Transparency data

Board minutes: 15 June 2023

Published 26 October 2023

Minutes of the 49th Board Meeting

Meeting held at the RAF Club, Piccadilly/via Teams 15 June 2023 14:00 to 17:00

Board members present:	Others present:
Hannah Nixon (Chair)	Alan Brennan (Head of Legal)
Peter Freeman	Colin Hill (Defence Advisor)
Alastair Groom	Mike Wetherell (Director of Corporate Resources)
Roy Barker	Tara Usher (MOD Representative)
Hugh Kelly	John Russell (observer)
Joanne Watts	Ben Johnson (item 7)
Claire Williams	Chris Willcox (item 7)
	Veli Koc (item 7)
	Anthony Bende-Nabende (item 7)

1. Welcome, apologies, announcements and declarations of interest

The Chair welcomed Board members to the meeting:

• Joanne Watts was welcomed to the meeting in her capacity as acting Chief Executive and Accounting Officer.
• Roy Barker was welcomed to his first meeting of the Board as a non-executive member.
• John Russell was welcomed to the meeting as an observer ahead of his start date as Chief Executive of 3 July 2023.

There were no apologies for absence.

Attendees were informed that the meeting would be recorded via Teams, with the recording being destroyed once the draft minutes are approved.

Hannah Nixon, Chair, declared a new interest as a non-executive director of Worldpay. The appointment did not present any conflicts of interest and was noted for the record.

The Chair invited John Russell and Roy Barker to introduce themselves to the Board and give their first impressions of the SSRO:

• John Russell commented that his induction had been a positive experience and that he was looking forward to seeing the evolution of the organisation as set out in the Corporate Plan.
• Roy Barker commented on two challenges for the SSRO: that while the SSRO was effective in its role, was the organisation efficient; and how could the SSRO be relevant to its audience.
• The Chair noted that some of these themes would be picked up at the July workshop.

2. Minutes of 48th meeting of the Board, 30 March 2023 (SSRO 01-0623) and action tracker (SSRO 02-0623)

The Chair introduced the minutes of the Board meeting held on 30 March 2023. Two actions were recorded and their status was noted. The actions were:

• Action 152: a DefCARS brochure had been drafted and a meeting to discuss it was held with the Board data champion on 20 March 2023. The brochure was being finalised, building on the feedback received and would be circulated. The briefing for the minister was being finalised with input from the SSRO’s communications and media consultant. It would be circulated once complete. The DefCARS brochure and the Minister’s briefing had been drafted and would be uploaded onto Decision Time. Action: Secretariat

• Action 161: the Board agreed that the SSRO REACH behaviours should be discussed as a standing item at each Board and this would be discussed under Item 12, Reflections on the meeting. This action would be closed.

The minutes of the 48th meeting of the Board were approved as a correct record.

3. Chair’s introduction

The Chair provided an update on the annual Chair’s letter, now received from the MOD. The letter reflected the change in relationship with the MOD and the SSRO’s priorities set out in the Corporate Plan. The letter would be published on the SSRO website alongside the Corporate Plan once approved.

The Board discussed the point that the SSRO’s KPIs should be aligned with defence outcomes and suggested that it would be helpful to have this clearly mapped for stakeholders. The Defence Advisor shared the MOD’s defence outcomes with the Board noting that Defence enabling objective 11 was where the SSRO’s objectives were mapped. The Defence Advisor would consider if there were lower-level objectives that might be more directly relevant to the SSRO once the next defence plan was published. Action: Colin Hill

The strategic update on 13 June had been cancelled as Dr Liesl Neale was, at short notice, unable to attend. This would be rescheduled for one of the diarised strategic updates later in 2023. In future, an internal back-up would be prepared to ensure that panel members still had a touchpoint.

The Chair updated the Board on recent stakeholder engagement noting that:

• The next set of industry visits were being arranged for the autumn and Board members would be given the opportunity to attend once the timetable was agreed.
• The Chair and the Chief Executive would be attending the Royal International Air Tattoo on 14 July as guests of Raytheon.
• The SSRO should have a strategic presence at external events such as DSEI in September. Board members would be invited to get involved once the timetable was announced.
• The Chair was meeting the Minister for Defence Procurement, James Cartlidge, on 3 July.
• The Defence Advisor was considering suitable SMEs for site visits, noting that there were some SMEs for whom single source contracts delivered 80-90% of their revenue making them particularly relevant.

4. Chief Executive’s report (SSRO 03-0623)

Joanne Watts, Chief Regulatory Officer, presented her report to the Board. The report provided an overview of recent publications, stakeholder engagement, including recent meetings and site visits to industry and MOD facilities.

