty.
We know um, after our. Our, our products are delivered throughout the life of those products. They are going to have to change what we can't necessarily specify at this moment in time is what those changes will exactly look like. Um, so contracting for, for uncertainty and unknown in that space. And I think that that will. That will come through industry delivering and a kind of building of trust in that partnership relationship.
11:33
Speaker 2
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Speaker 2
You ended up in a situation where something and you've mentioned Ukraine, um, which has been very effective and works well and is proven then can't be brought back to the UK because it's outside our regs. In other words, are we hobbling ourselves?I think our process. Our process is to get the feedback from the end user and then take it directly into the front end of the engineering world, where they will take that feedback spiral, develop our products to make them regulatory sound. Uh, if you were, because, um, Scott mentioned the, the pace of change and, uh, the military customer needs to be so non Ukraine needs to be comfortable with change and the rapid evolution of our products.
Um, I think the question you asked about the civil and military, I think my answer to that is that the platform is basically the same. It's what you put on the platform that is different for different operations. Whether you're looking at maritime or the maritime world, you're going to have a different sensor, a different payload to versus if you want to. Laser target, designate something from a payload. So civvy civil and military, same platform, different sensor payloads, uh, effectively.
Um, I think the question you asked about the civil and military, I think my answer to that is that the platform is basically the same. It's what you put on the platform that is different for different operations. Whether you're looking at maritime or the maritime world, you're going to have a different sensor, a different payload to versus if you want to. Laser target, designate something from a payload. So civvy civil and military, same platform, different sensor payloads, uh, effectively.
11:34
11:35
Speaker 2
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Speaker 2
That sorry, one one advantage we do have regulatory wise is, um, I won't go into the minutiae of the detail is that you can, you can change things on your platforms, minor changes so you can change, uh, payload. And change little bits without having to go through a regulatory process. There's only when you change larger items on the platforms where you have to go through that regulatory change, that can take months. For instance, if you upgrade the engine. So we had an engine on one of our larger products that was very hard to find parts for.
So we had a new engine that takes months to get through the regulatory burden. So you do have some kind of flexibility and change. Um, when it comes to the platforms, you can change small, small items.
So we had a new engine that takes months to get through the regulatory burden. So you do have some kind of flexibility and change. Um, when it comes to the platforms, you can change small, small items.
11:36
11:36
Speaker 3
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Speaker 3
Yeah, I think I think that's, that's absolutely correct. Um, so, so contracting for, for the capability. Um, and I think one of the, the, the challenges of overspecifying a piece of kit or an output, is it. It removes industry's opportunity to innovate and actually utilize the technology developments that we are working with to bring a better solution to the customer.
11:36
11:37
Speaker 4
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Speaker 4
Could I ask you about your company's relationship with your own supply chain in the UK and the materials and components and so on that you rely on to build your kit in the context that you've described to us, where you're making a forthcoming enormous investment, uh, where you've talked about, uh, increased orders coming through, you've talked about the need to expand at pace and continuous evolution in that context, can your supply chains keep up with your needs?Uh, and if not, is there anything that the government can do to help you assure the stability of those supply chains?
11:37
Speaker 3
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Speaker 3
Yeah. Um, it's a really great question. And, um, a continuous challenge of a, of a scaling organisation, um, not just from a supply chain perspective, from our perspective, um, as well, I think, uh, I said, I said earlier, one of the reasons we selected the UK as part of the strengths, uh, in the supply chain and some of the expertise that that provides access to and, um, so the UK as a number of areas in there and as part of our investment programme, we are looking to how we increase our UK content, uh, and build a really kind of UK based supply chain.
So partly that is transitioning our European supply chain to find sovereign activity. But that also does give us an element of supply chain resilience in being part of that wider global model. Um, as we have production activity in Portugal, the UK, and coming on in France, our aim is to have as local supply chains as possible, but then bring it into a global model, providing again, increased resilience. It's maybe not realistic at, at this stage to immediately say we can, um, onshore every component in every subsystem.
