Industry and Regulators Committee
Tuesday 7th July 2026
Skip to latest contribution
This debate has concluded
(began 2 months, 2 weeks ago)
Watch LiveSkip to latest contribution
This debate has concluded
11:16
11:16
11:17
11:17
11:17
Speaker 2
-
Speaker 2
What do you have both said about the need for greater speed and greater pace?To adapt to the demands of new technology?And you've given us some specific examples about how changes in processes could help. And you've certainly reinforced as, Miss Cassie has anticipated, the messages that have come through the inquiry up to now. And one of the suggestions that we've heard a few times is that the government needs to be prepared to accept more risk in procurement of particularly new technologies, abilities.
And would you like to comment on that specifically?Yes, I, I would agree that the government needs to be prepared to accept more risk, but I think it's it's not just a question of accepting more risk. I think it's more more a question of moving from what I think has been risk avoidance to risk management and accepting that. We have, I think, optimized over the last few decades to avoid commercial risk and. That is the envelope within which we're asking officials to operate when they seek to procure equipment.
How can they best minimize or avoid any commercial or financial risk?And that's for understandable reasons. This is public money. We're talking about, but I think it has. Not in every case led to the reduction of commercial or financial risk anyway. The length of time some of these procurements take. I'm sure you're aware of some of the numbers that are being quoted. I think seven plus years was the average length of a procurement as told to.
To us during our review process that. Many cases has led to financial loss in any case. So even when the system has been optimized to try to avoid the waste of public money, it has in some cases nonetheless led to that. I think I would therefore encourage a different kind of approach to risk, which is accepting that. If we need to move faster, which I. I think the SDR makes the case for. And the government has accepted that we are going to.
Buy equipment that will become obsolete much faster than we have ever been used to in the past. It may be a matter of weeks or months that something. We have bought some software, a drone, you know, some kind of air defence capability becomes obsolete quicker. We cannot therefore expect people any longer to provide very long term value for money statements when they are looking to buy equipment. It's a it's not suitable to the environment we now operate in. So I would argue that.
We do need to accept more risk than we have been used to accepting in the past, and a different type of risk that, um, experimentation in itself is a risk. Things you might buy or trial might not work. They might go wrong. They might have a short shelf life. I think we need to move to accepting that that is the new normal, that that is. As we say in the software world, it's a feature, not a bug that these equipment turns over very quickly.
That. In a sense, it's a sign that we are doing things right. If we're trying lots of things, they work for a while, we move on to something else. That's a good thing. We're not sticking holding on to things that have gone beyond their useful life. Should not apply the same assurance criteria when we're experimenting and using new technology, as we as we do when we're using things we've used for a very long time or are very large scale, often metal platforms, so to speak.
Um. In practice, therefore, I think we need to hold senior officials responsible for more than commercial risk. And I think there's a really, really important role here, possibly the most important role here for those of you who hold officials to account and scrutinise their behaviour, to ask some. Kinds of questions of them. So not just the financial commercial ones which are obviously remain important, but to me, the most important question in this era of war fighting is are we staying ahead of our adversaries?Not just are we moving quickly because we can move quicker and still buy the wrong things, we can buy the wrong things quickly.
We need to buy the right things quickly. And having a focus on the outcome of the procurements we're making, and whether that is keeping us ahead of our adversaries. And in the process, may lead to shorter shelf lives. Money being, um. According to an old way of looking at things wasted because it didn't have a ten year value for money schedule attached to it, but is putting us in a better place to be ready to deter our adversaries.
And would you like to comment on that specifically?Yes, I, I would agree that the government needs to be prepared to accept more risk, but I think it's it's not just a question of accepting more risk. I think it's more more a question of moving from what I think has been risk avoidance to risk management and accepting that. We have, I think, optimized over the last few decades to avoid commercial risk and. That is the envelope within which we're asking officials to operate when they seek to procure equipment.
How can they best minimize or avoid any commercial or financial risk?And that's for understandable reasons. This is public money. We're talking about, but I think it has. Not in every case led to the reduction of commercial or financial risk anyway. The length of time some of these procurements take. I'm sure you're aware of some of the numbers that are being quoted. I think seven plus years was the average length of a procurement as told to.
To us during our review process that. Many cases has led to financial loss in any case. So even when the system has been optimized to try to avoid the waste of public money, it has in some cases nonetheless led to that. I think I would therefore encourage a different kind of approach to risk, which is accepting that. If we need to move faster, which I. I think the SDR makes the case for. And the government has accepted that we are going to.
Buy equipment that will become obsolete much faster than we have ever been used to in the past. It may be a matter of weeks or months that something. We have bought some software, a drone, you know, some kind of air defence capability becomes obsolete quicker. We cannot therefore expect people any longer to provide very long term value for money statements when they are looking to buy equipment. It's a it's not suitable to the environment we now operate in. So I would argue that.
We do need to accept more risk than we have been used to accepting in the past, and a different type of risk that, um, experimentation in itself is a risk. Things you might buy or trial might not work. They might go wrong. They might have a short shelf life. I think we need to move to accepting that that is the new normal, that that is. As we say in the software world, it's a feature, not a bug that these equipment turns over very quickly.
That. In a sense, it's a sign that we are doing things right. If we're trying lots of things, they work for a while, we move on to something else. That's a good thing. We're not sticking holding on to things that have gone beyond their useful life. Should not apply the same assurance criteria when we're experimenting and using new technology, as we as we do when we're using things we've used for a very long time or are very large scale, often metal platforms, so to speak.
Um. In practice, therefore, I think we need to hold senior officials responsible for more than commercial risk. And I think there's a really, really important role here, possibly the most important role here for those of you who hold officials to account and scrutinise their behaviour, to ask some. Kinds of questions of them. So not just the financial commercial ones which are obviously remain important, but to me, the most important question in this era of war fighting is are we staying ahead of our adversaries?Not just are we moving quickly because we can move quicker and still buy the wrong things, we can buy the wrong things quickly.
We need to buy the right things quickly. And having a focus on the outcome of the procurements we're making, and whether that is keeping us ahead of our adversaries. And in the process, may lead to shorter shelf lives. Money being, um. According to an old way of looking at things wasted because it didn't have a ten year value for money schedule attached to it, but is putting us in a better place to be ready to deter our adversaries.
11:22
Speaker 3
-
Speaker 3
Yeah, I would chime in with that. I think, um, risk is something that, uh, all parts, not just the public sector, but private sector are always nervous about and for very reasonable reasons. Uh, but we do need to move if we're going to get that speed and pace, then we do need to move to an environment in which we are supportive of officials making decisions that include some element of risk. It's no good, you know, uh, asking people to accept a higher degree of risk in, in their roles and so on, and then castigating them if something goes wrong.
Um, inevitably, if you, as you move to a higher speed of activity, some, some things will go wrong and some programmes won't be as effective as you hoped and so on. But it's to learn from that and move on and, and so on is, is, is really the key thing. And again, I would come back to the point I made a little bit earlier about information. There is nobody wants to accept risk, which is unnecessary. Uh, and nobody wants risk, which couldn't have been reduced or mitigated.
So organisations need to look at things from the context of, for example, having good data on potential suppliers before they get to the contracting process so that they have that comfort that the organisation knows what it's doing. And I think, um, just to give you an illustration, we were, we were running a webinar recently where Boeing popped up and said, well, we used, um. Information sources to find straps for, uh, some sort of high tensile straps. And the interest was that these were completely unknown to Boeing, but were picked up very quickly.
And because there was information there around the quality and process quality of the, of the organisation, they were able to move to contract very, very quickly without having to go through all the laborious process of collecting information, going through the information, uh, validation and so on. Um, in the, in, before they could place a contract.
Um, inevitably, if you, as you move to a higher speed of activity, some, some things will go wrong and some programmes won't be as effective as you hoped and so on. But it's to learn from that and move on and, and so on is, is, is really the key thing. And again, I would come back to the point I made a little bit earlier about information. There is nobody wants to accept risk, which is unnecessary. Uh, and nobody wants risk, which couldn't have been reduced or mitigated.
So organisations need to look at things from the context of, for example, having good data on potential suppliers before they get to the contracting process so that they have that comfort that the organisation knows what it's doing. And I think, um, just to give you an illustration, we were, we were running a webinar recently where Boeing popped up and said, well, we used, um. Information sources to find straps for, uh, some sort of high tensile straps. And the interest was that these were completely unknown to Boeing, but were picked up very quickly.
And because there was information there around the quality and process quality of the, of the organisation, they were able to move to contract very, very quickly without having to go through all the laborious process of collecting information, going through the information, uh, validation and so on. Um, in the, in, before they could place a contract.
11:24
11:25
Speaker 4
-
Speaker 4
Thank you. Thank you very much. And thank you, um, for, for coming along. Um, my, my question is really directed to you, Grace, if I may. Um, we've heard that the defence industry is not an attractive financial proposition, although I can't help but observe, it seems to be for foreign companies to buy British ones. But never mind. Um what can the government do?Um, in procurement, budgeting, contracting, what can they do to make, make the industry financially attractive.
11:25
Speaker 2
-
Speaker 2
Thank you. I think the first thing I would say up front, because I think there's some. Uh, myths that circulate on this, that there is a lack of capital for companies in defence, certainly at the more innovative end of the market, from what I see in my day job as an investor, that is not the case. There is no shortage of capital that is interested in investing in defence and dual use technology. There has, in fact, never been as much capital that is interested in investing in this space.
I think it's possibly one of Vladimir Putin's unintended consequences of his invasion of Ukraine, as that it has encouraged more private investors to throw off their previous concerns around investing in this space and to become much more interested in supporting the creation of new novel technology that can support, um, Western. Democracies. However, there is a shortage of confidence that there is a market in UK defence, and I think that is at the core of the problem around the funding challenge for some companies here and elsewhere in our European and NATO allies.
