Industry and Regulators Committee
Tuesday 23rd June 2026
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11:37
Speaker 1
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Speaker 1
Competitor. We don't see ourselves as a competitor. We. We build the stuff that they don't want to. There's not um, there isn't friction there, even though it might look like we want the big, big ticket programs that are going to last 30 years. And there is a place for those. We're not suggesting that there isn't, but drones go out of date within six weeks. The Ooda loop for combat effectiveness changes. And so the reticence of Mod to buy things that are on the shelf now, in case they go out of date is a bit flawed because they're not taking into account the constant spiral development and the airframes don't change.
The FPV drones that are being used in Ukraine are 15 year old designs. There is nothing different about the design of the aircraft. The kit that goes on them is changing every six weeks, and that's where we need to get to in terms of, um, our company is full of war fighters as well, which helps us because we can understand the exam question in a different way. Um, and we were at the, but some of the primes have still got some strange mindsets. And we were at the opening of the unmanned system centre in Swindon, uh, for the first visit of um the Secretary of State, he came to our stand and we had a wonderful time and he spent a lot of time with us, which was, was heartening.
One of the primes realized that we had a technology available to us and said, oh, we would like that. And we said, yeah, yeah, yeah, sure. He said, and if you don't let us have it, we'll just buy that company anyway. Now, it may have been a flippant remark from a junior official. It might not be the intention at all. It's probably not how they want to operate. But that feeling was there and it was a oh, now what do we do?We need this technology for our aeroplanes.
Do we secure it and hold it so that we get it, in which case that stifles that company. But if somebody else gets it, they'll stifle it from us. And so there's this tension that was unnecessary. And why do we have to go through it when actually the primes have got an amazing role and an important role, but we don't really eat their sandwiches. We're on different programmes that they don't really want to be doing. Um, that might change in the future, of course, as the industrial complex builds if it ever does.
Um, but right now we should be working together. What are the roles and responsibilities that our armed forces have to satisfy that will drive the capability gaps?It might not be mod that recognised them first. They probably will, but it might. It doesn't always equate to that. And companies like ours do see capability gaps emerging, and we can fill them quicker than a procurement process that lasts 18 months.
The FPV drones that are being used in Ukraine are 15 year old designs. There is nothing different about the design of the aircraft. The kit that goes on them is changing every six weeks, and that's where we need to get to in terms of, um, our company is full of war fighters as well, which helps us because we can understand the exam question in a different way. Um, and we were at the, but some of the primes have still got some strange mindsets. And we were at the opening of the unmanned system centre in Swindon, uh, for the first visit of um the Secretary of State, he came to our stand and we had a wonderful time and he spent a lot of time with us, which was, was heartening.
One of the primes realized that we had a technology available to us and said, oh, we would like that. And we said, yeah, yeah, yeah, sure. He said, and if you don't let us have it, we'll just buy that company anyway. Now, it may have been a flippant remark from a junior official. It might not be the intention at all. It's probably not how they want to operate. But that feeling was there and it was a oh, now what do we do?We need this technology for our aeroplanes.
Do we secure it and hold it so that we get it, in which case that stifles that company. But if somebody else gets it, they'll stifle it from us. And so there's this tension that was unnecessary. And why do we have to go through it when actually the primes have got an amazing role and an important role, but we don't really eat their sandwiches. We're on different programmes that they don't really want to be doing. Um, that might change in the future, of course, as the industrial complex builds if it ever does.
Um, but right now we should be working together. What are the roles and responsibilities that our armed forces have to satisfy that will drive the capability gaps?It might not be mod that recognised them first. They probably will, but it might. It doesn't always equate to that. And companies like ours do see capability gaps emerging, and we can fill them quicker than a procurement process that lasts 18 months.
11:40
Speaker 2
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Speaker 2
So so is a software. Working in defence is quite different to any other sector you work in. In most other sectors, you would often sell your software directly to your customers. Um, defence typically doesn't buy software. It doesn't know how to buy software and typically buys much bigger capabilities. So that would be software hardware computing systems, communication systems, training programs. And together those multi-year programmes. Defence is quite unique like that. So it does mean by and large, as SMEs, where we tend to be more niche in what we're really good at, more often than not, you do find yourself working with part of a larger organisation in terms of experience with a larger, larger companies.
The primes, I think it really, from my experience, depends on where their decision making is. If they are a UK company or they have delegated decision making in the United Kingdom, then they're a lot easier to work in. That ties back to Tom's point on sovereignty. So if the people I'm dealing with are UK based and decisions are made in the UK, then actually it's good relationships. A couple of primes have been excellent with us. We've got very good relationships.
We're embedded in a few of their programs that people don't even know we're there. It's brilliant when those same on the front door, they look the same, but they're actually headquartered in another country, us historically, but we're seeing a more wider ones. The decision making is not in the UK. Therefore the relationship to those companies is nearly always difficult, if not non-existent. And the sort of predatory behaviours John was just mentioning become far more common because the person who makes the decision isn't the one you're talking to.
They're further away. So I think it's a very big distinction. It does tie into that sovereignty piece of where is the decision made and where is that assured access decision made?And it ties into how we work with the big companies. And the third point I was going to make on this is after the SDR was released, a bunch of SMEs who are all used to working together went, hang on a minute. Mod said they'd like a new relationship.
They'd like to see self forming consortia. So we did. So we've got one called Septa, which is a self forming consortia as it happens, two of us, Tom and myself, are sat here that came around for SMEs who naturally work together, going, hang on a minute, we all work together anyway, let's actually put a label on the door, work collaboratively and try and present that back to mod as a way that actually mod could suddenly engage with 1015 SMEs that offer a broad skill set, not necessarily a prime.
I'll be honest, it's had a lot of interest, but Mod don't know how to contract it. Back to my previous point, they don't know how to work with anything that isn't a traditional large prime with a large multi-year balance sheet, so I think there is an opportunity in there to go. How do we have a more UK collaborative working?And I'm sure the three of us here, if you ask us all privately, go, do we work with other SMEs?We work with other SMEs all the time.
You know, if you phoned anyone and said, do you know a company that does X, Y, Z, there's a very good chance all three of us would know. Someone go, yeah, there's phone them. We naturally collaborate behind the scenes. Trying to bring that to the fore to make actually give the resilience that John was talking about, I think is the opportunity. And that can be with a prime or even just as consortia.
The primes, I think it really, from my experience, depends on where their decision making is. If they are a UK company or they have delegated decision making in the United Kingdom, then they're a lot easier to work in. That ties back to Tom's point on sovereignty. So if the people I'm dealing with are UK based and decisions are made in the UK, then actually it's good relationships. A couple of primes have been excellent with us. We've got very good relationships.
We're embedded in a few of their programs that people don't even know we're there. It's brilliant when those same on the front door, they look the same, but they're actually headquartered in another country, us historically, but we're seeing a more wider ones. The decision making is not in the UK. Therefore the relationship to those companies is nearly always difficult, if not non-existent. And the sort of predatory behaviours John was just mentioning become far more common because the person who makes the decision isn't the one you're talking to.