We still have a number of areas. Specialist sensors and payloads that we have to secure or through through external partners, but we are actually working with UK mod to try and develop sovereign based solutions to this. Again trying to increase the sovereignty and resilience base um across this. So our approach is really around. Practical and phase. So land um, identify the kind of critical dependencies uh, use UK suppliers, um, where we can and where there is no alternative work with European or start to establish sovereign capability.
I think in the past 6 to 12 months we have onboarded, uh, in excess of 200 UK based suppliers. And we will continue to work more with them. It's slightly challenging for me to say, um, whether they are able to scale with us at the moment, because we are still in the process of bringing our new production facility online. Um, but this is an element of this is sourcing multiple suppliers for multiple components so that we don't become overly overly reliant on a, on a single, um, provider.
And I know there is, there is work ongoing in across UK mod and adds, looking at supply chain resilience, uh, more, more, more broadly, where, where might mod, um, support. I think having a collective overview of. Critical vulnerabilities across the entirety of the defence ecosystem, the defence enterprise and working to collectively address them, uh, would be a very helpful start.
So partly that is transitioning our European supply chain to find sovereign activity. But that also does give us an element of supply chain resilience in being part of that wider global model. Um, as we have production activity in Portugal, the UK, and coming on in France, our aim is to have as local supply chains as possible, but then bring it into a global model, providing again, increased resilience. It's maybe not realistic at, at this stage to immediately say we can, um, onshore every component in every subsystem.
We still have a number of areas. Specialist sensors and payloads that we have to secure or through through external partners, but we are actually working with UK mod to try and develop sovereign based solutions to this. Again trying to increase the sovereignty and resilience base um across this. So our approach is really around. Practical and phase. So land um, identify the kind of critical dependencies uh, use UK suppliers, um, where we can and where there is no alternative work with European or start to establish sovereign capability.
I think in the past 6 to 12 months we have onboarded, uh, in excess of 200 UK based suppliers. And we will continue to work more with them. It's slightly challenging for me to say, um, whether they are able to scale with us at the moment, because we are still in the process of bringing our new production facility online. Um, but this is an element of this is sourcing multiple suppliers for multiple components so that we don't become overly overly reliant on a, on a single, um, provider.
And I know there is, there is work ongoing in across UK mod and adds, looking at supply chain resilience, uh, more, more, more broadly, where, where might mod, um, support. I think having a collective overview of. Critical vulnerabilities across the entirety of the defence ecosystem, the defence enterprise and working to collectively address them, uh, would be a very helpful start.
11:41
11:41
Speaker 3
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Speaker 3
So, so if I, if I, if I take, um, the proportion of our suppliers onboarded over the past 12 months, I think around about 80% of them are our UK based. Um, I don't have, unfortunately, we can follow up with this. The exact proportions of, of supply. Um, I would say we've got an ambition to, uh, maximise our UK content as much as possible going forward.
11:42
11:42
11:42
Speaker 5
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Speaker 5
Um. We talked there about sovereignty and building up the supply chain from UK. Um companies. But I just want to ask really about overall capacity. What would you say that UK based industry has the capacity and the ability to supply. Let's take drones, sufficient drones in particular over a sustained period in the event of war. I mean, the Prime Minister speculated in his Munich speech, uh, a little while ago about the risks of a conflict opening out by 2030, within the next five years.
What what's our capacity to respond to a challenge of, of that scale?And what kind of, um, always. On capacity would be needed to, uh, to, to, to respond appropriately. So there are issues there for the government on the scale and, and so on of orders that they, they provide. But to what extent is the, is the sector. Equipped with the capacity to respond.
What what's our capacity to respond to a challenge of, of that scale?And what kind of, um, always. On capacity would be needed to, uh, to, to, to respond appropriately. So there are issues there for the government on the scale and, and so on of orders that they, they provide. But to what extent is the, is the sector. Equipped with the capacity to respond.
