Corporate report

Chair's newsletter July 2022

Published 15 July 2022

1. Introduction

I look forward to working with all stakeholders over the coming years to help drive timely and efficient defence procurement, which offers value for money for the MOD and provides fair returns to industry.

Along with SSRO Board members, I wish to continue engaging with as many of you as possible. We welcome offers from stakeholders to visit their facilities, to see and understand issues from your perspective. Many thanks to those who have offered such invitations.

I would like to thank David Galpin (Chief Operating Officer) for his professionalism and hard work throughout his time at the SSRO. All at the SSRO wish David well for the future.

I am pleased to welcome Joanne Watts to the SSRO in her role as Chief Regulatory Officer. Joanne joins us from HMRC where she was Finance Director for the Chief Finance Officer’s group. She has previously worked across government and the defence industry with roles at Raytheon, BAE Systems, GEC Marconi Avionics and the MOD.

Our Corporate Plan 2022-2025 contains plans to review whether we have access to the right skills, knowledge and experience: a capability review. We will use independent external support for this work - to gather a range of stakeholder views from across the MOD and the defence industry - for consideration by the SSRO Board. We are also planning how we can improve access to and use of experts: an important option for us to expand our access to specialist knowledge and experience when needed.

In line with our commitment to transparency, we have published our Framework document and the Chair’s annual letter.

I wish you well for the summer and look forward to hopefully meeting with you in the future.

Hannah Nixon

2. Corporate Plan 2022-2025

Our Corporate Plan for 2022-25 priorities include:

• Continuing to provide support to the implementation of the Secretary of State’s Review of the Legislation and the Procurement Bill.
• Improving our guidance and support, including through our consultation on the methodology for the 2023/24 baseline profit rate assessment, and also the consultation on updates to allowable cost guidance on overheads and cost recovery rates.
• Delivering better data to be used by the MOD and its delivery organisations.

The Amendments and Variances, and Overheads projects detailed in the Plan will also provide the MOD with better information about contracts.

3. Stakeholder Survey results

The SSRO has completed its third stakeholder survey, in line with the commitment made in the SSRO’s Corporate Plan 2021-2024.

Following an open competition, we commissioned Opinion Research Services (ORS) to undertake the survey and ensure the independence and anonymity of the responses. ORS has produced a report on the survey and the results.

The survey responses are positive although the Board and I are clear that there are areas where we can further improve. Identified improvement themes include:

• SSRO Guidance.
• SSRO engagement.
• An agile and proactive SSRO.
• SSRO skills, knowledge and experience.
• Improving KPI performance - DefCARS

Work is already underway or planned that will address aspects of respondents’ feedback, and further actions are being considered. We will publish an update on our progress in the Autumn.

The survey results will also be used to inform a refresh of the Stakeholder Engagement Strategy, which will be presented to the Board in September.

4. Annual Statistical Bulletin

This annual publication includes analysis of all contracts that became a QDC/QSC between 1 April 2021 and 31 March 2022, and includes data for Quarter 4 2021/22 within the quarterly series of bulletins. Data is also presented from April 2015, when the first QDC was entered into.

This year’s publication includes details on completed contracts – an area which will improve insight.

5. Referrals

We remain committed to facilitating referrals, which can help to resolve disputes and clarify application of the regulatory framework. We welcome the proposals in the Defence and Security Industrial Strategy: reform of the Single Source Contract Regulations Command Paper, to enable a wider range of referrals to be made.

Referrals have the potential to realise improvements in the way the regime operates, bringing benefits to defence procurement to both the MOD and industry.

Consistent with the Defence and Security Industrial Strategy theme of speed, we are focusing attention this year on ways to make it easier and quicker for the MOD and contractors to get answers to queries on the application of the regulatory framework.

We have published the outcome of the recent determination on R&D expenditure credit.