They're further away. So I think it's a very big distinction. It does tie into that sovereignty piece of where is the decision made and where is that assured access decision made?And it ties into how we work with the big companies. And the third point I was going to make on this is after the SDR was released, a bunch of SMEs who are all used to working together went, hang on a minute. Mod said they'd like a new relationship.
They'd like to see self forming consortia. So we did. So we've got one called Septa, which is a self forming consortia as it happens, two of us, Tom and myself, are sat here that came around for SMEs who naturally work together, going, hang on a minute, we all work together anyway, let's actually put a label on the door, work collaboratively and try and present that back to mod as a way that actually mod could suddenly engage with 1015 SMEs that offer a broad skill set, not necessarily a prime.
I'll be honest, it's had a lot of interest, but Mod don't know how to contract it. Back to my previous point, they don't know how to work with anything that isn't a traditional large prime with a large multi-year balance sheet, so I think there is an opportunity in there to go. How do we have a more UK collaborative working?And I'm sure the three of us here, if you ask us all privately, go, do we work with other SMEs?We work with other SMEs all the time.
You know, if you phoned anyone and said, do you know a company that does X, Y, Z, there's a very good chance all three of us would know. Someone go, yeah, there's phone them. We naturally collaborate behind the scenes. Trying to bring that to the fore to make actually give the resilience that John was talking about, I think is the opportunity. And that can be with a prime or even just as consortia.
11:44
11:44
Speaker 4
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Speaker 4
Please very, very quickly. And I do just have a very simple opinion on this. Our experience has been exclusively direct engagement with the Mod, and I think in uncrewed systems, we think this maximises customer intimacy, responsiveness, speed of iteration, and it keeps our products reassuringly affordable.
11:44
11:45
Speaker 5
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Speaker 5
Uh, yes. Hello. Um, I have got a question which follows on from from what you've just been saying. I think perhaps I'll just ask. Ask the question I'm supposed to ask. And then, um, if I may add, add, uh. That question. Um, and, and the question I'm about to ask you, you've sort of touched on various aspects of. So please don't feel the need to repeat. Um, but what you've already said, um, so the question I was going to ask is how do procurement processes and contracts need to change to adapt at pace to new technologies and requirements such as drone and anti-drone capabilities, and to make them easier for SMEs to engage with?What progress has the government made in moving towards its new segmented procurement model, and does the government need to accept a greater level of risk in its procurement of new technologies and capabilities?I know that's a long question, but if you'd like to pick up bits of that, um, that you want to reply to, can I just, um, on connected to that question and what you've just been talking about, there are, there are big infrastructure projects elsewhere in the UK.
Um, and I'm thinking Olympics, HS2, Sizewell C, um, and when I was running London first in the early 2000, um we had the Olympic Park being built and as a result um wanted to push business down to SMEs and to local people. And so the contracts to what would be the equivalent of your primes required 20% local SMEs and, and, uh, employees. Um, and so I'm just wondering whether there's any use of that in, in the defence world. And also the thing that we set up at the time, something called compete for, uh, which is still used, I see by Sizewell C today, which is about making clear to SMEs what, what products are available.
So I'm just wondering if there's any cross cross sector learning from that. Um, but if, if um one of you would like to answer any of those questions, that would be helpful.
Um, and I'm thinking Olympics, HS2, Sizewell C, um, and when I was running London first in the early 2000, um we had the Olympic Park being built and as a result um wanted to push business down to SMEs and to local people. And so the contracts to what would be the equivalent of your primes required 20% local SMEs and, and, uh, employees. Um, and so I'm just wondering whether there's any use of that in, in the defence world. And also the thing that we set up at the time, something called compete for, uh, which is still used, I see by Sizewell C today, which is about making clear to SMEs what, what products are available.
So I'm just wondering if there's any cross cross sector learning from that. Um, but if, if um one of you would like to answer any of those questions, that would be helpful.
11:46
11:46
Speaker 4
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Speaker 4
Just a brief point then to touch on one of your first questions, Baroness, uh, around, um, how are we procuring for these new technologies is how I heard that. I think traditional procurement there are stable requirements, long platform lifecycles, low rates of technology change. And so there is a model which I think of as you specify, you compete, you buy, and then you feel the equipment, the emerging model that we're seeing is you buy, you buy what's available, you learn, you adapt, and you buy again. And there is a fundamental change that's required to procure at a meaningful volumes.
We're talking thousands and tens of thousands of drones per month in order to enable that type of mindset. The second point I wanted to highlight was a winner takes all mindset to competitions. I'm still seeing this is the sort of default way to procure, as you compete, a capability and run a process. There's usually some sort of evaluation criteria. Sometimes there's a fly off and ultimately the winner, you know, there is a last man or woman standing, uh, in uncrewed systems.
I think this unintentionally weakens the industrial ecosystem. I think competition should continue after a contract award and not end because of it. What we are seeing to also refer back to the drone dominance and replicator programs in the US is multiple, and we're talking about more than ten companies getting meaningful contract awards off the back of what they call gauntlets, the equivalent of a fly off competition. And what that does is keeps the competition healthy between companies that are producing the relevant capability. But there's a whole sub supply chain structure, which is then not underpinned to one vendor.
And the government also then avoids having this vendor lock in. Of course, there needs to be some cohesion and potential down selection over time so that every soldier doesn't have ten different drones to understand how to train with. But I don't think we need to solve that immediately. I think we're stifling competition as a result of this approach.
We're talking thousands and tens of thousands of drones per month in order to enable that type of mindset. The second point I wanted to highlight was a winner takes all mindset to competitions. I'm still seeing this is the sort of default way to procure, as you compete, a capability and run a process. There's usually some sort of evaluation criteria. Sometimes there's a fly off and ultimately the winner, you know, there is a last man or woman standing, uh, in uncrewed systems.
I think this unintentionally weakens the industrial ecosystem. I think competition should continue after a contract award and not end because of it. What we are seeing to also refer back to the drone dominance and replicator programs in the US is multiple, and we're talking about more than ten companies getting meaningful contract awards off the back of what they call gauntlets, the equivalent of a fly off competition. And what that does is keeps the competition healthy between companies that are producing the relevant capability. But there's a whole sub supply chain structure, which is then not underpinned to one vendor.
And the government also then avoids having this vendor lock in. Of course, there needs to be some cohesion and potential down selection over time so that every soldier doesn't have ten different drones to understand how to train with. But I don't think we need to solve that immediately. I think we're stifling competition as a result of this approach.
11:48
Speaker 2
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Speaker 2
So I'll just pick up that one. Um, I think an important part to start looking at is the current procurement process was brought in in 1998. So that predates Google smartphones and home broadband. So at the time, 9% of the households had any internet access. And that was dial up for those of us who remember it. And so an awful lot has changed in that time, except our defence buys tech. We're still buying tech the way we designed to buy tech in 1998.
And I think that's the big root of the problem we've got here. If you were to go out to try and buy a new smartphone now, the mod would go and do a big requirements upfront exercise, ask everybody what they wanted and define exactly what that smartphone looked like. They would take their best ideas from iPhone and the best ones from Android, and they'd go and define one. It would be eye wateringly expensive and take forever. The rest of us. We choose if we want an iPhone or an Android phone, we go out and we buy them and we turn it on this afternoon.