11:43
Speaker 3
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Speaker 3
I think, I think it's fair to say. Um, so I, I, I can't necessarily speculate on the total capacity, uh, of, of the industry, um, but is it, is it, would it be capable of sustaining the level of activity in, in Ukraine?Um, that we see in Ukraine at the moment, I think that would be very challenging. Um. I think we've got the potential to build a much greater capacity and we are seeing in, in Swindon, the collection of a number of drone manufacturers.
And again, working in partnership, we can look at how we might be able to do, uh, collective talent programs to, to build the skills base. Um, I think it's, it's worth recognizing as well in a, in a sustained conflict. It's not just about our. Ability to produce platforms. There is a wider aspect to this as well in respect to the ability to actually train, um, operators to utilize these, these platforms. So I think capacity for the drone industry is probably best thought of as a, as a kind of an ecosystem.
And, um. Always on model is a, is a, is a really interesting, um, base and certainly. I think the capacity required would not be possible through industry alone without government support in a kind of contracting for availability, um, base. Uh, we, we. Don't know exactly what the next conflict will look like. Um, I think it's clear that autonomous systems will, will continue to play. An increasingly critical role. Um, so we need capacity that is, is modular, has the ability to, uh, be upgraded, evolved, uh, and iterated.
Um, so there is an element of. Thinking about not just how we increase capacity, but what we increase industries capability to flex to changing demands and change quickly, which I think is a slightly. Tougher challenge.
And again, working in partnership, we can look at how we might be able to do, uh, collective talent programs to, to build the skills base. Um, I think it's, it's worth recognizing as well in a, in a sustained conflict. It's not just about our. Ability to produce platforms. There is a wider aspect to this as well in respect to the ability to actually train, um, operators to utilize these, these platforms. So I think capacity for the drone industry is probably best thought of as a, as a kind of an ecosystem.
And, um. Always on model is a, is a, is a really interesting, um, base and certainly. I think the capacity required would not be possible through industry alone without government support in a kind of contracting for availability, um, base. Uh, we, we. Don't know exactly what the next conflict will look like. Um, I think it's clear that autonomous systems will, will continue to play. An increasingly critical role. Um, so we need capacity that is, is modular, has the ability to, uh, be upgraded, evolved, uh, and iterated.
Um, so there is an element of. Thinking about not just how we increase capacity, but what we increase industries capability to flex to changing demands and change quickly, which I think is a slightly. Tougher challenge.
11:46
Speaker 2
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Speaker 2
So I would add, um, Scott alluded to it briefly. It's not only the capacity to build the platforms, it's the capacity to, once they're built to test them and then train people on them. So as an example, um, to build some capacity and resilience at West Wales Airport, I'm already hiring people to work towards a model where we are open seven days a week. Currently, the airport is only operating Monday to Friday. Um, with the context that the airspace over the Welsh coast is, is open 24 over seven.
So the model that I want to come to in the next couple of years is that I want the airport to be open seven days a week, and then we can work towards 24 hours a day, and that opens up huge capacity when it comes to flying these platforms, training on the platforms are you just go back into night shift, day shift, same as production, night shift, day shift. Um, I think the government would, um, need. To lean in with the regulators to enable um, airspace. Access because we won't be the only ones that are, are trying to do this.
And as I've already mentioned, there's not many places where people have the freedom to fly. So the regulatory burden would have to, um, need, um, need to. Accelerate freedoms pretty quickly for people to build the capacity resilience to fly once they've built them. So it's a whole, I look at it from a whole, um. It's a, it's a whole system. It's not just the platform. Everything is a whole system. So from. Yeah, everybody, everybody is a cog in the system.
And there's big chunks of things that need to be thought about other than building a platform.
So the model that I want to come to in the next couple of years is that I want the airport to be open seven days a week, and then we can work towards 24 hours a day, and that opens up huge capacity when it comes to flying these platforms, training on the platforms are you just go back into night shift, day shift, same as production, night shift, day shift. Um, I think the government would, um, need. To lean in with the regulators to enable um, airspace. Access because we won't be the only ones that are, are trying to do this.