The inability to get meaningful contracts out of the door to a wider range of suppliers is. In my opinion, the biggest blocker to more investment flowing into this sector. Capital follows contracts, and I think the government has spent quite a lot of time talking about how to encourage capital to flow into defence and trying to be a venture capitalist itself and set up venture funds and so on. I don't think any of that is necessary. If they can fix the. Market problem and accept that they are the market, they have this lever in their hands to buy from a wider range of suppliers.
At a more meaningful level than has been the case to date. And if they can do that, the money will look after itself, the investors will look after itself. We're pretty simple people. We follow where we think there's a good market and a good return. And the problem at the moment is not the lack of capital, it's the lack of confidence that there is a meaningful return in the UK. Um. I, I'm concerned in particular because I think some of our peer countries allies are doing a better job of this than us.
And we are potentially going to miss the development of this generation of. Uh, defence and dual use deep technology companies that have some kind of application in defence and security, because the market is better among some of our key allies. And they will go there and the investors will go there and we are playing catch up. And so my, my. Key message really through the SDR. And since has been the good news is that we have this lever in our hands.
We, we, we, the UK, the government is the customer here. It can really shape this market. I think the Ministry of Defence is unusual in the public sector in that it is. I think, the only part of the public sector that has a sufficiently scaled budget and a sufficiently scaled need for technology that can absolutely shape the market. It wants to create. Most of the rest of the public sector doesn't doesn't have either the budget or the technology need to do that.
Defence does. It can do it. And. It needs to get on with it. And the publication of the Defence Investment Plan is, is an important first step because that. Uncertainty around when or what it would say has certainly been, uh, chilling, I. Talk to investors. Uh, so it is it is important that has been published, but it is very important that it is not seen as the end of the process. It is.
Step one. And step two is to go out and start deploying the money, not just into the hands of all the people that have traditionally received that money, but this more diverse set of suppliers that we want to create. And that will, I think, unlock a. Lot of the capital that is is ready and willing. I think it's it is possible that some of the more, uh, kinetic end of defence may still have a blockers to raising capital. So ammunition um missile.
And so on that are really at the, the sharpest end of this uh, of this market that can still remain a challenge, I think for, for companies to get funding in that area. Because although institutional investors, LPs and so on, I think have become much more relaxed in the last 3 or 4 years around defence exclusions in their. In what they're asking of the funds they. They invest in. For many of them, I think that last mile of the absolutely kinetic explosive area is still challenging.
So I think the government probably has a role to play there because the market struggles to fund that part of it in the way that 95% of this can be funded from private capital I.
I think it's possibly one of Vladimir Putin's unintended consequences of his invasion of Ukraine, as that it has encouraged more private investors to throw off their previous concerns around investing in this space and to become much more interested in supporting the creation of new novel technology that can support, um, Western. Democracies. However, there is a shortage of confidence that there is a market in UK defence, and I think that is at the core of the problem around the funding challenge for some companies here and elsewhere in our European and NATO allies.
The inability to get meaningful contracts out of the door to a wider range of suppliers is. In my opinion, the biggest blocker to more investment flowing into this sector. Capital follows contracts, and I think the government has spent quite a lot of time talking about how to encourage capital to flow into defence and trying to be a venture capitalist itself and set up venture funds and so on. I don't think any of that is necessary. If they can fix the. Market problem and accept that they are the market, they have this lever in their hands to buy from a wider range of suppliers.
At a more meaningful level than has been the case to date. And if they can do that, the money will look after itself, the investors will look after itself. We're pretty simple people. We follow where we think there's a good market and a good return. And the problem at the moment is not the lack of capital, it's the lack of confidence that there is a meaningful return in the UK. Um. I, I'm concerned in particular because I think some of our peer countries allies are doing a better job of this than us.
And we are potentially going to miss the development of this generation of. Uh, defence and dual use deep technology companies that have some kind of application in defence and security, because the market is better among some of our key allies. And they will go there and the investors will go there and we are playing catch up. And so my, my. Key message really through the SDR. And since has been the good news is that we have this lever in our hands.
We, we, we, the UK, the government is the customer here. It can really shape this market. I think the Ministry of Defence is unusual in the public sector in that it is. I think, the only part of the public sector that has a sufficiently scaled budget and a sufficiently scaled need for technology that can absolutely shape the market. It wants to create. Most of the rest of the public sector doesn't doesn't have either the budget or the technology need to do that.
Defence does. It can do it. And. It needs to get on with it. And the publication of the Defence Investment Plan is, is an important first step because that. Uncertainty around when or what it would say has certainly been, uh, chilling, I. Talk to investors. Uh, so it is it is important that has been published, but it is very important that it is not seen as the end of the process. It is.
Step one. And step two is to go out and start deploying the money, not just into the hands of all the people that have traditionally received that money, but this more diverse set of suppliers that we want to create. And that will, I think, unlock a. Lot of the capital that is is ready and willing. I think it's it is possible that some of the more, uh, kinetic end of defence may still have a blockers to raising capital. So ammunition um missile.
And so on that are really at the, the sharpest end of this uh, of this market that can still remain a challenge, I think for, for companies to get funding in that area. Because although institutional investors, LPs and so on, I think have become much more relaxed in the last 3 or 4 years around defence exclusions in their. In what they're asking of the funds they. They invest in. For many of them, I think that last mile of the absolutely kinetic explosive area is still challenging.
So I think the government probably has a role to play there because the market struggles to fund that part of it in the way that 95% of this can be funded from private capital I.
11:31
11:31
11:31
Speaker 3
-
Speaker 3
Yeah, just a couple of quick points then. Um, one is we've definitely seen a change over the last 18 months in terms of the number of people wanting to be active in the defence industry. Uh, so to give you an illustration, as I said, we have 6200 suppliers on our system, uh, of. Of whom one. Percent two years ago were nominated by the Prime Contractors or the Mod to be on the system. We then opened it to um.
Two people to self nominate to suppliers. So new suppliers from different industries could could enter. Um and there was a bit of a trickle at first, but that trickle has become uh, a substantial number. So now in the last 18 months there's been 600 suppliers who have registered, many of them from different industries and different backgrounds who have been attracted into defence because they see the potential. And some of them, a lot of them are technology companies. Uh, a lot of them are very small companies, SMEs and so on.
So it's really a positive sign. And, and we're, we're trying to help them to become, uh, to understand what they have to do to become a defence supplier.
Two people to self nominate to suppliers. So new suppliers from different industries could could enter. Um and there was a bit of a trickle at first, but that trickle has become uh, a substantial number. So now in the last 18 months there's been 600 suppliers who have registered, many of them from different industries and different backgrounds who have been attracted into defence because they see the potential. And some of them, a lot of them are technology companies. Uh, a lot of them are very small companies, SMEs and so on.
So it's really a positive sign. And, and we're, we're trying to help them to become, uh, to understand what they have to do to become a defence supplier.
11:33
11:33
Speaker 5
-
Speaker 5
You, um. Uh. Good morning. Um, I ask to what extent?It's clear where SMEs and non-traditional suppliers should go for advice and support to become involved in supplying defence requirements. Um, what more could the Ministry of Defence do to provide or signpost this support?And can I just add a rider on this as well, which is what, what are we learning from other huge infrastructure projects that also try to push things down the supply chain?So I'm thinking the Olympics, HS2, Sizewell C, I know a thing called compete for and I'd just be interested.
Colin, if the learnings about how to get primes to really push things down the supply chain, any any observations on that?If you wouldn't mind starting. Colin.
Colin, if the learnings about how to get primes to really push things down the supply chain, any any observations on that?If you wouldn't mind starting. Colin.
11:34
Speaker 3
-
Speaker 3
Yeah, sure. Thank you. Um, well, I think the, uh, the mod has improved significantly the amount of support they're trying to give to SMEs. They've set up the Office of Small Business Growth, which has, is still in its sort of very early stages. But, but is making some progress. Um, the trade associations have been particularly virulent about this whole area and um, are pushing, uh, the, the role of SMEs and so on in terms of the, um, uh, our system, as I said, we've got 6200 suppliers on it, of whom 4300 are SMEs.
So there's a lot of SMEs interest and a lot of those suppliers are quite small and very niche. Uh, in terms of people getting into these major infrastructure projects, there are always two issues really. One is how do you actually get noticed?How do you get to that stage?And the second is, of course, the size of these projects can be, can be difficult for small business. Uh, they're trying to play a role when actually, um, really their best role is as a sub contractor or subcontractor because the size of the contracts at the very top of the pyramid is just enormous and not really suitable.
And the technical complexity and the ability to pull on other subcontractors and bring them together in a cohesive group is something that takes itself a lot of skill and a lot of understanding and a lot of SMEs. And I'm saying this as an SME, actually don't really have that, that that capability. So I think in terms of, uh, giving. People a wider view of where they can add most value, one of the things is to get the, the SME community to really understand where its niche fits and how they can make most.
Themselves most attractive. Um, we've done a lot of work. We do a lot of work with SMEs trying to help them, whether it's fill in information. Many SMEs, for example, don't understand some of the basic requirements of the defence industry. Um things like cyber security, information security, things like Itar or other export controls and so on. These need to be explained to people and they're not naturally, uh, if you like, always fit with what they do. So I think it's, it's, it's a developing picture.
It's a picture that has improved for SMEs. And we see that in the, as so many are actually nominating themselves to go through the process. But it's, it's some way to go.
So there's a lot of SMEs interest and a lot of those suppliers are quite small and very niche. Uh, in terms of people getting into these major infrastructure projects, there are always two issues really. One is how do you actually get noticed?How do you get to that stage?And the second is, of course, the size of these projects can be, can be difficult for small business. Uh, they're trying to play a role when actually, um, really their best role is as a sub contractor or subcontractor because the size of the contracts at the very top of the pyramid is just enormous and not really suitable.