That's the times point. We've got to move that mindset of what's the outcome we want to achieve and when do we want to achieve it. Not exquisite upfront requirements. As a techie, when I came back into defence, the hardest thing I had to learn was how to do upfront requirements, the software industry. We dumped them in 2002, just after the Standish report, because it proved that they just don't work. Mod relies on them to do the work that then drives an over specification, and then that drives the risk averse nation because everything becomes so analysed, you then start looking at all these perceived risks.
And I think that perceived risk is the important one and the one very practical one I would put in is in mod. When anyone's going through a procurement, as Tom was saying on the contract, one, the number of people who can say no to signing off the contract. On last count I was chatting to a colleague was 28. People could say no. One person should be able to say yes. The others can advise. But if you can get that down to actions and that's that risk averse make make someone accountable.
And the accountability for doing nothing has to be just as important. The delay contracts for two years. What is the impact of that?That has to be factored in. And I think buying quickly, buying off the shelf to Tom's point, and then not getting tied up in complex procurement and buy tech like everybody else, buys tech as opposed to how defence does it.
And I think that's the big root of the problem we've got here. If you were to go out to try and buy a new smartphone now, the mod would go and do a big requirements upfront exercise, ask everybody what they wanted and define exactly what that smartphone looked like. They would take their best ideas from iPhone and the best ones from Android, and they'd go and define one. It would be eye wateringly expensive and take forever. The rest of us. We choose if we want an iPhone or an Android phone, we go out and we buy them and we turn it on this afternoon.
That's the times point. We've got to move that mindset of what's the outcome we want to achieve and when do we want to achieve it. Not exquisite upfront requirements. As a techie, when I came back into defence, the hardest thing I had to learn was how to do upfront requirements, the software industry. We dumped them in 2002, just after the Standish report, because it proved that they just don't work. Mod relies on them to do the work that then drives an over specification, and then that drives the risk averse nation because everything becomes so analysed, you then start looking at all these perceived risks.
And I think that perceived risk is the important one and the one very practical one I would put in is in mod. When anyone's going through a procurement, as Tom was saying on the contract, one, the number of people who can say no to signing off the contract. On last count I was chatting to a colleague was 28. People could say no. One person should be able to say yes. The others can advise. But if you can get that down to actions and that's that risk averse make make someone accountable.
And the accountability for doing nothing has to be just as important. The delay contracts for two years. What is the impact of that?That has to be factored in. And I think buying quickly, buying off the shelf to Tom's point, and then not getting tied up in complex procurement and buy tech like everybody else, buys tech as opposed to how defence does it.
11:51
11:51
11:51
11:52
11:52
Speaker 2
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Speaker 2
I can pick up on that one. The short answer is no. Um this is one I've banged my head around for years on the SME action plan. The 25% flowing down was always a nice to have. It was never contracted. A very simple one. That, um, actually a salesman at a prime gave me a very simple thing. If on every tender you put that 25% of the marks on that tender was based on that, you spent at least 25% of that budget with a UK SME, and you could prove it.
You would get the 25%. And if nobody could do it, nobody would get any benefit. You'd be able to score it. If an SME couldn't do it, you're building a nuclear submarine. Fine. It doesn't make any difference because no one could do it. The company that can manage an SME supply line or are an SME themselves would immediately get 25% more marks and would have a very good chance. But Mod has never done those and have always argued it would be illegal for them to do it.
So I'd be really interested to see how other sectors of government have done it within the same law where the Mod have argued, no, we couldn't mandate that, which I've always thought was an excuse.
You would get the 25%. And if nobody could do it, nobody would get any benefit. You'd be able to score it. If an SME couldn't do it, you're building a nuclear submarine. Fine. It doesn't make any difference because no one could do it. The company that can manage an SME supply line or are an SME themselves would immediately get 25% more marks and would have a very good chance. But Mod has never done those and have always argued it would be illegal for them to do it.
So I'd be really interested to see how other sectors of government have done it within the same law where the Mod have argued, no, we couldn't mandate that, which I've always thought was an excuse.
11:53
11:54
Speaker 7
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Speaker 7
Of my question was actually answered in your response to Baroness Harding, but so I'll try and focus it. Uh, my my question more precisely, the barriers to innovative SMEs navigating into defence in the first instance, you've all mentioned money contracting process, mod skills, but getting in in the first instance is 2 or 3 of the key barriers that have been identified to us is the is the defence landscape too complex to navigate?Tens of different gateways for innovation, innovation, funding, tenders and contracts?The hundreds or thousands of pages long?I don't know if that's a fair summary, but what, in your view, would be the key changes that would give you the quick gains for overcoming these barriers and assisting the new and future innovative SMEs getting into the defence space?
11:54
Speaker 2
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Speaker 2
I'll pick up on some of those, because I'm back to my colleague at the back of the room. We helped design some of the work that went into the office of SME growth. That could have been a way to help that by producing better signposting. But for people, for the defence industry isn't going to be enough. The frameworks you mentioned the frameworks as part of the previous work we did under what was called the Defence Suppliers Forum, actually identified well over 100 frameworks, either in use by the Mod at any moment in time.
We did a piece of work recently under Defence Industry Joint Council that recommended um, some actions, one of which was the Mod published. What frameworks they actually used for what they haven't been able to do that. So they don't even know their own frameworks because part of the work came out from that was the framework that typically gets used, is the framework that's familiar to the contracting officer, letting that piece of work, not the framework that's appropriate for that piece of work. So as an SME, I talk with my two colleagues here.
There is no chance we could be on 100 different frameworks. A handful might be practical, 100 won't be so often. And I've had personal experience, a piece of work that we were the current supplier on the Army went out and they needed to put it through a different framework. They chose the framework they were familiar with. It's not one we were on. They told us which framework they were going to put it on, and suggested we went and met the ten or so framework holders build a relationship.
So when it came out, we could then sub to one of them, and then we sub to one of them and got basically marginalised because we were now two down the supply chain. That happens all the time. So I think in terms of innovation, the key one is to get people in um, into the user and to pick up Tom's point, don't try and pick the winner on day one. Pick. Lots of companies have lots. Build that resilience, build that capability.
Dasa Defence Accelerator proudly claimed that they reject 90% of good bids. I think that's insane. It's totally the wrong way around. It should be. You reject all stupid bids and anything that's credible, give it a go. Once that money flows, you develop things. That cash flow is what keeps businesses alive. That creates the innovation, that creates the next, the next generation of ideas. So you've just got to flow money.
Don't try and pick the winner up front. Just try and get started and do things and then do things. You'll learn things. People do new things and you innovate. That's how you innovate. You never innovate by defining the winner at the start and hope for the best. It's never worked, but that's what Mod thinks.
We did a piece of work recently under Defence Industry Joint Council that recommended um, some actions, one of which was the Mod published. What frameworks they actually used for what they haven't been able to do that. So they don't even know their own frameworks because part of the work came out from that was the framework that typically gets used, is the framework that's familiar to the contracting officer, letting that piece of work, not the framework that's appropriate for that piece of work. So as an SME, I talk with my two colleagues here.
