Transparency data

Board meeting minutes: 4 December 2018

Published 1 April 2019

Single Source Regulations Office

Minutes of the 24th Board Meeting Board Room, Finlaison House, 15-17 Furnival Street, London EC4A 1AB

Tuesday 4 December 2018 2:00pm to 5:00pm

Board members present:	Others present:
George Jenkins (Chairman)
Mary Davies	Andrew Forzani (MOD) (Item 2)
Peter Freeman	Graham Payne
Terence Jagger	Malcolm Botting
David Johnston	Colin Sharples (item 5)
Marta Phillips
Neil Swift
Matthew Rees
David Galpin

1. Welcome, apologies, announcements and declarations of interest

1.1. The Chairman welcomed members to the 24th meeting of the Board.

1.2. There were no apologies.

No interests were declared

2. Presentation by Andrew Forzani, Chief Commercial Officer, MOD

2.1. The Chairman welcomed Andrew Forzani and thanked him on behalf of the Board for attending the meeting.

2.2. Andrew Forzani gave a presentation on the Modernising Defence Programme. Four policy review strands underpinned the Programme. The first related to the defence operating model, how it was operating and the relationship between the front-line commands and other agencies. The second considered change and potential efficiencies within the Department, partly in preparation for the next spending review. The fourth related to future equipment capability.

2.3. The third strand, the commercial and industrial approach, was most relevant to the work of the SSRO. Andrew Forzani had been leading a workstream within it considering better commercial capacity and capability. Appointments had recently been made to key positions on the commercial side in the ISS, DIO and SDA. The workstream was considering and seeking to implement many of the recommendations from the Dunne Review, several of which required detailed consideration. The MOD was also seeking to restructure its formal meetings with industry, for example through reconsidering the format of the MOD’s Defence Suppliers Forum.

2.4. The Acquisition Review was in progress and was considering among other areas how to reduce the life cycle of bringing defence equipment into service. Its four areas were: head office; requirement setting; pace and agility; and critical enablers.

2.5. In response to questions from Board members regarding links between this work and the SSRO, Andrew Forzani stated his view that the MOD would continue to require freedom of action in choosing how to develop capability, including through single source procurement.

The regime had not yet fully bedded in, and areas such as exploitation of information could be developed further. The regime provided an important balance in the way the MOD worked with industry.

2.6. Board members discussed the tailored review of the SSRO, which was scheduled to take place in 2019. Andrew Forzani replied that David Goldstone, the MOD’s COO, was undertaking a programme of reviews of frontline commands, delivery organisations and NDPBs. The review would be an opportunity to consider legislative requirements around, for example, data and reporting to identify potential gaps.

2.7. Board members discussed engagement between the MOD and SSRO, noting that a degree of healthy tension was necessary to maintain the SSRO’s independence, but that the engagement between the organisations was sufficient. The SSRO wished engagement to be maintained and broadened. In response, Andrew Forzani noted the opportunity to engage more widely with the newly appointed commercial leads.

3. Minutes of 23rd meeting of the Board and action tracker

3.1. The Chairman introduced the minutes of the Board meeting held on 27 September 2018.

3.2. Five actions were recorded on the separate action tracker and had been completed or were reported on in papers elsewhere on the agenda. Board members considered the minutes and the amount of detail included within them and agreed that Board minutes should record a similar level of information in future.

3.3. The minutes of the 23rd meeting of the Board were approved as a correct record.

4. Chief Executive’s Report to Board

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

4.2. On stakeholder engagement, the Chief Executive reported that the Chairman and he had been invited to present an item at the next meeting of the Defence Industries Council regarding the SSRO’s priorities and any support required from industry.

4.3. The SSRO had received requests from the MOD under Section 36(3) and Section 37 of the Act. The work requested under Section 37 had been submitted to the MOD before its deadline of 19 September. Several non-significant requests under Section 36(3) had been received and work was being undertaken to respond to them. In parallel, an internal procedure document for considering and handling requests under Section 36(3) and Section 37 of the Act was being reviewed and formalised.

4.4. The Chief Executive reported that the contract of the Interim Director of Corporate Resources had been extended by a further five months, to provide coverage through the closure of accounts and to support preparations for retendering the outsourced finance and HR services contract. The contract would now conclude at the end of August 2019.

4.5. The report provided an overview of the recent publication by the Public Chairs’ Forum, Association of Chief Executives and Institute for Government on partnerships between departments and public bodies. Action: Neil Swift to circulate a copy of this report to Board members.