And the technical complexity and the ability to pull on other subcontractors and bring them together in a cohesive group is something that takes itself a lot of skill and a lot of understanding and a lot of SMEs. And I'm saying this as an SME, actually don't really have that, that that capability. So I think in terms of, uh, giving. People a wider view of where they can add most value, one of the things is to get the, the SME community to really understand where its niche fits and how they can make most.
Themselves most attractive. Um, we've done a lot of work. We do a lot of work with SMEs trying to help them, whether it's fill in information. Many SMEs, for example, don't understand some of the basic requirements of the defence industry. Um things like cyber security, information security, things like Itar or other export controls and so on. These need to be explained to people and they're not naturally, uh, if you like, always fit with what they do. So I think it's, it's, it's a developing picture.
It's a picture that has improved for SMEs. And we see that in the, as so many are actually nominating themselves to go through the process. But it's, it's some way to go.
11:37
11:37
Speaker 4
-
Speaker 4
Thank you and good morning. Um, my, my question is, how can the Ministry of Defence better support and promote innovation in the supply of defence requirements?So I take that as being, um, how it can be innovative in the way that it has those, um purchasing procedures. Yeah. Um, I think Chris, you said earlier on that, um it needs to move from a buyer and seller relationship to a partnership relationship, which really to me focuses on this question, but how do we stop those becoming sweetheart deals and moving towards elements of corruption?I mean, corruption is big in global defence procurement.
The Covid times sort of said we're not completely necessarily immune to this within the UK. How do we make sure that doesn't happen either?
The Covid times sort of said we're not completely necessarily immune to this within the UK. How do we make sure that doesn't happen either?
11:38
Speaker 2
-
Speaker 2
I think it probably relates to what I was saying earlier around the accepting of faster turnover of products and focusing on an outcome based assessment of whether what you've bought is. Delivering and keeping you ahead of your adversaries. If we become more comfortable with the idea, that capability turns over quickly, then people can't stay in long term, comfortable sweetheart deals because they know that their capability is going to be tested ruthlessly and will be got rid of if it doesn't work. So I think I think.
Possibly, you know. As an industry in the past has been able to, uh, be in. A very long term, quite comfortable contracts where performance perhaps was, uh. I don't want to say you could get away with things not performing over time, but given the length of these contracts and the slowness of it all. In effect, things could coast along if we. Are moving. If we can move successfully to a culture of expecting performance. Quickly and sustainably, and suppliers understanding that if they no longer perform, then.
They will be moved on and the next one will come in. I think that should hopefully help to counter the risk that you're describing. I think more generally, on your question of how to support innovation, um. I don't think the UK has an innovation problem. I think we're very good at inventing things. We have lots of great people that whether in universities or in startups that come up with great ideas and invent things that get to a pilot stage, I think our challenge has been translating that innovation from a pilot level to a scaled level, and.
That, I think, is where we need to focus more attention. Things like the Office of Small Business Growth and the Defense Innovation Unit and so on. I think they're they're very good ideas in principle, but we must judge them over time on whether they're actually pulling capability through into the hands of users. And there are associated scaled contracts with that. So we we cannot, I think, afford to have innovation theatre any longer where there's lots of lovely projects and handshakes and photo shoots and so on, where there's something which sounds great, but isn't doesn't really have a lifespan beyond a small experimentation or contract.
Really. The proof of the pudding will be, does any of this over time lead to more?Smaller businesses or younger businesses being able to meaningfully grow their revenue and grow and create more jobs and so on over time, beyond a pilot contract?Um, I think that speaks to changing procurement as we're, as we're hinting at its some quite practical things like paying on time. So you're not leaving small businesses with a very difficult cash flow crunch. You're not requiring their investors to step in and give them some kind of funding extension because they've got a cash flow problem.
Um, so there's some quite simple practical things there that I would point to. Um. Allowing your suppliers to say they supply you is a quite simple and helpful thing, particularly for dual use innovation. Technology, if you're able to say as a start up or scale up that we are supplying the mod, that can be incredibly helpful. If you want to go and supply a telecom or a pharmaceutical company that might have a similar use of the same technology, but it's been quite difficult.
Sometimes when you have successfully made it through, uh, Mod procurement, if they're not allowed to tell anyone about it, you can't really leverage that with a wider customer set, I think.
Possibly, you know. As an industry in the past has been able to, uh, be in. A very long term, quite comfortable contracts where performance perhaps was, uh. I don't want to say you could get away with things not performing over time, but given the length of these contracts and the slowness of it all. In effect, things could coast along if we. Are moving. If we can move successfully to a culture of expecting performance. Quickly and sustainably, and suppliers understanding that if they no longer perform, then.
They will be moved on and the next one will come in. I think that should hopefully help to counter the risk that you're describing. I think more generally, on your question of how to support innovation, um. I don't think the UK has an innovation problem. I think we're very good at inventing things. We have lots of great people that whether in universities or in startups that come up with great ideas and invent things that get to a pilot stage, I think our challenge has been translating that innovation from a pilot level to a scaled level, and.
That, I think, is where we need to focus more attention. Things like the Office of Small Business Growth and the Defense Innovation Unit and so on. I think they're they're very good ideas in principle, but we must judge them over time on whether they're actually pulling capability through into the hands of users. And there are associated scaled contracts with that. So we we cannot, I think, afford to have innovation theatre any longer where there's lots of lovely projects and handshakes and photo shoots and so on, where there's something which sounds great, but isn't doesn't really have a lifespan beyond a small experimentation or contract.
Really. The proof of the pudding will be, does any of this over time lead to more?Smaller businesses or younger businesses being able to meaningfully grow their revenue and grow and create more jobs and so on over time, beyond a pilot contract?Um, I think that speaks to changing procurement as we're, as we're hinting at its some quite practical things like paying on time. So you're not leaving small businesses with a very difficult cash flow crunch. You're not requiring their investors to step in and give them some kind of funding extension because they've got a cash flow problem.
Um, so there's some quite simple practical things there that I would point to. Um. Allowing your suppliers to say they supply you is a quite simple and helpful thing, particularly for dual use innovation. Technology, if you're able to say as a start up or scale up that we are supplying the mod, that can be incredibly helpful. If you want to go and supply a telecom or a pharmaceutical company that might have a similar use of the same technology, but it's been quite difficult.
Sometimes when you have successfully made it through, uh, Mod procurement, if they're not allowed to tell anyone about it, you can't really leverage that with a wider customer set, I think.
11:42
11:42
Speaker 3
-
Speaker 3
Yes. Very quickly. I mean, the first of all, technology is moving so quickly. And if you go back 20, 30 years, these programs and even ten years were vast and only a few people could actually do them. And the nature of technology and the advance in technology means that there's now a much more of a broader group of people who could supply and. So the length of these projects is, is shorter. There's no natural conflict between having robust procurement and having innovation.
It's a question of setting things up in such a way that you encourage innovation and, and the tools and techniques are ready for it rather than, um, simply. Throw the baby out with the bathwater type approach of saying, well, we can go straight to award contracts with no proper process. And if you look at some of the most successful organisations acting in, in procurement and in technology, they have quite robust procurement processes, but they, they are geared towards speed and geared towards um, accuracy. So I don't think there's an issue there.
There is always a tendency in defence to be a little bit incestuous in terms that everyone knows everyone. And it's a bit close. So entering a market in which new people are entering all the time is always a bit tricky. But, and uh, is a bit of a shake up for the defence community, but I think that's inevitable. We are seeing that in the US in, in the defence industry, in the US, with new players coming in, disrupting the market, changing relationships and, uh, and undermining some of the, if you like, the traditional players.
And that's a good thing.
It's a question of setting things up in such a way that you encourage innovation and, and the tools and techniques are ready for it rather than, um, simply. Throw the baby out with the bathwater type approach of saying, well, we can go straight to award contracts with no proper process. And if you look at some of the most successful organisations acting in, in procurement and in technology, they have quite robust procurement processes, but they, they are geared towards speed and geared towards um, accuracy. So I don't think there's an issue there.
There is always a tendency in defence to be a little bit incestuous in terms that everyone knows everyone. And it's a bit close. So entering a market in which new people are entering all the time is always a bit tricky. But, and uh, is a bit of a shake up for the defence community, but I think that's inevitable. We are seeing that in the US in, in the defence industry, in the US, with new players coming in, disrupting the market, changing relationships and, uh, and undermining some of the, if you like, the traditional players.
And that's a good thing.
11:44
11:44
Speaker 6
-
Speaker 6
My question is on supply chains. It's in two parts the problem and the resolution. Um the first part of the question, we've heard that the visibility or lack of it of supply chains in their inputs can be an issue such as not understanding key risks or critical inputs through the supply chain. Um, so your views on how does responsibility for this visibility pass up and down the supply chain from the prime company through to the small SME?And subsequently the question is, how should the Mod and defence contractors ensure that the supply chains are secure and reliable?And have you seen any progress on this through the defence supply Chain Capability Programme?
11:45
11:45
Speaker 3
-
Speaker 3
Shall I go first?Yeah. Okay. So um thank you for that. That's a really interesting question actually. And in fact not easy to solve. Anyone who claims that they're able to solve supply chain mapping and be able to look down the supply chain is, is either being deceitful or, uh, or, um, gullible. So, um, it is a real problem. How do you get down in a supply chain that may have a thousand actors?Um, the other thing you find is as you drop down the supply chain, many of those actors are actually not willing to share the information on who is a supplier to them.
That's their competitive information that they, they hold very closely to their chest. And they hate telling everyone because they're terrified of being disintermediated as used to be the in word or being, um, being basically people going direct to their suppliers and cutting them out of the picture and so on and losing control. So it's a, it's a really crucial issue, but it is absolutely essential if you're going to get, uh, high quality. Capacity in the market, sufficient to manage a scenario in which there could be a potential conflict and you need to have enough information about what is happening down the supply chain to know how you could ramp up production by a matter of, uh, you know, really large percentages or large, um, factors.