There is no chance we could be on 100 different frameworks. A handful might be practical, 100 won't be so often. And I've had personal experience, a piece of work that we were the current supplier on the Army went out and they needed to put it through a different framework. They chose the framework they were familiar with. It's not one we were on. They told us which framework they were going to put it on, and suggested we went and met the ten or so framework holders build a relationship.
So when it came out, we could then sub to one of them, and then we sub to one of them and got basically marginalised because we were now two down the supply chain. That happens all the time. So I think in terms of innovation, the key one is to get people in um, into the user and to pick up Tom's point, don't try and pick the winner on day one. Pick. Lots of companies have lots. Build that resilience, build that capability.
Dasa Defence Accelerator proudly claimed that they reject 90% of good bids. I think that's insane. It's totally the wrong way around. It should be. You reject all stupid bids and anything that's credible, give it a go. Once that money flows, you develop things. That cash flow is what keeps businesses alive. That creates the innovation, that creates the next, the next generation of ideas. So you've just got to flow money.
Don't try and pick the winner up front. Just try and get started and do things and then do things. You'll learn things. People do new things and you innovate. That's how you innovate. You never innovate by defining the winner at the start and hope for the best. It's never worked, but that's what Mod thinks.
11:58
Speaker 1
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Speaker 1
I totally agree with that. Um, if we could have one defence sourcing portal where everybody knows this is the only way as an SME that you can go through any process to get a contract, that would really help. Things are announced in different places and you don't know what you don't know. As an SME. So perhaps to help SMEs, there ought to be a triaging company set up or a, I would say, not a government department, because it would then start to develop its favourites.
A way of an SME being guided towards things that are appropriate to it. And also SMEs are great at innovation, but they're not great at scaling. They're not great at assurance certification or the frameworks. And if there was a mechanism that the great idea from an SME that was not prepared enough to deliver that idea, rather than have that idea competed, and therefore that idea is then socialised amongst all of the primes. And that SME never gets to capitalise on its great idea.
Instead, if we could bring some, um, horsepower into that company from government to say, we're going to do the certification bit with you, we're going to give you some advice on assurance. We're going to show you how the bid system works, even. Yeah. I'll give you an example of why this didn't really work. Um, in one of the major bids it said, and this was supposed to be for SMEs that were new to defence. Tell me how many government programmes you have delivered to government if you didn't score as highly as the primes, you were never going to get through, and yet it was set up for SMEs to do.
And that programme is actually primes really, with SMEs tacked on with their capability. And that's not the answer for us. We need to grow more companies in more breadth rather than those companies support a few primes, most of which aren't UK ones. So we need to think in a different way. So I would say one portal please and help for the smaller SMEs. The Fred in the shed, who's got the great idea to take that idea forward so it benefits them.
Not the first prime that saw it.
A way of an SME being guided towards things that are appropriate to it. And also SMEs are great at innovation, but they're not great at scaling. They're not great at assurance certification or the frameworks. And if there was a mechanism that the great idea from an SME that was not prepared enough to deliver that idea, rather than have that idea competed, and therefore that idea is then socialised amongst all of the primes. And that SME never gets to capitalise on its great idea.
Instead, if we could bring some, um, horsepower into that company from government to say, we're going to do the certification bit with you, we're going to give you some advice on assurance. We're going to show you how the bid system works, even. Yeah. I'll give you an example of why this didn't really work. Um, in one of the major bids it said, and this was supposed to be for SMEs that were new to defence. Tell me how many government programmes you have delivered to government if you didn't score as highly as the primes, you were never going to get through, and yet it was set up for SMEs to do.
And that programme is actually primes really, with SMEs tacked on with their capability. And that's not the answer for us. We need to grow more companies in more breadth rather than those companies support a few primes, most of which aren't UK ones. So we need to think in a different way. So I would say one portal please and help for the smaller SMEs. The Fred in the shed, who's got the great idea to take that idea forward so it benefits them.
Not the first prime that saw it.
12:00
Speaker 4
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Speaker 4
Yeah. I'd like to add that I would take maybe a slightly different perspective or approach on this, which is when I'm thinking about a microcosm of what the government is trying to do. So I would set the strategy, the long term strategy for my company. I think the strategic Defence Review and the Defence Industrial Strategy are broadly on the money, and it's well understood that the challenge is, and the direction of travel we need to go in are directionally correct. I then set granular metrics, objectives and employ people to go and deliver on them.
I think what we are missing is that level of granularity on reporting. If we can't objectively measure things like sovereign procurement, if we're not transparently reporting, potentially by quarter, at least by year, long term contracts placed with SMEs, then how do we know that we're on the right track?And I think that level of reporting would drive good people within the government, within the Mod, people responsible for procurement to come up with the right initiatives to increase the level of access that and the long term procurement that we're looking to drive with industry.
I think what we are missing is that level of granularity on reporting. If we can't objectively measure things like sovereign procurement, if we're not transparently reporting, potentially by quarter, at least by year, long term contracts placed with SMEs, then how do we know that we're on the right track?And I think that level of reporting would drive good people within the government, within the Mod, people responsible for procurement to come up with the right initiatives to increase the level of access that and the long term procurement that we're looking to drive with industry.
12:01
Speaker 2
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Speaker 2
I would suggest yes, because the fundamental one is if you don't understand your data and your impact, you can't understand if a policy decision or an action has the consequence you wanted, had the right output, the wrong output, or had an unintended consequence. If you've got no way of measuring it. So a lot of that SME data was SME spend, SMEs and supply chain. And so much of that data was poor. A lot of the companies I saw a lot of the feed in data universities listed as SMEs, subsidiaries of large multinationals listed as SMEs.
All things that broke the the definitions. That meant you didn't have that data set. So when you made a policy statement, we want to spend another 2.5 billion with SMEs. If you've got no way of measuring it. This is to Tom's point here reporting. If you've got no way of measuring it, you've got no way. If you're achieving it, you don't know if you're going the right way or completely the wrong way. You might bring in a policy that's well intended that actually suffocates a whole section of the industry.
You want to catch that?And no, that's a bad idea. Let's change it. If you don't have any of the data and you're relying on primarily primes telling you what they think you want to hear, you're not going to get the evidence. And I think we look back to the Covid times, the data set and the government's use, suddenly learning how to use data and make sense of that fundamentally changed how government worked. And I think very successfully that we need that same level of data driven decision making into defence.
And particularly when you're looking at, you know, in the industry side, £36 billion a year of taxpayers money being spent, I think we have to have better idea how it's being spent and be able to look down the supply chain. And to John's point, flowing that money down supply chains, how we build that resilience. If we don't know who's in the supply chain, we don't know how resilient our supply chain is. So I think they're all related. But I'm a mathematician by degree.
I like numbers, and therefore I come back to if we haven't got the numbers, I struggle for how you might make the decisions.
