Transparency data

Board minutes: 28 March 2018

Published 11 February 2019

Single Source Regulations Office

Minutes of the 20th Board Meeting Board Room, Finlaison House, 15-17 Furnival Street, London EC4A 1AB

Wednesday 28 March 2018 2:00pm to 4:30pm

Board members present:	Others present:
George Jenkins (Chairman)	Graham Payne
Mary Davies	Malcolm Botting
Peter Freeman	Colin Sharples (item 4)
Terence Jagger
David Johnston
Marta Phillips (part)
Neil Swift
Matthew Rees
David Galpin

1. Welcome, apologies, announcements and declarations of interest

1.1. The Chairman welcomed members to the 19th meeting of the Board and welcomed David Galpin to his first meeting as an executive Board member.

Graham Payne declared an interest in an item within the Interim Chief Executive’s Report on the Interim Director of Corporate Resources role. He would not be present for this item.

2. Minutes of 19th meeting of the Board and action tracker

2.1. The Chairman introduced the minutes of the Board meeting held on 11 December 2017. Four actions were recorded on the separate action tracker and had been completed or were reported on in papers elsewhere on the agenda. No other matters were arising.

2.2. The minutes of the 18th meeting of the Board were approved as a correct record, subject to a minor change to paragraph 3.8.

3. Interim Chief Executive’s Report to Board

3.1. Neil Swift, Interim Chief Executive, presented his report to the Board, which provided an update on items not included elsewhere on the agenda. His presentation informed the Board of recent senior stakeholder engagement, including meetings and workshops with senior staff in DE&S and MOD Main Building.

3.2. Since the last Board meeting, the SSRO had published documents relating to its recommendation of the baseline profit rate, capital servicing rates and SSRO funding adjustment for 2018/19. The Secretary of State accepted the SSRO’s recommendation and announced the final rates on 15 March.

3.3. The MOD intended to publish its Command Paper following the Secretary of State’s review of the legislation. The SSRO would be required to publish guidance in support of proposed changes to the cost risk adjustment. The Board noted that such guidance would represent a technical and significant piece of work and would require engagement with stakeholders. Work was under way to forestall identified issues and the Board provided a steer on courses of action. The SSRO planned to confirm in writing the likely timeframe for producing the guidance.

3.4. The edited Wage Inflation report had been provided to Board members. Any comments received would be factored into the development of the draft. Following planned discussions with the MOD, a final version would be put to the Chairman. Action: Board members.

3.5. The SSRO had received initial results from its recent stakeholder survey and they were broadly positive. The Board considered whether to include late entries within the results and agreed that all feedback should be included.

3.6. The Board discussed the MOD’s consultation on the Modernising Defence Programme, and the SSRO’s involvement in it. It also discussed the government’s response to the Defence Committee’s Gambling on ‘Efficiency’: Defence Acquisition and Procurement report.

3.7. The Chairman had met with the Minister for Defence Procurement on 20 February and 27 March and provided an update to the Board on these recent meetings.

3.8. The Chairman provided an update on the recruitment of a permanent Chief Executive.

3.9. Graham Payne left the meeting for the Board’s discussion on the Interim Director of Corporate Resources post. The Board considered the issues set out in the report and noted the interim Chief Executive’s intention to appoint Graham Payne on a fixed term contract.

The Board:

• noted the information provided in the report.

4. Corporate Plan

4.1. David Galpin, Director of Legal and Policy, introduced a report presenting the 2018-21 Corporate Plan to the Board for approval prior to its publication on the SSRO’s website.

4.2. It had been agreed at the January Board meeting that the SSRO would consult its key stakeholders on the draft Corporate Plan in February 2018 before it was finalised. The plan was subsequently circulated to the stakeholders on 29 January for their views and input over a four-week period ending on 27 February.

4.3. The process of engagement throughout the production of the plan had been more intensive than the SSRO had undertaken in the past. While stakeholders had provided few comments on the proposed objectives, the SSRO had received detailed comments on drafting. The report provided an overview of the main points raised and how the SSRO had sought to address them. An overview would be sent to stakeholders setting out how their feedback had been acted on.

4.4. The Corporate Plan was underpinned by a detailed business plan that had been developed in consultation with staff.

4.5. The Board discussed comments made by industry and the MOD about the plan, both through written responses and orally at the Defence SSCR Advisory Group meeting at ADS on 13 February. The Board asked for some specific changes to wording, which would be factored into the drafting of the plan before publication. Action: David Galpin.

The Board:

• noted the feedback received from stakeholders in response to the draft Corporate Plan;
• approved the Corporate Plan;
• agreed the Corporate Plan should be formally submitted to the MOD and published on 30 March 2018;
• approved the proposed Stakeholder Feedback Summary and that it should be provided to stakeholders who were invited to comment on the proposed plan; and
• agreed that the Chairman will approve the final documents for publication, having considered the views expressed by the Board at the meeting.

5. SSRO budget 2018/19

5.1. Graham Payne, interim Director of Corporate Resources, introduced a report presenting the SSRO’s 2018/19 budget for review and approval by the Board ahead of presentation to the MOD alongside the Corporate Plan.

5.2. The draft 2018/19 budget had been developed based on delivery of the draft 2018-21 corporate plan and the need for the proposed key work areas to be adequately resourced.