So I think information is an important area. We have to accept that we're never going to get complete information. Uh, it's just not going to happen. And also, um, one of our, uh, neds is a professor at Oxford who worked with another guy at, uh, Tokyo University and they tried to map Toyota's supply chain. Following the Fukushima earthquake. Or tsunami and discovered that actually, you weren't looking at a nice clinical pyramid. You were looking at a complete ball of relationships where everyone was connected to everyone.
And many suppliers had many, many different points of access or points of, uh, of relationship. So mapping the whole thing is not just. Uh, a point in time. It's, it's needs absolutely continuous attention because the ball is changing all the time. I don't know if that answered your question.
That's their competitive information that they, they hold very closely to their chest. And they hate telling everyone because they're terrified of being disintermediated as used to be the in word or being, um, being basically people going direct to their suppliers and cutting them out of the picture and so on and losing control. So it's a, it's a really crucial issue, but it is absolutely essential if you're going to get, uh, high quality. Capacity in the market, sufficient to manage a scenario in which there could be a potential conflict and you need to have enough information about what is happening down the supply chain to know how you could ramp up production by a matter of, uh, you know, really large percentages or large, um, factors.
So I think information is an important area. We have to accept that we're never going to get complete information. Uh, it's just not going to happen. And also, um, one of our, uh, neds is a professor at Oxford who worked with another guy at, uh, Tokyo University and they tried to map Toyota's supply chain. Following the Fukushima earthquake. Or tsunami and discovered that actually, you weren't looking at a nice clinical pyramid. You were looking at a complete ball of relationships where everyone was connected to everyone.
And many suppliers had many, many different points of access or points of, uh, of relationship. So mapping the whole thing is not just. Uh, a point in time. It's, it's needs absolutely continuous attention because the ball is changing all the time. I don't know if that answered your question.
11:48
11:48
11:48
11:48
Speaker 3
-
Speaker 3
Yes. Uh, well, the first bit is the, the mod are making a lot of steps forward in terms of gathering information, better managing information, creating opportunities to collect that data. We, we ourselves are using this system we run have been part of that and been feeding information in on suppliers who are who may be apt in terms of CCP. Um, it's part of a wider process, but inevitably it needs to involve people like the prime contractors as well. You can't just do it in isolation because 70% of all, certainly SM contracts comes through the prime contractors.
So to do it without their support or without their involvement is is a bit of a hiding to nothing.
So to do it without their support or without their involvement is is a bit of a hiding to nothing.
11:49
11:50
Speaker 7
-
Speaker 7
Yes, Colin, you've mentioned already that cyber attacks the security angle for SMEs is a particular problem. I think, though the question goes first to grace because this is your your special subject. What what are these small SMEs really require to overcome the hazards of cyber attacks?And how much of that is down to government to do something?
11:50
Speaker 2
-
Speaker 2
This is a very difficult challenge. And in the age of AI. I would say this is as much a problem for large suppliers as it is for small suppliers. I think the nature of the threat is changing. It is. Accelerated by AI. There are new attack surfaces as a result of AI. So everybody in the defence, supply chain. Everybody in the economy is facing a. Challenge to become cyber resilient in this era.
The good news is that AI can also be very helpful in defending against cyber threats. Much day to day cyber work is, uh, has been very manual. People in security teams responding to huge numbers of alerts from their various sensors on their systems, trying to triage those, trying to work out, which are the false positives and so on. That has been hard manual work for a number of years. AI gives us the opportunity to automate a great deal of that and to free up humans to apply judgment to their edge cases.
The. The threats that might be more specific to your own organisation, where you have a greater knowledge of your your own systems, your own needs. So I think there is a good news story alongside the negatives that AI can can bring in here. Automation for SMEs. Should be a positive. There are. Some very interesting. Vendors emerging. Uh, who can provide. Suites of products that will take a lot of this away from an Overpressed IT team in a small or medium sized business.
So. In the next couple of years, I expect that we will find that many smaller medium sized businesses will be able to actually raise their level of basic cyber security because the tooling will improve, is improving already. Um, I think if you're talking though, at the highest level, where a, where a smaller supplier may be vulnerable to more of a nation state level cyber threat, that is. Is something where the government, I think does need to still step in and support SMEs. I don't think it's reasonable to expect an SME with a potentially a small IT budget to defend against nation state level threat.
That's where I think government resources can and should be applied in support of parts of our supply chain. Um, I know the NCS runs a number of working groups in this area to support um sensitive. Sectors. But I think as we think about defence and the, the amount of. New money that is now flowing into defence and will flow in in future. And the kinds of companies that we want to encourage into that. There is going to be a longer tail of cyber risk associated with that.
And I think government will need to remain part of that defensive effort. Um, at the higher level of risk, as I say, I think some of the, the, the more automatable risk is.
The good news is that AI can also be very helpful in defending against cyber threats. Much day to day cyber work is, uh, has been very manual. People in security teams responding to huge numbers of alerts from their various sensors on their systems, trying to triage those, trying to work out, which are the false positives and so on. That has been hard manual work for a number of years. AI gives us the opportunity to automate a great deal of that and to free up humans to apply judgment to their edge cases.
The. The threats that might be more specific to your own organisation, where you have a greater knowledge of your your own systems, your own needs. So I think there is a good news story alongside the negatives that AI can can bring in here. Automation for SMEs. Should be a positive. There are. Some very interesting. Vendors emerging. Uh, who can provide. Suites of products that will take a lot of this away from an Overpressed IT team in a small or medium sized business.
So. In the next couple of years, I expect that we will find that many smaller medium sized businesses will be able to actually raise their level of basic cyber security because the tooling will improve, is improving already. Um, I think if you're talking though, at the highest level, where a, where a smaller supplier may be vulnerable to more of a nation state level cyber threat, that is. Is something where the government, I think does need to still step in and support SMEs. I don't think it's reasonable to expect an SME with a potentially a small IT budget to defend against nation state level threat.
That's where I think government resources can and should be applied in support of parts of our supply chain. Um, I know the NCS runs a number of working groups in this area to support um sensitive. Sectors. But I think as we think about defence and the, the amount of. New money that is now flowing into defence and will flow in in future. And the kinds of companies that we want to encourage into that. There is going to be a longer tail of cyber risk associated with that.
And I think government will need to remain part of that defensive effort. Um, at the higher level of risk, as I say, I think some of the, the, the more automatable risk is.
11:54
11:54
Speaker 2
-
Speaker 2
Um, I can't speak to the capacity that exists in, in the agencies and the NCS. My. Guess is that it would need to be increased. I think the. And we would need to have a better understanding of what we think counts as critical national infrastructure in future. That I think we all have an instinctive understanding of power grids and um. Uh. Certain parts of the financial machinery that count as critical national infrastructure.
I think what we're going to see in this newer era of deterrence, that a much broader set of our national infrastructure becomes critical. And in some readings of that could include critical parts of a supply chain where there's a company that's providing something that is unique to a defence or security capability and needs to be given the kind of CNI protection that has traditionally only been given to. The power grids and the undersea cables and so on. But even in that area, I think it's fair to say that the SDR called for a significant increase in support to even that higher end of CNI.
I think, needs more attention than it's had to date.
I think what we're going to see in this newer era of deterrence, that a much broader set of our national infrastructure becomes critical. And in some readings of that could include critical parts of a supply chain where there's a company that's providing something that is unique to a defence or security capability and needs to be given the kind of CNI protection that has traditionally only been given to. The power grids and the undersea cables and so on. But even in that area, I think it's fair to say that the SDR called for a significant increase in support to even that higher end of CNI.
I think, needs more attention than it's had to date.
11:55
11:56
Speaker 3
-
Speaker 3
Yeah, I got some figures, which always is great fun, but um, so of our 6200 suppliers, I've mentioned several times, uh. This is quite, quite a surprising figure. 46% as of now do not have any form of cyber security credentials. So despite much urging from Mod and the prime contractors and others in the field, 46%, 2888 do not have any form of cyber security certification. And of those, they're not all SMEs you might think they would be, but 1145 are either medium or large suppliers.
And of those, um, well, not of the 1100 of the 2888, 1213. Uh, are accessing sensitive data shared by their customers. So that's a pretty alarming figure. When you put the whole thing together and, um, uh, and so we have been working with defence over several years now to try and improve that. It has improved. It's dropped from 70% 2 or 3 years ago to 46% today, but it's still a long, long way from where you would expect it to be.
And of those, um, well, not of the 1100 of the 2888, 1213. Uh, are accessing sensitive data shared by their customers. So that's a pretty alarming figure. When you put the whole thing together and, um, uh, and so we have been working with defence over several years now to try and improve that. It has improved. It's dropped from 70% 2 or 3 years ago to 46% today, but it's still a long, long way from where you would expect it to be.
11:56
11:57
11:57
11:57
Speaker 1
-
Speaker 1
Inquiry a month or so ago. I thought I knew nothing about defence at all. And the more evidence we take, the more I hear echoes of Covid and the absence of a British industrial capability, which we didn't have in vaccines or diagnostics. And this lack of collaborative working relationship between the private sector, the academia and, and, and the public sector. Um, that's my personal experience. What I wanted to ask of you is, what do you think the defence sector should be learning from other sectors that you've got experience of?And how does the UK defence sector, particularly with regard to its relationship with government and its ways of working compared to those of other countries?I think, Grace, you already mentioned that you thought that other countries, um, other of our key allies, markets were working better.
And what can we learn from other industries and what can we learn from other countries?
And what can we learn from other industries and what can we learn from other countries?
11:58
Speaker 2
-
Speaker 2
Um, it's. A great question. I think. I perhaps the cyber security industry may in some senses be too close to defence, but nonetheless use it as a as an example, I think cyber has done a good job as an industry in the last decade or so of becoming far more collaborative. So, uh. Financial services organisations sharing information between themselves about the threat sharing intelligence that, um. Can be valuable to others in their sector. Understanding that an attack on one.