All things that broke the the definitions. That meant you didn't have that data set. So when you made a policy statement, we want to spend another 2.5 billion with SMEs. If you've got no way of measuring it. This is to Tom's point here reporting. If you've got no way of measuring it, you've got no way. If you're achieving it, you don't know if you're going the right way or completely the wrong way. You might bring in a policy that's well intended that actually suffocates a whole section of the industry.
You want to catch that?And no, that's a bad idea. Let's change it. If you don't have any of the data and you're relying on primarily primes telling you what they think you want to hear, you're not going to get the evidence. And I think we look back to the Covid times, the data set and the government's use, suddenly learning how to use data and make sense of that fundamentally changed how government worked. And I think very successfully that we need that same level of data driven decision making into defence.
And particularly when you're looking at, you know, in the industry side, £36 billion a year of taxpayers money being spent, I think we have to have better idea how it's being spent and be able to look down the supply chain. And to John's point, flowing that money down supply chains, how we build that resilience. If we don't know who's in the supply chain, we don't know how resilient our supply chain is. So I think they're all related. But I'm a mathematician by degree.
I like numbers, and therefore I come back to if we haven't got the numbers, I struggle for how you might make the decisions.
12:04
12:04
Speaker 2
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Speaker 2
I'm no. They're aware they have a problem. I'm not convinced they are actively trying to solve the problem. I think it's one of the ones that's in the too hard basket, for want of a better term. They know it's a problem. And again, as we saw in the Covid times, getting to that data was so important early. I think Mod sees the problem, but I think they aren't taking the action necessary.
12:04
12:05
12:05
Speaker 8
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Speaker 8
Thank you. Thank you very much. Um, I want to ask about the supply chain. And you've dealt with this quite a bit. And so I'm I'm not asking you to repeat everything. Um, but the question I wanted to ask was what are the critical materials, components and other inputs that you need and to what extent are they available in the UK supply chain?And then perhaps to help me, could you sort of take something which I absolutely know nothing about, but you talked about thermal cameras, for example, which seemed to me to be, you know, if there is such a shortage of the bits for a thermal camera, why isn't somebody wanting to build the bits for the thermal camera?Sorry.
I mean, can you sort of help me with this supply chain question?And I have a secondary one, but I'll come back to that if I may.
I mean, can you sort of help me with this supply chain question?And I have a secondary one, but I'll come back to that if I may.
12:06
Speaker 4
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Speaker 4
I'm happy to take this one. So the vast majority of these critical components that go into uncrewed aerial systems and uncrewed systems in multi domains are underpinned by largely Chinese technology. So neodymium which is a material that goes into a it's a rare earth that gets refined. It goes into motors. 87% of the world's neodymium is refined or controlled by China. Uh, thermal cameras. The example that I gave one needs to have the sufficient scale, industrial scale of production in order to be remotely competitive in terms of the production cost, a thermal camera might competitively in China cost 5 to £600 equivalent within Europe, or the US would cost £3,000.
If you are submitting a bid for a UK tender and you're trying to decide which of those components you should put in your bill of materials, when you assemble your materials, um, you need to decide what's going to win you that bid. And what I'm still seeing is a lack of a prohibition of, um. Lack of evaluation criteria, which rewards sovereign resilience, uh, and a big emphasis on value for money. Invariably it comes down to who's got the best price and there'll be an opportunity for clarifying questions in most, most competitive tenders.
And there's over the last year, I've seen multiple questions to the effect of, is it okay to have a Chinese camera or motor?And invariably the answer comes back that it's it's not forbidden. It's not prohibited. So this does incentivize it does not incentivize prioritizing sovereign procurement, uh, in order to drive the type of, um, competitive pricing for those materials at an industrial scale, one needs volume, at least 1000 drones, drones a month over a 12 to 18 month, ideally longer period, probably more like 10,000 units a month.
Uh, there's a notion of always on production that's referred to in the Strategic Defence review in relation to munitions. If you took the same approach with drones, this is what would. It's not beyond the wit of man to create these, um, critical components in a UK first manner, but it just requires significant investment up front in order to get there. Just another very specific example. Um, last year we were considering that there was a consideration by an investor to um, fire up a rare earth refinery.
Some of this motor material was referring to in Sheffield, and they were picking between the UK and the US, and they decided that due to US government subsidies, it was a more attractive investment to set up those materials in the US. And so what we're now seeing is that we're able to obtain motors that are non-Chinese, which are still actually a rare beast in the industry, down to not just where you wind and assemble the materials, but down to where do where does the stuff come out of the ground?That is, that is us refined.
That capability does not exist in the UK.
If you are submitting a bid for a UK tender and you're trying to decide which of those components you should put in your bill of materials, when you assemble your materials, um, you need to decide what's going to win you that bid. And what I'm still seeing is a lack of a prohibition of, um. Lack of evaluation criteria, which rewards sovereign resilience, uh, and a big emphasis on value for money. Invariably it comes down to who's got the best price and there'll be an opportunity for clarifying questions in most, most competitive tenders.
And there's over the last year, I've seen multiple questions to the effect of, is it okay to have a Chinese camera or motor?And invariably the answer comes back that it's it's not forbidden. It's not prohibited. So this does incentivize it does not incentivize prioritizing sovereign procurement, uh, in order to drive the type of, um, competitive pricing for those materials at an industrial scale, one needs volume, at least 1000 drones, drones a month over a 12 to 18 month, ideally longer period, probably more like 10,000 units a month.
Uh, there's a notion of always on production that's referred to in the Strategic Defence review in relation to munitions. If you took the same approach with drones, this is what would. It's not beyond the wit of man to create these, um, critical components in a UK first manner, but it just requires significant investment up front in order to get there. Just another very specific example. Um, last year we were considering that there was a consideration by an investor to um, fire up a rare earth refinery.
Some of this motor material was referring to in Sheffield, and they were picking between the UK and the US, and they decided that due to US government subsidies, it was a more attractive investment to set up those materials in the US. And so what we're now seeing is that we're able to obtain motors that are non-Chinese, which are still actually a rare beast in the industry, down to not just where you wind and assemble the materials, but down to where do where does the stuff come out of the ground?That is, that is us refined.
That capability does not exist in the UK.
12:08
12:08
Speaker 4
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Speaker 4
Certainly think that a critical part of being able to sustain, uh, in a non-disruptive way and always on production at the scale that a war would require. So by far in the world, the Ukraine conflict is obviously consuming the largest number of drones, tens of thousands per month, something like 7 million drones this year. That type of demand creates a huge strain on the supply chain, and most of it comes from China. Uh, if tariffs were introduced, uh, if the there was a decision at a government level to stop supplying those rare earth materials, we would the Ukrainians would very quickly run out of materials to make their drones.
And it would take a very long time to spin up the capability to replace those materials.
And it would take a very long time to spin up the capability to replace those materials.
12:09
Speaker 8
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Speaker 8
Thank you. I have a slightly supplementary one on a different topic. I'm sorry. Two minutes to you again as well because you raised it. Um, your comment about um working capital. Um, I mean, sort of that was the world I was in and I, I would invest in your business if I couldn't see working capital coming through the door on a regular basis. So what is the, the banking attitude or the, the, what's the attitude of the financiers towards investing in a business like yours?
