Transparency data

Board meeting minutes: 29 January 2019

Published 1 April 2019

Single Source Regulations Office

Minutes of the 25th Board Meeting Board Room, Finlaison House, 15-17 Furnival Street, London EC4A 1AB

Tuesday 29 January 2019 2:00pm to 4:30pm

Board members present:	Others present:
George Jenkins (Chairman)	Graham Payne
Mary Davies	Colin Hill
Peter Freeman	Malcolm Botting
Terence Jagger	Colin Sharples (item 4)
David Johnston	Justine Wharton (item 4)
Marta Phillips	Simon Mahony (item 5)
Neil Swift	Dagmar Jeschin (item 9)
Matthew Rees	Steve Dunsmuir, Hex Security (item 9)
David Galpin

1. Welcome, apologies, announcements and declarations of interest

1.1. The Chairman welcomed members to the 25th meeting of the Board.

1.2. There were no apologies.

1.3. The Chairman noted that the register of interests on the SSRO’s website had been updated since the last meeting.

1.4. The Chairman had received a letter from the Minister for Defence Procurement confirming that David Johnston would be reappointed for a second term as a non-executive Board member.

1.5. Colin Hill had joined the SSRO as Defence Advisor and was welcomed to the meeting as an attendee.

No interests were declared

2. Minutes of 24th meeting of the Board and action tracker

2.1. The Chairman introduced the minutes of the Board meeting held on 4 December 2018.

2.2. Five actions were recorded on the separate action tracker and had been completed or were reported on in papers elsewhere on the agenda. At the previous meeting Andrew Forzani, Chief Commercial Officer at the MOD, had informed the Board that appointments had been made to key positions on the commercial side at the DIO and SDA. In response to a question about engagement with the new appointees, the Chief Executive confirmed that meetings had been arranged with all.

2.3. The minutes of the 24th meeting of the Board were approved as a correct record.

3. Chief Executive’s Report to Board

3.1. Neil Swift, Chief Executive, presented his report to the Board, which provided an update on items not included elsewhere on the agenda.

3.2. The Chief Executive informed the Board that he and the Chairman had given a presentation to the Defence Industries Council on 21 January. The presentation had been positive and had focused on the SSRO’s professionalism and independence, its recent work and immediate plans. Following the presentation, the discussion with members of the Council had covered the benefits of visits to industry; the views of the investment community; the role of the SSRO; and wider knowledge and understanding of the regime. The Board considered the table of information within the report regarding stakeholder engagement, and it was agreed that NEBM engagement should be included specifically in future. Action: Neil Swift.

3.3. The Board discussed a matter that had arisen at the Reporting and IT Sub group meeting on 22 January regarding data security. The Chief Executive had written to the MOD about the issue and would keep the Board informed of the outcome. Action: Neil Swift.

3.4. An interim survey had recently been undertaken on staff engagement and the overall score for staff engagement had increased, with positive movement on all questions. The next full survey would be circulated in February 2019 in time for staff engagement to be reported in the 2018/19 Annual Report and Accounts as one of the SSRO’s key performance indicators.

3.5. Following the October 2018 budget commitment to enhance the role of the UK Regulators Network, a 25 per cent annual fee increase for each regulator had been discussed and agreed. The Chief Executive confirmed that this could be accommodated within the SSRO’s budget and the Board noted the increase.

3.6. The Board considered the comparison provided of the SSRO’s current travel and subsistence rates with those of the MOD and discussed whether it would be appropriate to adopt the MOD’s rates across all categories. Following discussion, the Board agreed to adopt the MOD’s rates for accommodation only, in line with the recommendation. This was considered more appropriate and reflective of market rates than the SSRO’s current rates.

3.7. The lease on Finlaison House was due to expire in June 2023 and the SSRO was required to provide notice by March 2022. All arms’ length bodies were being considered for relocation outside of London and the South East of England at lease events unless there was a clear operational and business need for them to remain. The SSRO had been in contact with the Places for Growth team in the Cabinet Office and the Government Property Unit, and a range of possible options were being considered. A business case for the SSRO’s future accommodation would be prepared, and the Board discussed issues relating to its development.

The Board:

• noted the information provided in the report; and
• approved the SSRO’s adoption of the MOD’s accommodation rates.

4. Corporate Plan

4.1. David Galpin, Director of Legal and Policy, introduced a report updating the Board on progress with the development of the SSRO’s Corporate Plan for 2019- 2022. A draft Corporate Plan had been developed following the Board’s discussion on 4 December 2018 and reflected the indicative corporate budget for 2019/20.

4.2. The Plan set out several priorities for the next three years including: the review of legislation in 2020; reporting requirements; the profit review; the forthcoming tailored review of the SSRO; and specific areas where the need for further or more developed guidance had been identified.

4.3. The key performance indicators for each objective had been reviewed, with a mixture of quantitative and qualitative indicators included. While several were retained from the previous Plan to ensure continuity and comparability, others had been changed where they were no longer relevant or where a different metric was considered to be a better measure of the organisation’s performance. Board members discussed the targets against which some of the KPIs would be measured, including those related to compliance and engagement. It was agreed that the KPI on the quality of report submissions would be considered during the next review of the compliance methodology. Action: David Galpin.

4.4. The Executive Committee had developed an internal business plan setting out more specific work and resource plans for the financial year 2019/20. The internal business plan would be for internal, operational purposes only.

4.5. The Board considered the areas of focus in the Plan and noted that flexibility was required around resourcing of referrals and analysis, and that other areas of work could be delayed or reduced to compensate for increased activity in that area.