May well be an attack on others very quickly, and that it is in the the whole sector's interest to share things even when things have gone wrong for you. And that's been a really important shift in the cyber security industry, where if a company has had a breach, being transparent about it with others is a is an important learning because then you stop others suffering the same fate. And from a national perspective, that's obviously important. Um. On, on the point about comparison with other countries, I did mention earlier, I think I would be specific that I think among our.
European allies, I think Germany and Poland are at the top of the list for how they have managed to. Really operational. Wise. What they mean by a different partnership between industry and government. They have put real money behind the warm words. And we are seeing genuine. Development in the industrial base of those countries and the way that they interact with their host governments. I think at a at a smaller scale. But another great example is, um, Estonia in the Baltic states, where again, there is a much more established pattern of proper partnership, proper co-working people on the front lines, very familiar with working with private companies and sharing that information back and forth.
So you have an iterative process of improving the things that you're deploying. Um, but I think in terms of our scale, Germany and Poland, I think are very interesting, instructive examples for us. The US is, is somewhat of an example of its own because of its scale. I don't think it's easy for us to expect that we could replicate how the US is doing this. But setting aside the scale issue, I think there are some things they are doing which we could draw from in terms of prioritising pace, prioritising iteration, understanding that things can can go wrong and that's okay.
May well be an attack on others very quickly, and that it is in the the whole sector's interest to share things even when things have gone wrong for you. And that's been a really important shift in the cyber security industry, where if a company has had a breach, being transparent about it with others is a is an important learning because then you stop others suffering the same fate. And from a national perspective, that's obviously important. Um. On, on the point about comparison with other countries, I did mention earlier, I think I would be specific that I think among our.
European allies, I think Germany and Poland are at the top of the list for how they have managed to. Really operational. Wise. What they mean by a different partnership between industry and government. They have put real money behind the warm words. And we are seeing genuine. Development in the industrial base of those countries and the way that they interact with their host governments. I think at a at a smaller scale. But another great example is, um, Estonia in the Baltic states, where again, there is a much more established pattern of proper partnership, proper co-working people on the front lines, very familiar with working with private companies and sharing that information back and forth.
So you have an iterative process of improving the things that you're deploying. Um, but I think in terms of our scale, Germany and Poland, I think are very interesting, instructive examples for us. The US is, is somewhat of an example of its own because of its scale. I don't think it's easy for us to expect that we could replicate how the US is doing this. But setting aside the scale issue, I think there are some things they are doing which we could draw from in terms of prioritising pace, prioritising iteration, understanding that things can can go wrong and that's okay.
12:01
12:01
Speaker 3
-
Speaker 3
Yes. Um the we run another system rather like Joska for the financial services industry. We have 89 I think it is banks and insurers who share supplier data and so on between themselves and about 5500 suppliers on that system. Um, who input the data. And I must say we're a very strong is on issues like cyber security and information security. They've been very pushy on that and they've driven, uh, their suppliers along a road of, of getting a fair degree of compliance around, around those areas, which has been really important.
And I think there is something for the, um, defence industry to perhaps take on board in terms of strength of message and so on around what is acceptable and unacceptable and what isn't acceptable risk. In the case of, um, other countries, I agree with what you said about Germany and Poland and the, the focus they're putting on this, but also we run a similar system in Australia and they. They are very, um, exacting. Uh, they have very particular requirements and they are really quite well organised.
But there is also an element in the Australian defence industry, which is quite collaborative. They do actually, they don't have this slight degree between mod and the primes, which is a bit of a can be a bit of a tension. They do tend to work more, more collaboratively with the primes to achieve results, and that's a good thing to see.
And I think there is something for the, um, defence industry to perhaps take on board in terms of strength of message and so on around what is acceptable and unacceptable and what isn't acceptable risk. In the case of, um, other countries, I agree with what you said about Germany and Poland and the, the focus they're putting on this, but also we run a similar system in Australia and they. They are very, um, exacting. Uh, they have very particular requirements and they are really quite well organised.
But there is also an element in the Australian defence industry, which is quite collaborative. They do actually, they don't have this slight degree between mod and the primes, which is a bit of a can be a bit of a tension. They do tend to work more, more collaboratively with the primes to achieve results, and that's a good thing to see.
12:02
Speaker 8
-
Speaker 8
I thank you both. That does end this particular session. Could I thank you both enormously. You will have heard about our areas of interest. This is is is not the end point. And if the sort of questions you feel we were asking would like you'd like to write in with more, we'd really very much welcome that. Um, but for the moment, can I thank you both for, uh, here today. And that ends this particular public session.
And I welcome you to this meeting of the Industry and Regulators Committee as part of our inquiry, looking at the relationship between government and the defence industry, this is being broadcast live. There will be a Hansard record afterwards. And if we've misunderstood any of your words, you'll have a chance to correct that. Um, could I though, first of all, welcome you and maybe you could just introduce yourself.
And I welcome you to this meeting of the Industry and Regulators Committee as part of our inquiry, looking at the relationship between government and the defence industry, this is being broadcast live. There will be a Hansard record afterwards. And if we've misunderstood any of your words, you'll have a chance to correct that. Um, could I though, first of all, welcome you and maybe you could just introduce yourself.
12:04
12:05
Speaker 8
-
Speaker 8
And apologies, I didn't introduce myself. I'm Diane Hayter and I will introduce my other colleagues as they pose questions. But if I could start with um general one, following the last year's Strategic Defence review, which called for a new partnership, and that's what we're looking at between, uh, basically government with the mod mostly and the defence industry. Could you tell us something about what you think are the both the cultural and any structural practical changes that are needed to bring about that new relationship?
12:05
Speaker 9
-
Speaker 9
Yeah, absolutely. And yeah, it's a long term 25 year partnership with the Ministry of Defence. We believe passionately in the kind of long term partnership arrangements. Um, and that starts for us with early engagement. Um, and, and in that early engagement, I think the Ministry of Defence needs to be somewhat sort of ambidextrous, how it deals with um the supply. Chain. Um, because on one hand we need to develop sovereign capability. And that is very often long term, um with.
Partners, uh, you know, big and small alike. So there's a level of longer term investment in those relationships that are required. Uh, but then also it needs to be able to rapidly procure, um. Capabilities, kit equipment and facilities that are required that will pop up on a far more ad hoc and, and routine basis. So it needs to be able to operate in both of those, both those worlds. Uh, and for us, yeah, that starts with having a real openness with key industry partners around the threat that's being faced.
Uh, because if we better understand the threat that's being faced, uh, we are better positioned to help and we're better positioned to come up with solutions before the question has been asked of us about what we can do. Um, a lot of time is spent, uh, iterating requirements. Um, defining, uh, outcomes and also inputs. Whereas if we can understand the outcome, we can proactively provide solutions. Um, and then if we can operate that way, that requires a level of trust. Um, and we also recognise that that trust comes through delivery and ultimately we need to be held to account, uh, industry be that, you know, big prime such, is um, equipment manufacturers, uh, companies like kinetic who are more partnered with the Ministry of Defence and small companies.
We have to perform, um, the. More that we are held to account for our performance and the better, um, that structure is, uh, will, will force us to be better. Um, um, we've actually seen some really good progress in the last few years under what we call the partner executive program, uh, where each of the sort of big companies have provided an executive sponsor from within the Ministry of Defence. Function of being held to account at a corporate level. Um, but also, um, creates a level of advocacy for where we think we can add value to, to defence.
Um, and we see that as is a really important part of a wider programme of, of engagement. Uh, but I'll just come back to you the earlier we can be engaged in the, the priorities that defence has, the challenges that it sees from a threat perspective and understanding of where we can best serve those interests will allow us to be more adaptive and more responsive, um, underpinned by really good quality commercial arrangements, which must be held to account for delivery on.
Partners, uh, you know, big and small alike. So there's a level of longer term investment in those relationships that are required. Uh, but then also it needs to be able to rapidly procure, um. Capabilities, kit equipment and facilities that are required that will pop up on a far more ad hoc and, and routine basis. So it needs to be able to operate in both of those, both those worlds. Uh, and for us, yeah, that starts with having a real openness with key industry partners around the threat that's being faced.
Uh, because if we better understand the threat that's being faced, uh, we are better positioned to help and we're better positioned to come up with solutions before the question has been asked of us about what we can do. Um, a lot of time is spent, uh, iterating requirements. Um, defining, uh, outcomes and also inputs. Whereas if we can understand the outcome, we can proactively provide solutions. Um, and then if we can operate that way, that requires a level of trust. Um, and we also recognise that that trust comes through delivery and ultimately we need to be held to account, uh, industry be that, you know, big prime such, is um, equipment manufacturers, uh, companies like kinetic who are more partnered with the Ministry of Defence and small companies.
We have to perform, um, the. More that we are held to account for our performance and the better, um, that structure is, uh, will, will force us to be better. Um, um, we've actually seen some really good progress in the last few years under what we call the partner executive program, uh, where each of the sort of big companies have provided an executive sponsor from within the Ministry of Defence. Function of being held to account at a corporate level. Um, but also, um, creates a level of advocacy for where we think we can add value to, to defence.
Um, and we see that as is a really important part of a wider programme of, of engagement. Uh, but I'll just come back to you the earlier we can be engaged in the, the priorities that defence has, the challenges that it sees from a threat perspective and understanding of where we can best serve those interests will allow us to be more adaptive and more responsive, um, underpinned by really good quality commercial arrangements, which must be held to account for delivery on.
12:08
12:08
Speaker 7
-
Speaker 7
Yes, we've heard about the difficulties of the industry and testing and evaluating new equipment and, and innovation. People having to go to Texas and Utah to test things. And this is your speciality. This is this is what you do. What, um, what would make your work more effective and more efficient, particularly in supporting SMEs in that testing and evaluation of innovations, new equipment.