12:09
Speaker 4
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Speaker 4
We approached a number of banks and we approached invoice sort of debt factoring because these were for contracts. And it's a nice problem. You know, we've got a contract, we're delivering on it. Uh, if it's one contract and your customer says, I'm not paying you till the end of the contract because supply chain requires upfront, then you have this profile where there's a bit of a dip, but it's all good at the end. If you have four contracts at the same time doing the same thing, the dips are a lot bigger and the the ending point is higher.
Uh, so you would think that you could approach a bank or various facilities to, to, to deliver on mod defence deals and that this would be, you know, there'd be some cost associated with it, but it would be a reasonably frictionless process. The feedback we got from commercial banks was, you have one customer for these deals, which is the mod. All four of them were with different parts of the mod, but there was a feeling of high concentration of risk. Uh, the most that we could receive in advance from a debt factoring facility was 100 zero zero £0, which didn't touch the sides.
So we were really looking at investor support, and we were lucky enough that our investors took a long term view on this and could see that we delivered on projects like this in the past. I think without understanding investors, we would have been in a position where we might have been turning down those contracts and saying, let's, let's do this in a sustainable way. Let's pick the best contract and decline the rest.
Uh, so you would think that you could approach a bank or various facilities to, to, to deliver on mod defence deals and that this would be, you know, there'd be some cost associated with it, but it would be a reasonably frictionless process. The feedback we got from commercial banks was, you have one customer for these deals, which is the mod. All four of them were with different parts of the mod, but there was a feeling of high concentration of risk. Uh, the most that we could receive in advance from a debt factoring facility was 100 zero zero £0, which didn't touch the sides.
So we were really looking at investor support, and we were lucky enough that our investors took a long term view on this and could see that we delivered on projects like this in the past. I think without understanding investors, we would have been in a position where we might have been turning down those contracts and saying, let's, let's do this in a sustainable way. Let's pick the best contract and decline the rest.
12:11
12:11
Speaker 9
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Speaker 9
Okay. Yes. Thanks very much. Um, one of the things that's become very clear is that on any sort of war, consumables, munitions, drones, whatever, you probably get through them in the first week at the the rate it goes. And I think you mentioned already, I mean, I looked up for drones used in Ukraine in 2024, I think it was 1.5 million. You're now talking sort of 9 million a year. So, uh, the question we come down to, which is a really fundamental one, is whether we as a industrial sector have the ability to supply sufficient drones in this case.
But I same must be true of more standard and traditional munitions over a sustained period of war. What level of all was on capacity is needed because the thing. In the past, all the. And it's probably even more the case with things like sophisticated missiles. The production lines no longer exist. How do we make sure we get round that, uh, issue of, of being able to do that?And I suppose coming on to it, something you said before is it sounds like the hard hardware is not necessarily perishable, but the.
So if you like, the storage is not such a big issue, but it's around the, the software and the applications and what they carry. So perhaps you could just enlarge on that as well.
But I same must be true of more standard and traditional munitions over a sustained period of war. What level of all was on capacity is needed because the thing. In the past, all the. And it's probably even more the case with things like sophisticated missiles. The production lines no longer exist. How do we make sure we get round that, uh, issue of, of being able to do that?And I suppose coming on to it, something you said before is it sounds like the hard hardware is not necessarily perishable, but the.
So if you like, the storage is not such a big issue, but it's around the, the software and the applications and what they carry. So perhaps you could just enlarge on that as well.
12:13
Speaker 1
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Speaker 1
It's the fear of buying something that they then suddenly out of date. So can the UK industrial complex provide the number of effects that will be burned through at the rate of expenditure that appear on peer adversary war will need. The answer is yes. Um. Relax. The UK will be able to supply that sort of rate of expenditure, but it requires an always on demand signal to now when there's an always on contract doesn't always mean that there's always money.
It means that we've already contracted with you. And when we need them, we'll tell you that's not always on. So we need to have. And for the supply chain as well, the supply chain needs to be pump primed. So we always need the supply chain ahead of the demand signal. That means we have to have visibility of the demand signal. And we have to have an understanding that what we supply may be out of date today.
But we're on a route map to um, update. It if you're on an innovation cycle, which is aggressive and accelerative, then you can stay ahead of the enemy's innovation. Ooda loop encounters. If you're doing that, then you need a supply chain that can also adapt. And that supply chain has to be here. It can't be overseas because the supply lines of communication will have been broken or at least stressed. So an always on contract is multifaceted.
It's always on for you, always on for your supply chain. But your supply chain has to be as agile as the OEM. So as that platform gets challenged, whether it's a communications waveform challenge or whether the aircraft is not able to navigate because of changes to the Gnss jamming environment, and you're having to put new pieces of equipment in that innovation cycle is less than six weeks, which means your supply chain has to have the same mindset. They can't have the same mindset if they've not got an always on contract.
So the always on contract has to flow and has to cascade all the way down through industry. And that means that the, um. Senior responsible officers are going to be taking some risk and um. And that's difficult. You might let a contract, you have 100% confidence in today. And then in six weeks time, what you've just bought has been counted. There's no point buying something unless that operator and the vendor are working together to lead turn the threat and the the counter to the platform that you're supplying.
So you need an open architecture. You need, um, model based systems engineering, things that are just coming to the fore now. And Britain actually is ahead in this. We've actually got some really good framework ideas for open architecture frameworks, and we've got some very good certification and regulatory compliance methodologies that others don't have. So if anybody can do it, it's actually the UK. But we should do it with British companies because those are the only ones that are going to be here when we're having to innovate at the speed of relevance and get this equipment to our warfighter so that they never have something that's substandard.
So yes, is the answer. Yes. We could supply in enough numbers and remember the the stocks traditionally have been, um, calculated on standard scenarios. Those scenarios are not exactly real world. They're a bit hypothetical. But let's take an example of storm shadow. I can't talk about the numbers for obvious reasons, but let's say Storm Shadow was procured in certain volume. Then the peace dividend, which we've spent now, by the way, reduced that number by, let's say, 50%.
And then a big amount of them is given to another nation because they needed it. And it was actually in our interest. So to do now we're left with a very small stockpile, but nobody has pumped primed the supply chain. So now we have to either innovate a new idea, which is probably Project Backstop, which is a great innovative, um, uh, methodology from mod groundbreaking, but there's only one of them, only one of those programs. So we have to rethink the whole thing.
It means that we've already contracted with you. And when we need them, we'll tell you that's not always on. So we need to have. And for the supply chain as well, the supply chain needs to be pump primed. So we always need the supply chain ahead of the demand signal. That means we have to have visibility of the demand signal. And we have to have an understanding that what we supply may be out of date today.
But we're on a route map to um, update. It if you're on an innovation cycle, which is aggressive and accelerative, then you can stay ahead of the enemy's innovation. Ooda loop encounters. If you're doing that, then you need a supply chain that can also adapt. And that supply chain has to be here. It can't be overseas because the supply lines of communication will have been broken or at least stressed. So an always on contract is multifaceted.