The Chief Regulatory Officer updated the Board on:

• Recent stakeholder engagement and site visits.
• Publications. The Corporate Plan and Stakeholder Engagement Strategy would be published once Ministerial approval had been received. The Annual Statistics Bulletin and the Profit Rate Activities consultation would be published on 22 June. The Board noted that LinkedIn was being used to promote SSRO communications.
• Accommodation. The move to 100 Parliament Street had been successfully achieved and Board members had been informed of how to get building passes.
• Review of Legislation. The SSRO issued three working papers on reporting, profit and alternative pricing on 25 May. The MOD also provided a working paper for release to OWG members, noting that it was not yet government policy. If publication of the MOD’s consultation document was delayed, the SSRO would extend the deadline for responses to its consultation to allow respondents to take it into account in their responses.

The MOD representative noted that the MOD had issued a summary of its draft consultation, not a working paper. The CRO would ensure that the SSRO was consistent in how it referred to the MOD’s paper. Action: Jo Watts

• Referrals. The CRO updated the Board on current and potential referrals noting that referrals engagement was increasing, and resources were limited. It was confirmed that the current panel member recruitment would provide a wider pool of panel members for referrals but that experienced SSRO staff were needed to resource referrals, which meant moving staff from business-as-usual work and back-filling those positions. The SSRO was able to recharge the cost of referrals from the MOD.

The panel member recruitment campaign had been very successful and had targeted candidates with MOD commercial skills.

The Board discussed conflicts of interests of panel members noting that there was a fine balance between recruiting panel members with relevant experience and conflicts. Conflicts of interest would be discussed on a case-by-case basis, but financial interests would always exclude a panel member. This risk was mitigated through recruiting a wider panel.

• It was intended to use panel members’ skills more widely in future in areas such as staff briefings and training.
• No external complaints had been received since the last Board meeting.

The Board noted the information provided in the report.

5. Agenda for July Board workshop (SSRO 04-0623)

Joanne Watts, Chief Regulatory Officer, and Colin Hill, Defence Advisor, introduced the draft workshop agenda.

The agenda would focus on the challenges faced by the MOD acquisition reform programme and the relevance to the strategic challenges for the next Corporate Plan.

The Board discussed the agenda and noted that details of timing and travel arrangements would be sent out shortly.

The Board considered and commented on the draft agenda at Appendix 1.

6. Corporate Performance Report (SSRO 04-0623)

Joanne Watts, Chief Regulatory Officer, introduced the Corporate Performance Report (CPR), which provided an update on how the SSRO was delivering against its corporate priorities as set out in the Corporate Plan.

The Board noted the more concise format of the report and it was confirmed that if an objective turned red then an appendix would be added to the report until the issue was resolved.

Directors then discussed issues arising within their work areas that were not covered in greater detail elsewhere on the agenda:

• Review of legislation. The working paper approach was working well.
• Data utilisation. Access for MOD super users had been granted and positive engagement continued with Land Equipment Commercial. Hugh Kelly, Board Data Champion was meeting with the team ahead of the July workshop.
• Accommodation. The move from Finlaison House to 100 Parliament Street had been successfully achieved and the MOTO had been signed by the MOD but not yet by the GPA. The Board recorded its thanks to all parties involved.
• Civil service cost of living payment. The Board noted that the SSRO was aware of the approach being considered by the MOD in relation to the civil service one-off cost of living payment and would remain aligned with the MOD’s plans. It was confirmed that the payment was required to be made in the current financial year and the People Committee would receive a report for consideration at its 24 July 2023 meeting.

The Board reviewed and commented on the Corporate Performance Report.

7. Profit Review Consultation (SSRO 06-0623)

Ben Johnson, Head of Pricing and Economics, and Chris Willcox, Principal Accounting Advisor, presented the report which sought agreement to launch a public consultation on aspects of the Single Source Baseline Profit Rate, Capital Servicing Rates, and Funding Adjustment Methodology.

The SSRO’s 2023-26 corporate plan sets out that in 2023 the SSRO will consider how the MOD’s purchasing decisions are evolving by reviewing the DefCARS contract portfolio and representations from industry and consider whether this signals the need to further develop the activity types that underpin the current methodology.

The review would take place in two phases, over 2023 and 2024. Phase 1, the subject of the consultation, examined the activities of all contracts in DefCARS and analysed how they align with the existing five activity groups which form part of the methodology. The consultation would share those findings with stakeholders and ask for feedback on our conclusions.

Phase 2 would be a longer-term project focusing on the implementation of any recommended refinement of activity groups, as well as any other areas of exploration arising from the responses to this consultation. The assessment in September would use the existing methodology with any changes arising implemented in 2024.

Chris Willcox, Principal Accounting Advisor, highlighted the key findings from the review:

• The exercise had been an opportunity to use the data collected in DefCARS.
• While some minor refinements were suggested, the SSRO’s activity groups were heavily aligned with what the MOD was contracting on.
• The findings were in line with expectations but if there was any expectation that the MOD was to start contracting on different activities, this would be looked at. It was noted that this was covered in the last consultation question.
• The review looked at historical data but there were indications that new areas could come into the single source regime in future, such as some contracts in Defence Digital.

Meetings had been set up with DSAG to talk about the consultation. It was noted that industry was keen to raise familiar, wider issues about the methodology and that while the SSRO would continue to listen to representations, it would only consider new points.