4.6. Board members discussed several areas of the Plan, including:

• the definitional differences between objectives 6 and 7 and whether these two objectives could be reordered or joined together;
• whether the SSRO should be more proactive in developing a suite of reports that would enable users to get better use out of the data in the DefCARS system; and
• agreement that the wording of the section in the Plan stating that the SSRO does not generate savings or have targets to do so should be reconsidered.

4.7. Board members were complimentary about the design and layout of the Plan. The final plan would be presented to the Board for approval on 28 March 2019, following a period of consultation with stakeholders.

The Board:

• commented on the draft Corporate Plan;
• approved sending the draft Corporate Plan to the MOD, ADS and all defence contractor members of the Operational Working Group for feedback;
• delegated authority to the Chairman, after consultation with the Chief Executive, to sign off the final document before publication on 31 January; and
• agreed that a four-week consultation period should be allowed for feedback.

5. Data strategy

5.1. Matthew Rees, Director of Economics and Regulation, introduced the SSRO’s draft data strategy for the information provided in statutory reports. The strategy, which had been developed through significant engagement across the SSRO, explained the SSRO’s vision for the use of the data: that the data submitted by contractors in statutory reports was fully utilised in procurement decisions, contract management and the development of the regulatory framework to deliver value for money and fair and reasonable prices. The strategy signalled the SSRO’s commitment to data quality and explained the importance of engagement with industry and the MOD.

5.2. The data strategy would be released for consultation with stakeholders at the same time as the SSRO’s Corporate Plan and would be brought back to the Board for consideration in June, before the final version was published in July. The Board endorsed the direction of the strategy and members hoped that it would encourage debate during the consultation.

5.3. The Board asked for a review of some specific wording in the strategy, for example around accessibility. The Board also asked for the consultation response form to include a question about the ambition of the strategy. Action: Matthew Rees.

The Board:

• agreed that the SSRO should consult on the proposed data strategy;
• agreed to the data strategy for consultation in Appendix 1 and the consultation document and response form in Appendix 2 should be the basis of the consultation; and
• agreed to the timetable for next steps (section 4).

6. Annual review of Board effectiveness

6.1. The Chairman introduced his annual review of the Board’s effectiveness and thanked Board members for the views they had provided through a questionnaire and recent individual meetings. This engagement had provided assurance to the Chairman that the SSRO Board was effective and that the right governance and controls were in place.

6.2. The Board discussed the report and its recommendations, considering specifically:

• the fourth recommendation, that the content of the Corporate Performance Report should be reviewed in response to Board feedback to ensure that it was focused on relevant operational or people issues; and
• the first recommendation, regarding the separation of items on Board agendas between strategy and corporate items. It was suggested that the Board could increase its focus on strategy, for example through away days and specific discussions on strategic issues.

6.3. Marta Phillips was invited to provide feedback on the Chairman’s own performance in chairing the Board, based on the questionnaire responses received. She reported that in all areas the majority of members were content with the focus of meetings, use of time, and the way meetings were organised. Board members were also content with the communications between meetings and during Board meetings.

The Board:

• approved the recommendations from the Board effectiveness review 2019.

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.

The Board:

• reviewed and commented on the Corporate Performance Report.

8. Impact of a no-deal Brexit

8.1. Graham Payne introduced a report providing an update on the implications of a ‘no deal’ Brexit for the SSRO, including the impact on the SSRO’s workforce. The MOD’s Permanent Secretary had written to his department and to arms’ length bodies including the SSRO to inform recipients of the Cabinet decision that the principal focus for the public sector should now be on ensuring that plans and mitigations for a possible ‘no deal’ scenario should be in place. The Board considered the wider points made in the paper about the implications and preparations for a ‘no deal’ Brexit, and how the SSRO could support the MOD in its preparations.

The Board:

• noted the report.

9. Presentation on cyber-security

9.1. The Chairman introduced a presentation on cyber-security, which he had asked to be provided in view of the importance of the issue to the SSRO’s work. The 30-minute presentation was provided by Steve Dunsmuir from Hex Security, who had advised the SSRO on cyber-security since 2015. The presentation covered the national cyber risk as well as the SSRO’s specific position. At its conclusion the Board discussed the issues raised and made points relating to the information held by the SSRO, the assessment provided of the SSRO’s performance and planned future initiatives.

9.2. The Board thanked Steve Dunsmuir for his useful and informative presentation and noted that the issues covered had provided assurance about the arrangements the SSRO had in place. In concluding the item the Chairman noted that it was important for the Board and Audit Committee to continue monitoring this issue.

10. Minutes of the 26 November 2018 Regulatory Committee and update from 23 January 2019 Regulatory Committee

10.1.Peter Freeman presented the minutes of the Regulatory Committee meeting on 26 November 2018 and provided an overview of the meeting on 23 January 2019.

10.2.At its January meeting the Regulatory Committee had agreed the baseline profit rate, capital servicing rates for fixed capital and working capital, and the SSRO funding adjustment for 2019/20 that would be recommended to the Secretary of State. The Committee had discussed DefCARS at length and was conscious of the importance of the system to the organisation’s standing. It had also considered and agreed revisions to the pricing guidance.

The Board:

• noted the minutes

11. Future Board business

11.1.The Chairman presented to the Board a two-page document showing the business of all Board and sub-committee meetings until January 2020. The Board noted the content of the report.

The Board:

• Commented on the future Board business.

12. Any Other Business

12.1.The next meeting of the Board would take place on 28 March 2019 at 2:00pm