5.3. The draft budget reflected a total spend for 2018/19 of £6.05 million. The MOD’s DG Finance had accepted this amount as a provisional Grant in Aid bid on 27 October. The report set out the assumptions used in allocating this money across the SSRO’s functions, and Graham Payne provided an overview of specific items of expenditure.

5.4. The SSRO had advised the MOD of resource risks and potential development requirements. The current budget did not include capacity for significant growth, and therefore major workload increases would be subject to in-year business cases for additional Grant in Aid to cover additional resourcing costs.

5.5. The Board considered risks, including workload pressures, and mitigating actions to ensure that the SSRO stayed within the planned budget. It also considered salary costs and the government’s cap on public sector pay increases.

5.6. The Board also discussed the provision for dilapidations relating to the latest assessment by the SSRO’s landlord that current tenants will remain until lease end in 2023 at which time the building will need to be vacated and returned to its pre-lease condition. The SSRO was in discussion with the MOD to confirm how this would be funded.

5.7. It was requested that future budget updates should include comparisons with the previous year’s budget, and that the Board should have an early discussion about the SSRO’s approach to the 2019/20 budget process. Action: Graham Payne.

The Board:

• approved the budget for 2018/19;
• noted the plans to deal with risks and resource pressures; and
• noted the proposed revalorisation of salary bands.

6. Annual Board effectiveness review

6.1. The Chairman introduced his annual review of the SSRO Board’s effectiveness. The SSRO’s Corporate Governance Framework required the Chairman to provide for a formal review of the Board’s effectiveness each year, taking into consideration the Board as a whole, the operation of committees and the contributions of individual members. Independent input had been sought from the Government Internal Audit Agency for this year’s review.

6.2. The Board considered the review, which found that the Board was operating effectively and independently and that robust policies and procedures were in place to ensure its effective governance, risk management, independence and decision making.

6.3. The report made six recommendations, and the Board considered them and the methods by which they should be implemented in turn. One of the recommendations related to the appointment of a lead non-executive Board member to help deputise for the Chairman in the case of unexpected absence. The Board asked for further consideration to be given to whether a lead member may be appointed and, if so, what their responsibilities would be. Action: David Galpin.

The Board:

• approved the recommendations from the Board effectiveness review 2018

7. Corporate Performance Report

7.1. Graham Payne, interim Director of Corporate Resources, introduced the report, which provided an update to the Board on how the organisation was delivering against its corporate priorities as set out in the Corporate Plan. The Board considered progress against each of the objectives, and the KPI ratings set out in the report.

7.2. The Corporate Performance Report would be refocused for the next Board meeting to include changes to the SSRO’s corporate objectives from the new Corporate Plan. It would also in future include a summary of the corporate risk register as an appendix. The Board was asked to consider which other information should be included in the report to support the Board in its role of scrutinising performance. Board members were asked to write to Graham Payne with suggested content. Action: all Board members.

7.3. The Board discussed information within the report regarding the use of QDC data obtained from DefCARS at the MOD’s SSCR Steering Group. The Chairman stated that he had written to DG Finance on this issue.

The Board:

• reviewed and commented on the Corporate Performance Report.

8. Minutes of the 6 March 2018 Audit Committee

8.1. Marta Phillips provided an update to the Board on the 6 March 2018 meeting of the Audit Committee. This had been the first meeting that Mary Davies had attended as a member.

8.2. The Committee had discussed the dilapidations issue considered earlier in the Board meeting, the position of interim Director of Corporate Resources and planned enhancements to DefCARS. The Committee had also considered the corporate risk register at length, following the Executive Committee’s review of the risks within it. Marta Phillips outlined to the Board the Committee’s major points of discussion on specific risks within the register, and the Board discussed risk reporting from the Committee to the Board more generally. The Board agreed that Marta Phillips and Neil Swift should discuss internal audit’s reporting to the Audit Committee. Action: Neil Swift.

The Board:

• noted the minutes

9. Minutes of the 12 March 2018 Regulatory Committee

9.1. Terence Jagger introduced the minutes of the 12 March meeting of the Regulatory Committee. This was the first meeting of the Committee, and it had been a constructive meeting supported by preparatory work by the executive.

9.2. The Committee had considered three significant agenda items: on regulatory priorities, the referrals process and the annual report on the regime. Terence Jagger outlined the Committee’s consideration of each issue, and the Board discussed the items raised in his presentation.

The Board:

• noted the minutes

10. Board workplan

10.1.The Chairman presented to the Board a two-page document showing the business of all Board and sub-committee meetings until December 2018. The Board noted the content and asked for some revisions to the workplan for the next meeting.

The Board:

• Commented on the draft agendas.

11. Any Other Business

11.1.The Chairman was required by the Corporate Governance Framework to undertake the Chief Executive’s annual appraisal following consultation with nonexecutive Board members. Non-executive members were asked to write to the Chairman with feedback on the performance of the interim Chief Executive, which the Chairman would consider for his forthcoming appraisal meeting with the Chief Executive. Action: non-executive Board members.

12. Date of the next meeting

12.1.The next meeting of the Board would take place on 22 May 2018 at 9:00am.

**These minutes have been redacted for publication.