And as I've already mentioned, there's not many places where people have the freedom to fly. So the regulatory burden would have to, um, need, um, need to. Accelerate freedoms pretty quickly for people to build the capacity resilience to fly once they've built them. So it's a whole, I look at it from a whole, um. It's a, it's a whole system. It's not just the platform. Everything is a whole system. So from. Yeah, everybody, everybody is a cog in the system.
And there's big chunks of things that need to be thought about other than building a platform.
11:48
11:48
11:49
11:49
11:49
11:49
Speaker 6
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Speaker 6
Is it best or. Is it me?Okay. Sorry. Mr.. Um, yes, we've we've talked about the various obstacles you face. Um, but looking at UK defence procurement capacity and capability at a system level and particularly the Strategic defence reviews reference to creating a new partnership between the two wings of um defence. Um my question is, how does your relationship with the UK government compare with your relationship with the governments of other countries that you engage with or operate in, and what could the UK learn from the relationship in how it's managed in other countries?And if you've got particular exemplars, you'd quote.
11:50
Speaker 3
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Speaker 3
Yeah. So, so I think we we touched on this. Earlier. So we, we operate internationally, um, across a whole host of, of different countries. And we, we naturally see different approaches to defence innovation and, and industrial partnership. It's not to say that there's anything. Wrong. Or, or the likes across, across different models. Um, but countries have their own uh, their own. Drivers and interests that impact around, around that, that relationship.
Um, I think we've got a, we've built a strong relationship with, with the UK over the, over the past decade. So it's, you know, it takes, it takes, takes time, it takes time to, to kind of build that trust. And, and we look forward to, to continuing that in, in the future. Um, I don't think there's, there's any particular avenues, I'm afraid to say that I could suggest. Uh, this country does this and therefore the UK should, should do, do that.
Um, I think we've got a, we've built a strong relationship with, with the UK over the, over the past decade. So it's, you know, it takes, it takes, takes time, it takes time to, to kind of build that trust. And, and we look forward to, to continuing that in, in the future. Um, I don't think there's, there's any particular avenues, I'm afraid to say that I could suggest. Uh, this country does this and therefore the UK should, should do, do that.
11:51
11:51
Speaker 2
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Speaker 2
I think we're, I think we're we're slightly privileged here because. I don't know of any of my colleagues who have the same interaction with their governments, and I don't know if you do. Um, whereas we, we interact with um our MPs, uh, especially in. London. Will stone is um, regularly talking to us, uh, in fact, most weeks. Um, so I don't think or I'm unaware of any other. Area of tech where they have that level of interaction with government.
That's, that's my thought. Initial thoughts.
That's, that's my thought. Initial thoughts.
11:52
Speaker 3
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Speaker 3
Yeah, I think, I think that's, that's fair. Um, we have a. Somewhat if we are engaging, um, in countries that we haven't had much activity or experience, we try to, to come in to share more around the kind of operational lessons that we have seen, um, through, through operating in Ukraine and operating in a world that, that the wider world are looking at and wanting to learn from. Um, so it's very much in the kind of education base trying to kind of raise awareness.
Um, and I think, I think the UK is. Has been doing a relatively decent job of actually learning, uh, in terms of those lessons.
Um, and I think, I think the UK is. Has been doing a relatively decent job of actually learning, uh, in terms of those lessons.
11:53
Speaker 1
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Speaker 1
Thank you. I hope that doesn't leave us nothing to say in our report. We were hoping for lots of things that we could be saying about, um, thank you both very much. Um, not just for your time today, but needless to say, for all that your company is doing, I think we realize how important that has been and will continue to be. So, I mean, I think, you know, we owe you some thanks for that, but thank you very much. If having looked at the, um.
Transcript later on, there's anything else you think would be helpful, um, as we continue our work, we will be sitting for some time yet. Um and so any other input you want to put would be very welcome.
Transcript later on, there's anything else you think would be helpful, um, as we continue our work, we will be sitting for some time yet. Um and so any other input you want to put would be very welcome.
11:54
11:54