The Board asked if there was any crossover with the Review of Legislation and noted that there were some areas where a contract could fall into two categories and this information could be useful longer-term as it was relevant for segmentation. Alternative pricing could also be an area of crossover.

The Board queried if the timetable could be shortened. It was explained that the timetable for the BPR assessment did not allow for a new methodology to be implemented before next year.

A Board member asked for the overall costs of the review and it was confirmed that this work had been costed in the Corporate Plan. The CRO would forward the full costs outside of the meeting. Action: Jo Watts

The Board:

• agreed that the SSRO should launch a public consultation on the methodology in accordance with the timetable set out in 7.1;
• approved the consultation document (Appendix 1), that will be published on the SSRO website; and
• delegated to the Acting Chief Executive authority to make minor revisions to the final documents prior to publication.

8. Final Annual Report and Accounts (SSRO 07-0623)

Mike Wetherell presented the Annual Report and Accounts (ARA) 2022/23 for review and comment, ahead of presentation to the C&AG on 12 July.

The Chair of the Audit Committee confirmed that the Committee had considered the draft ARA at its meeting on 21 March. Clean audits had been received from the NAO and GIAA. The Audit Committee agreed that the accounts should be prepared on a going concern basis and approved the accounts to be presented to the Board.

The Board noted that the ARA remained subject to NAO audit, and changes were possible until the accounts are signed by the C&AG. There was one outstanding issue around the valuation index for DefCARS, but no material changes were expected.

The Board noted that the format and tone of this year’s ARA was more aligned with the Corporate Plan.

The ARA was shared with the Minister on 8 June. There was a risk of a delay in Ministerial clearance or that the Minister would ask for changes to be made after the Board. The SSRO were working closely with MOD colleagues to mitigate this risk.

The Board asked that any comments from the Minister be shared with the Board.

The Board:

• confirmed that a going concern basis remains appropriate for the financial statements;
• reviewed and commented on the ARA 2022/23;
• delegated consideration and any subsequent revision of the document to the Chief Executive and Chair, noting that any significant or material changes would come back to the Board; and
• approved the document for presentation to the C&AG.

9. Minutes from March and May Regulatory Committees (SSRO 08-0623)

Peter Freeman presented the minutes from the Regulatory Committee held on 8 March 2023 and the draft minutes of the meeting held on 17 May 2023. There were no matters arising and the next meeting of the Regulatory Committee was on 12 July 2023.

The Board noted the update.

10. Minutes from March Audit Committee and update from June Audit Committee (SSRO 09-0623)

Alastair Groom presented the minutes from the Audit Committee held on 21 March 2023 and a summary of business from the meeting held on 1 June 2023.

A summary of business from the 1 June 2023 meeting was included in the Board papers.

The Committee considered the risk management report; approved the Annual Report and Accounts for presentation to the Board; received the NAO audit completion report and the Head of Internal Audit annual opinion; and agreed the Audit Committee effectiveness review report and a resulting action plan.

The key action was to arrange a workshop for Audit Committee members to align and confirm the Audit Committee’s role on risk. The outcomes from the workshop would feed into the Annual Board effectiveness review and the annual governance review.

The Committee Chair highlighted the need to change the Audit Committee name to the Audit and Risk Assurance Committee to highlight the Committee’s role in managing risk. The Audit Committee would like the Board to consider whether it was discharging its role on risk, noting that the Board had not discussed the risk summary included in the Corporate Performance Report.

The Board noted the update.

11. Minutes from March People Committee (SSRO 10-0623)

Claire Williams presented the draft minutes from the People Committee held on 20 March 2023. The Board had previously received an oral update at the March meeting. There were no matters arising.

The Board noted the update.

12. Future agendas, reflections on meeting and any other business

The Chair introduced a two-page document showing the business of all Board and sub-committee meetings for the next 12 months:

• The Chair noted that Board business would be reviewed after the July workshop.
• It was confirmed that the Board considered risk annually at its March meeting.
• The September Audit Committee would undertake a deep dive into the people and resources risk.
• Board workshops would be added to the forward look as they were scheduled.

Board members were invited to reflect on the meeting, including REACH behaviours:

• The Board discussed the use of the comments function in Decision Time. It was noted that the Executive welcomed comments in Decision Time ahead of the meeting and confirmed that only meeting attendees could access comments. The Board agreed that comments should be copied to all meeting attendees. Detailed questions could be emailed to the report author.
• The Board discussed the format and length of Board papers. It was agreed that the Board needed detailed appendices for legal reasons but that cover papers should signpost the key information so that the reader could dip in and out as needed.
• The Board felt that the discussion had been calm and polite.
• John Russell commented that he would like the Board to focus on longer-term strategic thinking in future and suggested this be discussed at the July workshop.

The Board congratulated Colin Hill, Defence Advisor, on his RAF Deputy Commander Capability’s commendation award for his RAF work.

13. Next Board meeting

The next meeting of the Board would take place on 26 September 2023 at 14:00.

14. 13. Non-Executive Board Member discussion

Only Non-Executive Board Members remained for this discussion.