12:09
Speaker 9
-
Speaker 9
Yeah. So um. We do recognise that. Yeah. There are, there is a requirement for greater testing, evaluation flexibility I think is probably key. But to come to your point about, um, you know, about Texas, you know. There are places with bigger land masses than we have to conduct testing depending on what is the criteria of the test against which, you know, we, we have a, an enormous range up in the Hebrides, uh, over water. Uh, but that doesn't have any topography.
So if you're keen to understand how your equipment operates under topography, um, then that's not ideal. Um, and also you don't have downrange effects if. Um, so I think what I would advocate for is, is understanding what is the effect of the test we're trying to, to have and then picking the best environment under which to do it. But to your point around, um, access, I think is key here. And you know, if I look back over Kinetic's history, you know, we, we started as an organisation, um, where mod programs and defence programs were, were long, highly complex and centered around very, very expensive pieces of equipment.
Had to transform and we need to transform the way we do that. And under our long term partnering agreement, um, over its multiple kind of iterations, we've invested many hundreds of millions of pounds trying to make that more relevant. But to, to SMEs that still needs more. And when we redesigned the Lcpa last year, we made a commitment to something called the T&E Innovation Gateway. Um, and that is a mechanism whereby UK based small and medium sized enterprises can access, um, the lhpa, the long term partner agreement, effectively, the MoD's T&E estate at the same price as if it were the Ministry of Defence up to a threshold of, of subsidy.
Um and why do we do that?It's because previously it was prohibitively expensive for SMEs to, to access those. So we've brought the kind of commercial barrier down. Um and we're seeing some really good pull through of that. We've had sort of nearly 70 inquiries come through. We're in 30 active discussions about how we can support them. We've delivered a number of projects, uh, on the back of that then. Is about then the access, the time, how much time is available on these, uh, in these facilities, on these ranges.
And again, normally if you're doing a big complex air to air, um, or air to ground activity, you only really want one of those going on at a time due to, um, you know, the amount of space it takes and the danger area, but can we make smaller parts of our, um, estate available to people very quickly for very short time frames. And um, we've managed to do that. We can respond within 48 hours to a company that was operating in Ukraine, said it found an issue with their, with their equipment, uh, wanted to test it in an anechoic test chamber.
We turned that around in 48 hours. Um, we need to make that routine. Um, and we do have the mechanisms to do that. And we deliver that under, uh, our drone works, um, facilities, um, which is about repurposing some of that and reimagining how it can be used at a more iterative pace. So, um, yeah, I would advocate for thinking, you know, about the outcome of the, the test we're trying to do, where can that be best done?And then we can work in partnership through these new arrangements we have in place to make sure they're available.
So if you're keen to understand how your equipment operates under topography, um, then that's not ideal. Um, and also you don't have downrange effects if. Um, so I think what I would advocate for is, is understanding what is the effect of the test we're trying to, to have and then picking the best environment under which to do it. But to your point around, um, access, I think is key here. And you know, if I look back over Kinetic's history, you know, we, we started as an organisation, um, where mod programs and defence programs were, were long, highly complex and centered around very, very expensive pieces of equipment.
Had to transform and we need to transform the way we do that. And under our long term partnering agreement, um, over its multiple kind of iterations, we've invested many hundreds of millions of pounds trying to make that more relevant. But to, to SMEs that still needs more. And when we redesigned the Lcpa last year, we made a commitment to something called the T&E Innovation Gateway. Um, and that is a mechanism whereby UK based small and medium sized enterprises can access, um, the lhpa, the long term partner agreement, effectively, the MoD's T&E estate at the same price as if it were the Ministry of Defence up to a threshold of, of subsidy.
Um and why do we do that?It's because previously it was prohibitively expensive for SMEs to, to access those. So we've brought the kind of commercial barrier down. Um and we're seeing some really good pull through of that. We've had sort of nearly 70 inquiries come through. We're in 30 active discussions about how we can support them. We've delivered a number of projects, uh, on the back of that then. Is about then the access, the time, how much time is available on these, uh, in these facilities, on these ranges.
And again, normally if you're doing a big complex air to air, um, or air to ground activity, you only really want one of those going on at a time due to, um, you know, the amount of space it takes and the danger area, but can we make smaller parts of our, um, estate available to people very quickly for very short time frames. And um, we've managed to do that. We can respond within 48 hours to a company that was operating in Ukraine, said it found an issue with their, with their equipment, uh, wanted to test it in an anechoic test chamber.
We turned that around in 48 hours. Um, we need to make that routine. Um, and we do have the mechanisms to do that. And we deliver that under, uh, our drone works, um, facilities, um, which is about repurposing some of that and reimagining how it can be used at a more iterative pace. So, um, yeah, I would advocate for thinking, you know, about the outcome of the, the test we're trying to do, where can that be best done?And then we can work in partnership through these new arrangements we have in place to make sure they're available.
12:12
12:12
Speaker 1
-
Speaker 1
Um how do procurement processes and contracts need to change to adapt at pace to new technologies and requirements?Um, you know, I'm particularly interested in the sort of, you know, faster changing new technologies like drones and anti-drone capabilities. Um, what progress is the government actually making in changing the way it procures and contracts for those that sort of bottom segment of higher risk, faster changing technologies.
12:13
Speaker 9
-
Speaker 9
Um, so, so we're not a OEM of equipment, so I can only provide you with what we've observed and we've seen some really interesting progress through, uh, particularly through through UK di defence innovation, um, who were really focused around a response to and supporting task force kindred out of Ukraine. Um, and recently they've undertaken, um, some very innovative procurement processes to procure very long range one way effectors. Um, and that was done through a really disruptive method. We, we observed, which was to um, do a rapid down selection, make time, the critical factor of the, of the procurement process.
Can you be ready in time to the supply chain providing a level of seed corn investment to a number of suppliers and then what they call a three, two, one process. So three will be taken through a first phase to, to design. Uh, and then you would have, let's say, a fly off between two technologies and then a selection of one. And we thought that was very interesting for a number of reasons. Firstly, but time is the kind of cardinal point, if you cannot be ready by this point, that is not valuable to us.
And I think that's a significant change for, for for defence. Uh, I think secondly then in is recognising that by investing in a number of companies, even if they don't make it to the end, that's a good investment for defence because they can take that investment and then deploy it on the next competition they run. Um, and then thirdly, a visible demonstration of success. Um, and that has a number of things. It's good from an external perspective showing that, you know, our adversaries that we can respond, uh, pace of relevance, but also showing to the Ministry of Defence.
It is buying a product, uh, that is capable of delivering the effect that it was designed to do. Um, so we, we, and we are seeing a series of those happening through, through UK. So I We are seeing a series of those happening through through UK. So I think where teams are. We are seeing some of the benefits of that. And then we. We have the role of then being able to, you know, create those test and evaluation facilities to ensure that those processes can be ducted safely and effectively.
Can you be ready in time to the supply chain providing a level of seed corn investment to a number of suppliers and then what they call a three, two, one process. So three will be taken through a first phase to, to design. Uh, and then you would have, let's say, a fly off between two technologies and then a selection of one. And we thought that was very interesting for a number of reasons. Firstly, but time is the kind of cardinal point, if you cannot be ready by this point, that is not valuable to us.
And I think that's a significant change for, for for defence. Uh, I think secondly then in is recognising that by investing in a number of companies, even if they don't make it to the end, that's a good investment for defence because they can take that investment and then deploy it on the next competition they run. Um, and then thirdly, a visible demonstration of success. Um, and that has a number of things. It's good from an external perspective showing that, you know, our adversaries that we can respond, uh, pace of relevance, but also showing to the Ministry of Defence.
It is buying a product, uh, that is capable of delivering the effect that it was designed to do. Um, so we, we, and we are seeing a series of those happening through, through UK. So I We are seeing a series of those happening through through UK. So I think where teams are. We are seeing some of the benefits of that. And then we. We have the role of then being able to, you know, create those test and evaluation facilities to ensure that those processes can be ducted safely and effectively.
12:16
12:16
Speaker 9
-
Speaker 9
Um. I. Think that's a fair. Challenge. My, my observation would be that. That's about culture and risk taking. Because on one hand you are investing in companies that you know are not going to make it. And is that acceptable?Is that acceptable defence that we sink cost into these processes?I would advocate that it is. And that's about, um, you know, the taking of proportionate risk.
Um, and empowering. I think the commercial bodies within defence to, with. Amount of latitude to pick a process, pick a. You know, a club out the tool of the golf bag if you like to to address the issue that's happening. And so they will be different. Yeah. This one was about pace. Um if you are buying, you know, next generation of combat aircraft pace may not be your, your number one priority. It might be about, you know, the, the quality of the outcome, or you might need a more partnered arrangement for a long term pipeline.
So I think it's giving, you know, um, authority to commercial entities to, to pick the approach they think is, will have the best outcome.
Um, and empowering. I think the commercial bodies within defence to, with. Amount of latitude to pick a process, pick a. You know, a club out the tool of the golf bag if you like to to address the issue that's happening. And so they will be different. Yeah. This one was about pace. Um if you are buying, you know, next generation of combat aircraft pace may not be your, your number one priority. It might be about, you know, the, the quality of the outcome, or you might need a more partnered arrangement for a long term pipeline.
So I think it's giving, you know, um, authority to commercial entities to, to pick the approach they think is, will have the best outcome.
12:18
12:18
Speaker 6
-
Speaker 6
Um, hi. Hello. Um, you were sitting here previously. So you are my supply question chain. Question. When I put it to Mr. Maude. And the two parts, the problem and the resolution. So the problem. We've heard that the visibility of supply chains and the, um inputs can be an issue, uh, particularly around, um, understanding key risks and critical, inputs from those supply chains and how the responsibility of this, visibility or having control of this visibility is passed up and down the supply chain.