It's always on for you, always on for your supply chain. But your supply chain has to be as agile as the OEM. So as that platform gets challenged, whether it's a communications waveform challenge or whether the aircraft is not able to navigate because of changes to the Gnss jamming environment, and you're having to put new pieces of equipment in that innovation cycle is less than six weeks, which means your supply chain has to have the same mindset. They can't have the same mindset if they've not got an always on contract.
So the always on contract has to flow and has to cascade all the way down through industry. And that means that the, um. Senior responsible officers are going to be taking some risk and um. And that's difficult. You might let a contract, you have 100% confidence in today. And then in six weeks time, what you've just bought has been counted. There's no point buying something unless that operator and the vendor are working together to lead turn the threat and the the counter to the platform that you're supplying.
So you need an open architecture. You need, um, model based systems engineering, things that are just coming to the fore now. And Britain actually is ahead in this. We've actually got some really good framework ideas for open architecture frameworks, and we've got some very good certification and regulatory compliance methodologies that others don't have. So if anybody can do it, it's actually the UK. But we should do it with British companies because those are the only ones that are going to be here when we're having to innovate at the speed of relevance and get this equipment to our warfighter so that they never have something that's substandard.
So yes, is the answer. Yes. We could supply in enough numbers and remember the the stocks traditionally have been, um, calculated on standard scenarios. Those scenarios are not exactly real world. They're a bit hypothetical. But let's take an example of storm shadow. I can't talk about the numbers for obvious reasons, but let's say Storm Shadow was procured in certain volume. Then the peace dividend, which we've spent now, by the way, reduced that number by, let's say, 50%.
And then a big amount of them is given to another nation because they needed it. And it was actually in our interest. So to do now we're left with a very small stockpile, but nobody has pumped primed the supply chain. So now we have to either innovate a new idea, which is probably Project Backstop, which is a great innovative, um, uh, methodology from mod groundbreaking, but there's only one of them, only one of those programs. So we have to rethink the whole thing.
12:17
12:18
Speaker 1
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Speaker 1
I would say by today's equipment and by an innovative cycle, agree to take, agree to agree on what the next cycle might look like and allow the money to flow straight away for that iterative six week cycle. So Mod would have to buy into the innovation cycle and work together to steer that company in the direction of travel. For requirements, we've got to break our addiction to requirements. By the time you've written it, it's out of date anyway. If you haven't written it in six weeks, why did you write it?It's out of date.
So we need to think in a different way. The warfighter will have more cognition of what's needed than mod in some of these instances. And so a feedback with the front line, the front line talking to the manufacturer, I need this. This doesn't work. This works well, but I'd like it this way. If you do it back through the system, it would take two years. But if we can talk directly to the warfighter and say, what is it that you need?What is the reach to weapon?What do you need from it?I'll change it now and then.
Mod picks up the bill later.
So we need to think in a different way. The warfighter will have more cognition of what's needed than mod in some of these instances. And so a feedback with the front line, the front line talking to the manufacturer, I need this. This doesn't work. This works well, but I'd like it this way. If you do it back through the system, it would take two years. But if we can talk directly to the warfighter and say, what is it that you need?What is the reach to weapon?What do you need from it?I'll change it now and then.
Mod picks up the bill later.
12:19
Speaker 9
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Speaker 9
Can I just come?You. You've talked about peer to peer warfare. If there is peer to peer warfare in terms of. And all the needs of supply, your sites will be one of the main targets. So do you work with government?Because at the moment we're defenseless, aren't we?In terms of our production facilities?So do you talk to government about that?
12:20
Speaker 1
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Speaker 1
We've thought about this. There's no point talking to government about our company and its its site holdings. We have already got a plan. Yes, we're moving into Swindon. Yes, we're taking a 200 600 zero square foot factory, but we won't be there in wartime. We will take the lessons of the Second World War from the mosquito and other manufacturing capabilities, and we will distribute it still in the region, but we'll be moving to old DFS warehouses, old toys R us warehouses.
We won't be there and we'll announce that we're not there so that the old site is not a target. But we will distribute, manufacture everything that's going into our robotic factory is distributable. It can be removed and moved to different areas. So that section of the factory will create this capability, and it can then be delivered to the assembly works somewhere else.
We won't be there and we'll announce that we're not there so that the old site is not a target. But we will distribute, manufacture everything that's going into our robotic factory is distributable. It can be removed and moved to different areas. So that section of the factory will create this capability, and it can then be delivered to the assembly works somewhere else.
12:21
12:21
12:22
Speaker 10
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Speaker 10
Um. Good afternoon. I'd like to talk about defence growth deals and the work that government has begun to do with devolved administrations and local authorities to support regional defence industries. Um, things like the plan for Barrow partnership and probably most connected to yourselves, um the support that Swindon Council has been giving to creating a drone and defence technology cluster. I'd be interested in your experiences, perhaps you have of those and your thoughts, but in particular, um what support you'd like to see the government um with devolved local authorities provide to support regional defence industries and what these deals need to provide to be a success for SMEs like yourselves.
12:22
Speaker 2
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Speaker 2
I'll give a very quick first part of it. Um, the value of them is if I'm understanding right, it's about 250 million over five years across five areas. When you divide that out, that's not much money that we've talked about. Not quite skimming the surface. That's a rounding error on the rounding error on the rounding error. It's such a small amount of money, it will be very hard to be meaningful. And if I take my honest view of previous announcements like that, a large amount of that money will actually go into the local government's administrative side of that.
So actually, out of the 5 million per annum to each one, the amount of that actually flows into the hands of SMEs will probably be possibly tens, maybe hundreds of thousands of pounds at the most across all of them. So I think if they are to work, those numbers are just such insignificant numbers. That's that's the fundamental one. It's a rounding error. And rounding error would be my one concern.
So actually, out of the 5 million per annum to each one, the amount of that actually flows into the hands of SMEs will probably be possibly tens, maybe hundreds of thousands of pounds at the most across all of them. So I think if they are to work, those numbers are just such insignificant numbers. That's that's the fundamental one. It's a rounding error. And rounding error would be my one concern.
12:23
Speaker 1
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Speaker 1
Um, regional authorities, it's a postcode lottery. Certain areas are anti defence. They find defence is a dirty word. Others have embraced it. Own MP has done an amazing job as has the Swindon Borough Council. They. I've never heard them talk politics. I've only ever heard them talk about the people of Swindon. That's the reason we're going actually it's because of their vision. So the regional um authority there is the reason we're going.
So. But what I would like to see is an investment in the suitably qualified and experienced personnel training apprenticeships. We're going to pay for them, but we'd like to be able to influence that training to see what it looks like and to, to make sure that we get the skills that we need. Um, the MP Will Stone has already set up a Defence Excellence committee for the people, for the companies that are going into Swindon, an amazing initiative, forward leaning. What does defence need from Swindon?It's not a take.
It's what can we give?And that's revolutionary. We've never seen that before. So that's great. But I agree with um my colleague that. They won't have enough money to help us financially. Instead give us a better access to energy, better access to internet.