And the second one, if you, if you could give us your views on the problem, how should the Mod and defence contractors respond to that problem?Um, in order to secure in order to achieve secure and reliable supply chains?And do you have any knowledge of any progress through the defence supply chain capability programme?We've already heard today an example of third party risk and supply chains and cyber security, which I think shocked us. Um, but could you have a go at the problem or articulate your views on the problem and the resolution to that problem?
And the second one, if you, if you could give us your views on the problem, how should the Mod and defence contractors respond to that problem?Um, in order to secure in order to achieve secure and reliable supply chains?And do you have any knowledge of any progress through the defence supply chain capability programme?We've already heard today an example of third party risk and supply chains and cyber security, which I think shocked us. Um, but could you have a go at the problem or articulate your views on the problem and the resolution to that problem?
12:19
Speaker 9
-
Speaker 9
Um, I'll give you my views. Yeah. We, uh, as a services company generally don't have hugely deep supply chains. So again, I'll probably just give you my, my perspectives. And I guess, you know, ultimately, visibility starts with why, why do we want this information?And what are we going to do with it when we have it?Um, because I think, you know, we've seen a lot of, uh. Reports for greater visibility. Um, so we get that visibility.
Okay, what are we going to do differently as a result?So I think if, if industry can understand what it is, the intention is, and we then we can respond accordingly. Yeah. For me, this would start with again, holding to account, you know, if Mod has entered into a contract with a. Industry provider to deliver something, whether that has a hugely complex supply chain or a very simple one, ultimately holding them to account to deliver the outcome. And if they need to overcome.
You know, supply chain issues, uh, obsolescence, risk, um, you know, uh, various other supply chains, then holding them to account for doing that, I think would be, you know, the primary outcome. I think then moving more broadly again, when you've got that visibility is. One of the things that we are advocating for is to open up defence to, uh, disruptive, perhaps non-traditional defence suppliers to become part of our supply chains as we do. That we move away from traditional suppliers for good and for bad.
We know how they perform and, and what they deliver to us, to a far more networked set of suppliers. That's about risk and reward. Yeah. We want the rewards of bringing innovation, bringing new. Uh, new supply chain disruption. The risk is that we are introducing new participants into that market. And we've got to accept that the benefits do outweigh those risks. Um, from a, the supply chain program you referenced, um, haven't been hugely close to it.
I was at the, an air capability symposium where they gave their sort of initial findings. And again, that was, this is the potential risk that we hold, which is useful to understand. Yeah. So we have visibility, we understand where we have single points of failure in the defence supply chain. We understand why we have huge dependence on um overseas. Suppliers and what have you. Then the question is, well so what, what are we going to do about.
And I haven't to be honest, I haven't seen. That's not a criticism of the program. I just I've not observed what the the response to that risk will be and how we actually go on and manage and mitigate it further.
Okay, what are we going to do differently as a result?So I think if, if industry can understand what it is, the intention is, and we then we can respond accordingly. Yeah. For me, this would start with again, holding to account, you know, if Mod has entered into a contract with a. Industry provider to deliver something, whether that has a hugely complex supply chain or a very simple one, ultimately holding them to account to deliver the outcome. And if they need to overcome.
You know, supply chain issues, uh, obsolescence, risk, um, you know, uh, various other supply chains, then holding them to account for doing that, I think would be, you know, the primary outcome. I think then moving more broadly again, when you've got that visibility is. One of the things that we are advocating for is to open up defence to, uh, disruptive, perhaps non-traditional defence suppliers to become part of our supply chains as we do. That we move away from traditional suppliers for good and for bad.
We know how they perform and, and what they deliver to us, to a far more networked set of suppliers. That's about risk and reward. Yeah. We want the rewards of bringing innovation, bringing new. Uh, new supply chain disruption. The risk is that we are introducing new participants into that market. And we've got to accept that the benefits do outweigh those risks. Um, from a, the supply chain program you referenced, um, haven't been hugely close to it.
I was at the, an air capability symposium where they gave their sort of initial findings. And again, that was, this is the potential risk that we hold, which is useful to understand. Yeah. So we have visibility, we understand where we have single points of failure in the defence supply chain. We understand why we have huge dependence on um overseas. Suppliers and what have you. Then the question is, well so what, what are we going to do about.
And I haven't to be honest, I haven't seen. That's not a criticism of the program. I just I've not observed what the the response to that risk will be and how we actually go on and manage and mitigate it further.
12:23
12:23
12:23
12:23
Speaker 4
-
Speaker 4
Okay, one of the things that, uh, has become quite obvious, uh, partly because of the Ukraine war, is that, uh, with more conventional warfare, you can run out of your munitions within days, and your stockpiles disappear very, very quickly. Um, I'll question is, does the UK industry have the ability to supply sufficient capacity, whether it's drones or more conventional munitions over a sustained period in the event of that level of war?But how do you actually get around that in terms of, um, making sure that capacity is available for the future?Do you have to is it a type of contract or do you have to pay for people to keep production lines open?I was interested that to read that on Storm Shadow.
1990s, um, munition, that or cruise missile that they're now having to re. Produce that between France and England now. Um, before they can actually bring a new version in. Um how do we get around that issue.
1990s, um, munition, that or cruise missile that they're now having to re. Produce that between France and England now. Um, before they can actually bring a new version in. Um how do we get around that issue.
12:24
Speaker 9
-
Speaker 9
So and again, I wouldn't want to speak for others that do manufacture their supply chains, but um, from, from a, from our perspective, I. Think there is a, been an industrial base that's been waiting and seeking the clarity that the dip has now provided. So people's ability to invest and, and, um, at their own risk based on a projected pipeline, I think has increased. Um, whether that is sufficient or not, I'm really not qualified to say, but perhaps what I would offer is a slightly different mindset to the challenge.
And in our role, when we work with the Air and Space Warfare Centre was when we were gifting munitions to Ukraine as part of the the conflict, there was a view that on the kind of, uh, on the label that some of the munitions were providing were life expired. Uh, either that they'd been stored for too long or they'd been on, uh, had been, um, had too many characters on them. Uh, and we actually undertook a very short study, um, which indicated that. Uh, we.
Could change our risk tolerance. Not to an extreme extent, but by having a little bit of the right advice, looking at a problem slightly differently, actually giving the, what we call the duty holder, the person that's in charge of that weapon, the opportunity to say, I accept the risk of storing this for longer or, or flying for longer with it on the wing is actually not an intolerable risk. So I think there is a way that by using the skills we have in the UK to look at these problems, to not only shore up the supply chains we have, but to relook at the equipment we already have and make best use of.
That is also an option. I know that didn't quite answer your question, but I do feel slightly ill.
And in our role, when we work with the Air and Space Warfare Centre was when we were gifting munitions to Ukraine as part of the the conflict, there was a view that on the kind of, uh, on the label that some of the munitions were providing were life expired. Uh, either that they'd been stored for too long or they'd been on, uh, had been, um, had too many characters on them. Uh, and we actually undertook a very short study, um, which indicated that. Uh, we.
Could change our risk tolerance. Not to an extreme extent, but by having a little bit of the right advice, looking at a problem slightly differently, actually giving the, what we call the duty holder, the person that's in charge of that weapon, the opportunity to say, I accept the risk of storing this for longer or, or flying for longer with it on the wing is actually not an intolerable risk. So I think there is a way that by using the skills we have in the UK to look at these problems, to not only shore up the supply chains we have, but to relook at the equipment we already have and make best use of.
That is also an option. I know that didn't quite answer your question, but I do feel slightly ill.
12:25
12:25
12:26
Speaker 5
-
Speaker 5
Thank you very much. Um, this question is about devolved authorities. So um the government has begun to work with devolved administrations and local authorities through, uh, defence growth deals. Given much of your work is tied to specific locations such as testing ranges, what impact do you have on local industries and areas and how do you work with those authorities in relation to your activities?And then, uh, supplementary. What do these deals need to provide in order to be a success?
12:26
Speaker 9
-
Speaker 9
Yeah. Thank you. Um, and you know, we at Connecticut, a lot of our work, uh, almost 50% of our employees live and work in rural and semi-rural areas. So this is a really important part to us. But if I talk about my portfolio and we operate, uh, two air ranges, one, uh, in West Wales and one in the Hebrides, um, so, you know, local relationships are incredibly important to us. Um, you know, from a, from an employee perspective, we're often the biggest employer in that area.
Um, so, you know, and we have multi-generations of families working within our workforce. So understanding what we need to, to provide, um, like, you know, flexible working arrangements. So for people who do, who are crofters, for example, we offer flexible contracts during the summer so they can work at kinetic and then go and do, um, other activities outside. And then that changes in the winter, as you can imagine. Um, I think then secondly, having good relationships with local schools, colleges and universities, um, because we thrive on, you know, the capability of our people.
So, um, Stem subjects are really important. So creating connections between the work we do and um, those local colleges and schools to encourage people into Stem and then to find a, you know, a. Career at kinetic that is valuable to them. And then finally into the supply chain. And again, we try and be a responsible employer utilizing local supply chains where we can. Um, and that will be for sort of, you know, sort of routine. And support services, uh, but also into the more technical skill sets to make sure that the sort of high quality technical work that we do also flows into, into that arena.
And there are engineering delivery partnership, we have 200 SMEs that work for us, and we fully commit to, um, you know, we have supplier friendly terms. We have, um, what we. Call a provider network advisory group that helps us understand the impact of how we operate as a large organisation. Um, but in terms of the um defence. Growth partnerships, we've, uh, we signed up, as you know, as part of the, uh, the Welsh partnership that was um, approved just a few months ago.
Uh, clearly we need to see how that washes through in terms of how the funding gets allocated and how that gets supported through programs of record. Uh, but whether it's in Wales, Scotland, or into rural England, you know, those, um, devolved administrations and local supply chains are hugely important and we invest quite a lot of time and effort in ensuring that we support the communities within which we work.
Um, so, you know, and we have multi-generations of families working within our workforce. So understanding what we need to, to provide, um, like, you know, flexible working arrangements. So for people who do, who are crofters, for example, we offer flexible contracts during the summer so they can work at kinetic and then go and do, um, other activities outside. And then that changes in the winter, as you can imagine. Um, I think then secondly, having good relationships with local schools, colleges and universities, um, because we thrive on, you know, the capability of our people.
So, um, Stem subjects are really important. So creating connections between the work we do and um, those local colleges and schools to encourage people into Stem and then to find a, you know, a. Career at kinetic that is valuable to them. And then finally into the supply chain. And again, we try and be a responsible employer utilizing local supply chains where we can. Um, and that will be for sort of, you know, sort of routine. And support services, uh, but also into the more technical skill sets to make sure that the sort of high quality technical work that we do also flows into, into that arena.
And there are engineering delivery partnership, we have 200 SMEs that work for us, and we fully commit to, um, you know, we have supplier friendly terms. We have, um, what we. Call a provider network advisory group that helps us understand the impact of how we operate as a large organisation. Um, but in terms of the um defence. Growth partnerships, we've, uh, we signed up, as you know, as part of the, uh, the Welsh partnership that was um, approved just a few months ago.
Uh, clearly we need to see how that washes through in terms of how the funding gets allocated and how that gets supported through programs of record. Uh, but whether it's in Wales, Scotland, or into rural England, you know, those, um, devolved administrations and local supply chains are hugely important and we invest quite a lot of time and effort in ensuring that we support the communities within which we work.
12:29
12:29
Speaker 7
-
Speaker 7
Thank you very much. My question is on regulation. Um, we've been told that the regulatory framework, um, struggles to keep up with developments. So my question really is is that true. And secondly, um what, what should the regulators do, um, to, to make themselves more available to the industry and to be able to work on new revised regulations.
12:29
Speaker 9
-
Speaker 9
Um, so yeah, I run a business. And so regulation is really important to us. Um, and regulation used. Well, um, and implemented thoughtfully can actually be an accelerator. Um, so that we can do things quickly, we can do them appropriately, we do them safely, because if we do them unsafely, then that will, that will grind everything to a halt again. So I think regulation in its, in its, um, in. In and of itself is not, you know, a, an inhibitor.
Um, but we've been engaged through the d IJC, the joint, uh, the Defence Industry Joint Council to, to look at regulation and how the, um, the implementation of regulation is having an impact. So first of all, having this debate between defence and industry, I think is great. Um, I think from, from our perspective, we need to enable pace whilst maintaining an appropriate level of assurance. Um, and there are a number of areas we see that probably uh, provide a higher burden that are worth exploring things like environmental regulation, um, whilst not burdensome in and of itself, um, the pace of approval, um for even routine activity can be outwith the pace that, that the defence is trying to, uh, trying to operate at.
We often see overlapping civil and military um requirements. We're a civilized civil organisation working for the military. So you've got two regulatory regimes, um, working together. And if they, you know, don't dovetail well, that can again, cause delay and duplication of, um, approval effort and, and things like that. Uh, we also see gaps in regulation. Um, you know, for example, that, which can sometimes lead to sort of the inappropriate utilization of frameworks. Um, just as an example, the, the uncrewed, uh, the testing of uncrewed vehicles is actually regulated by what we call the work boat code, because there was no other code for it.
So that's used in a way to fill a gap in regulation, whilst defence really works out what it needs. Um, but all of that requires an. A risk tolerance and risk acceptance. Um I think defence needs to have a broader discussion about because at the moment I think we have a tendency to default to conservative risk acceptance. Um so whether the regulation is correct or otherwise, how do you, um, how do you accept risk, how do you tolerate it?And how do you mitigate it?I think is the next level of discussions.
So, you know, our views would be, you know, how could we explore a, you know, a fast track approval for mod sponsorship where there is an imperative to do something quickly?How can we explore, um, the opportunity to, to get that fast track through, through a system. Secondly, the creation of regulated sandbox environments whereby, you know, companies such as ourselves are given greater permissions to operate within an area, um, which comes with responsibility, but provided we can assure regulators that we will not incur that area, we would like to see a greater number of permissions to work within it.
Blanket approvals for routine activity, you know, which goes back to trust, right. And, you know, if you give a blanket approval to do routine things, if you step outside of that, we expect that to be taken away. But if you're a responsible contractor acting responsibly and demonstrably, then the ability to do that routine activity more quickly, I think will be a welcome change as well.
Um, but we've been engaged through the d IJC, the joint, uh, the Defence Industry Joint Council to, to look at regulation and how the, um, the implementation of regulation is having an impact. So first of all, having this debate between defence and industry, I think is great. Um, I think from, from our perspective, we need to enable pace whilst maintaining an appropriate level of assurance. Um, and there are a number of areas we see that probably uh, provide a higher burden that are worth exploring things like environmental regulation, um, whilst not burdensome in and of itself, um, the pace of approval, um for even routine activity can be outwith the pace that, that the defence is trying to, uh, trying to operate at.
We often see overlapping civil and military um requirements. We're a civilized civil organisation working for the military. So you've got two regulatory regimes, um, working together. And if they, you know, don't dovetail well, that can again, cause delay and duplication of, um, approval effort and, and things like that. Uh, we also see gaps in regulation. Um, you know, for example, that, which can sometimes lead to sort of the inappropriate utilization of frameworks. Um, just as an example, the, the uncrewed, uh, the testing of uncrewed vehicles is actually regulated by what we call the work boat code, because there was no other code for it.
So that's used in a way to fill a gap in regulation, whilst defence really works out what it needs. Um, but all of that requires an. A risk tolerance and risk acceptance. Um I think defence needs to have a broader discussion about because at the moment I think we have a tendency to default to conservative risk acceptance. Um so whether the regulation is correct or otherwise, how do you, um, how do you accept risk, how do you tolerate it?And how do you mitigate it?I think is the next level of discussions.
So, you know, our views would be, you know, how could we explore a, you know, a fast track approval for mod sponsorship where there is an imperative to do something quickly?How can we explore, um, the opportunity to, to get that fast track through, through a system. Secondly, the creation of regulated sandbox environments whereby, you know, companies such as ourselves are given greater permissions to operate within an area, um, which comes with responsibility, but provided we can assure regulators that we will not incur that area, we would like to see a greater number of permissions to work within it.
Blanket approvals for routine activity, you know, which goes back to trust, right. And, you know, if you give a blanket approval to do routine things, if you step outside of that, we expect that to be taken away. But if you're a responsible contractor acting responsibly and demonstrably, then the ability to do that routine activity more quickly, I think will be a welcome change as well.
12:32
12:32
12:33
Speaker 9
-
Speaker 9
Um, so we operate in, um, a number of countries around the world, uh, you know, in the US, Australia and Germany, notably, as well as Canada in the UK. Um, we have very, very different relationship in the UK given, you know, we're an organisation that was spun out of the Ministry of Defence 25 years ago. So the kind of symbiotic nature between kinetic and um. The Ministry of Defence we believe is unique, um and is a position that we sort of hugely appreciate and recognise as a very privileged position for us to hold.
From our perspective, um, and our unique relationship that there's a lot of things that work really well in that, uh, we have a number of long term arrangements, which are incredibly well managed by the Ministry of Defence, um, over, over their lifetime, um, what we call a number of interventions have been put into those to hold us to account. Um, and they've required us to invest, you know, £200 million a year to ensure that capabilities are, are kept relevant, that our services are kept up to date and that we hold the unique skills and capabilities that we do hold on behalf of the Ministry of Defence for the long term.
So there's a lot of richness in the way that Mod can deal with its long term partners. Outside of the UK, we hold a different position, so we are probably more in the kind of like supply side, uh, side of industry where we are more often in the, competed space on pop up opportunities. And then we experience the same opportunities and challenges. A lot of the, um, OEMs would typically provide about, you know, when's the next competition running?Uh, when does the, um, when does the service provision start?So yeah, I would reflect that from a kinetic perspective.
Um, we have a really, really healthy relationship with the UK Ministry of Defence. We are held to account for our performance. Um, we, we invest heavily as a result of, of the investment you also make in us. Um, so there's a lot of richness I think that can be read across from the way you work with us into other similar organisations.
From our perspective, um, and our unique relationship that there's a lot of things that work really well in that, uh, we have a number of long term arrangements, which are incredibly well managed by the Ministry of Defence, um, over, over their lifetime, um, what we call a number of interventions have been put into those to hold us to account. Um, and they've required us to invest, you know, £200 million a year to ensure that capabilities are, are kept relevant, that our services are kept up to date and that we hold the unique skills and capabilities that we do hold on behalf of the Ministry of Defence for the long term.
So there's a lot of richness in the way that Mod can deal with its long term partners. Outside of the UK, we hold a different position, so we are probably more in the kind of like supply side, uh, side of industry where we are more often in the, competed space on pop up opportunities. And then we experience the same opportunities and challenges. A lot of the, um, OEMs would typically provide about, you know, when's the next competition running?Uh, when does the, um, when does the service provision start?So yeah, I would reflect that from a kinetic perspective.
Um, we have a really, really healthy relationship with the UK Ministry of Defence. We are held to account for our performance. Um, we, we invest heavily as a result of, of the investment you also make in us. Um, so there's a lot of richness I think that can be read across from the way you work with us into other similar organisations.
12:35
12:35
Speaker 8
-
Speaker 8
Thank you very much. And thank you for your time today, partly because you were here for the earlier session as well. You'll be very aware of the sort of questions that we've got and the degree of interest we've got. Um, after this, if you would like to answer some of the questions that probably we may have even stimulated in your mind, we'd be very much welcome that because of the, the breadth of your experience. But thank you for coming today. And that ends today's public session.
Thank you, thank you.
Thank you, thank you.