So. But what I would like to see is an investment in the suitably qualified and experienced personnel training apprenticeships. We're going to pay for them, but we'd like to be able to influence that training to see what it looks like and to, to make sure that we get the skills that we need. Um, the MP Will Stone has already set up a Defence Excellence committee for the people, for the companies that are going into Swindon, an amazing initiative, forward leaning. What does defence need from Swindon?It's not a take.
It's what can we give?And that's revolutionary. We've never seen that before. So that's great. But I agree with um my colleague that. They won't have enough money to help us financially. Instead give us a better access to energy, better access to internet.
12:25
12:26
Speaker 1
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Speaker 1
No, I think that's what they need to now start concentrating on. It's not about, um, the money spend. It's can you um, give. Me preferential rates on business rates for a holiday period or something. Can you allow us some headroom before the bureaucracy starts. You know, we just need to get a clear run at getting the nation ready for the future.
12:26
12:26
12:26
12:26
Speaker 1
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Speaker 1
I've not tried in other places. Well, I did try in Leeds and it was, uh, I was shouting into the wind um but in Swindon they get it. They're on board. They, they come to us with ideas. We don't have to ask for much. They're so forward leading. It's why it's going to be a success. And others should copy that model.
12:27
12:27
12:27
12:27
Speaker 11
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Speaker 11
I'm going to be brief. Now, John, you said something very positive in the way you said that. We've got a very good regulatory environment, uh, platform based, sort of world leading. I'd like to know, particularly the really good bits that we're doing that others aren't in practical examples of what's working. And you were very positive. And is that optimism shared by both Graham and Tom, or do you have a different worldview?But John, first.
12:28
Speaker 1
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Speaker 1
Um, we have an excellent working relationship with the CAA, but especially the Ma, the Military Aviation Authority. They are open to ambitious new ideas. Um, a comment I heard from one of their senior commanders to me at the USC opening was, let's try it. That sounds cool. I've never heard that from a regulator. Being the first to regulate is not something to be proud of, but these guys are now they get it. Things have to change.
Now, my company is lucky because we do open architecture frameworks and we do certification models using model based systems engineering. Uh, and so we have a clear understanding of how we want our aircraft to be certified. The risk that other regulators assume is based on manned aviation experience. They've only got experience in the manned world. And so they, they imprint those ideas back into our framework. We don't have anybody sitting in our aircraft. Our risks are third party.
It's different for weapons assurance that we cannot get wrong weapons, assurance that will hurt our own people as they load weapons, as they handle misfires, all of those things. We have to get that absolutely right. And so there's no shortcuts there, I'll give you that. But in terms of permissions to let people go flying and places to test the Ma is so forward leaning, I don't see it as a risk. I think they're part of the solution. Certainly not part of the problem.
Now, my company is lucky because we do open architecture frameworks and we do certification models using model based systems engineering. Uh, and so we have a clear understanding of how we want our aircraft to be certified. The risk that other regulators assume is based on manned aviation experience. They've only got experience in the manned world. And so they, they imprint those ideas back into our framework. We don't have anybody sitting in our aircraft. Our risks are third party.
It's different for weapons assurance that we cannot get wrong weapons, assurance that will hurt our own people as they load weapons, as they handle misfires, all of those things. We have to get that absolutely right. And so there's no shortcuts there, I'll give you that. But in terms of permissions to let people go flying and places to test the Ma is so forward leaning, I don't see it as a risk. I think they're part of the solution. Certainly not part of the problem.
12:30
12:30
Speaker 2
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Speaker 2
So we're only really a software company. So we supply it to other people doing things. One of the challenges it's related, it's more the test facilities. Um, most of the testing we see in the UK, particularly when it comes to common system testing, we test with GPS turned on and working perfectly well. We work in comms around, you know, 20m or 200m away from where you launch. The real world is nothing like that. So what we do lack in the country is realistic test ranges and the ability to test in areas where you might have denied navigation, you might have, you know, active adversaries, jamming, etc.
because of the nature of the country, the size, we really struggle with that. So then so much of our regulatory framework regulates for doing things in a nice, safe way, which I get, and it's important, but we're not testing in anything like a real world environment. So the first opportunity for a lot of things to be tested in the real world would be in the real world. And that's not really the environment we want to get to. So it's.
because of the nature of the country, the size, we really struggle with that. So then so much of our regulatory framework regulates for doing things in a nice, safe way, which I get, and it's important, but we're not testing in anything like a real world environment. So the first opportunity for a lot of things to be tested in the real world would be in the real world. And that's not really the environment we want to get to. So it's.
12:31
Speaker 4
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Speaker 4
It took us an hour and a half, but we finally got a split decision on this one. Um, we do frequently encounter difficulties getting the necessary approvals to conduct the type of testing that we think is required, where we, where we struggle is around some of the areas that John, that Graham was referring to. Um, so GPS denied actively jamming GPS is quite hard in the UK. Uh, radio jamming, uh, beyond visual line of sight operations, you can't see the drone anymore. Um, and you still want to conduct operations, multi-system autonomous operations, swarming, um, some, some of you may know, uh, under that term, we will quite often be required to conduct that testing overseas.
It's just too hard and too it's, there's a lot similar to procurement actually. I think there is a lot of reasons to say no and manage risk. And that is not a slight on the CAA or the Ma. If their mandate is to make sure that drone operations are safe and in line with legislation. Uh, so.
It's just too hard and too it's, there's a lot similar to procurement actually. I think there is a lot of reasons to say no and manage risk. And that is not a slight on the CAA or the Ma. If their mandate is to make sure that drone operations are safe and in line with legislation. Uh, so.
12:32
12:32
12:33
12:33
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12:33
Speaker 4
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Speaker 4
So it's easy to obtain, uh, access to facilities in those locations that you can run active testing in and not require the level of approval process, which may or may not result in, in, you know, being granted access. Uh, swarming is something which is going to become a, um, something that. Needs to be actively tested. And what you're, this is a, this is a problem for the CAA and the Ma because you're taking the human out of the loop of having a 1 to 1 operation of a drone and you're having a one to many, and then you're introducing software and autonomous behaviors.
In our example, it could be doing a sweep of a field and multiple drones looking if there are any people or vehicles to be aware of before your soldiers move into that area, for example, to test that in a safe way in the UK is extremely difficult. Um, so I'd say some of the, what ends up happening is you can slow down that, that iterative loop. So we really need to drive more of those sort of designated innovation test environments that are in line with warfighting experiments here in the UK.
In our example, it could be doing a sweep of a field and multiple drones looking if there are any people or vehicles to be aware of before your soldiers move into that area, for example, to test that in a safe way in the UK is extremely difficult. Um, so I'd say some of the, what ends up happening is you can slow down that, that iterative loop. So we really need to drive more of those sort of designated innovation test environments that are in line with warfighting experiments here in the UK.
12:34
Speaker 3
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Speaker 3
Wow. And that's anyone really?Listen, I think that has been absolutely fascinating. Um, there will be things that you've picked up from our questions that we're really interested in and need some answers. Um, but really what you've done today has been, I think, enormously useful to, to the work we're doing. Um, and please get back to work because I think we need what you three do actually. And this ends this session of.