4.6. The Audit Committee had discussed the draft Single Equalities Scheme at its last meeting and it was proposed that a Board member should be appointed as the SSRO Diversity Champion. Action: Graham Payne to develop a job description for the Diversity Champion and circulate it to Audit Committee members for consideration.

The Board:

• noted the information provided in the report; and
• approved a new six-year enabling agreement for Contingent Labour with Alexander Mann under CCS framework RM3749 (Public Sector Resourcing (PSR)), which would come into effect immediately.

5. Corporate Plan

5.1. 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. The report provided a draft outline structure and proposed that the headline objectives and structure remained consistent with those in the previous Plan, reflecting that the objectives were substantially changed in 2018 and that the SSRO’s statutory functions and aims remained unchanged. The KPIs underpinning the objectives were being considered and there were no current proposals for significant amendment.

5.2. The report provided a set of corporate objectives and high level priorities for the Board’s consideration. The Board considered the proposals, including that there should be a focus on the baseline profit rate and the refresh of the underlying methodology, work to provide guidance on cost risk and a focus on reporting guidance. The views of Board members included that the outline structure should be reconsidered to ensure that it was logical, in particular the section on performance in 2018/19. Board members also discussed how the risk of low stakeholder buy-in would be fully mitigated by consultation.

5.3. The Board was content with the direction set out in the report and a draft Corporate Plan would be prepared for the January 2019 Board meeting. Final sign off would be sought in March, before publication in April.

The Board:

• approved the draft outline of the structure for the Plan set out in section 3 of this paper;
• approved the proposed objectives set out in Appendix 2; and
• noted that work would continue to develop the Plan, with engagement and input from stakeholders, and in parallel the Internal Business Plan.

6. Workforce strategy presentation

6.1. Graham Payne, Interim Director of Corporate Resources, gave a presentation on the development of a workforce strategy for the SSRO. The Corporate Plan and Internal Business Plan required a range of knowledge, skills and expertise to enable delivery across the period, and the SSRO had choices on how these needs were met.

6.2. The goal of the strategy was to have a workforce that was: skilled, with people able to deliver their personal business objectives to a high standard; agile, with collaborative, flexible working across teams; and engaged, with people feeling valued, supported and enthusiastic about the SSRO and its work.

6.3. To deliver this strategic goal, the SSRO would: continue to observe and develop fair and open recruitment practices in order to recruit the best candidates for each job; ensure the SSRO had fair and equitable employment policies that supported its organisational values; and ensure the SSRO operated a pay system that remunerated its people fairly having due regard to the constraints imposed by its Framework, affordability and public sector fiscal policies. It would seek to build an organisational culture that supported every member of staff to progress their career.

6.4. The proposed next steps and actions, which would be set out in the strategy, were to focus on staff and organisation development by having a clear action plan for training; to review recruitment processes to ensure vacancies and new roles were considered strategically and that any potential process bias was removed; to review the effectiveness of remuneration and reward systems; and review the organisational structure to reaffirm or identify changes to current arrangements. A series of KPIs would be developed to allow the Board to hold the executive to account on the delivery of the strategy.

6.5. In discussion, Board members recommended that the SSRO’s values were made clear externally as well as internally, by making them explicit in external documents. The Board also noted that the SSRO’s skills requirement would change over time, so it was important to consider this regularly. The Board also welcomed the proposed involvement of staff in contributing to the development of the strategy.

The Board:

• commented on the proposed approach to setting the workforce strategy.

7. SSRO financial planning

7.1. Graham Payne introduced a report presenting the forecast outturn for the 2018/19 SSRO corporate budget as at 31 October, and an update on the progress of the 2019/20 draft budget. The report identified potential risks to the 2018/19 final outturn figures and plans to mitigate them. The forecast outturn for the year was for an underspend, and the Executive Committee had considered managing this risk through proactive use of contingent labour and management of project expenditure.

7.2. The draft 2019/20 budget and a full set of assumptions and risks that supported the proposed resources had been presented to the MOD for initial review and comment.

7.3. The Board considered the information set out in the paper and requested that the method used to profile and forecast the financial position as set out in the monthly Corporate Performance Reports should be reviewed. Action: Graham Payne.

The Board:

• noted the 2018/19 forecast outturn and plans to notify the MOD of a £44,000 underspend;
• noted the plans to mitigate the residual risk of underspend in 2018/19; and
• noted the progress of the 2019/20 budget.

8. Annual review of Corporate Governance Framework and Code of Conduct

8.1. Malcolm Botting, Head of Governance, introduced the SSRO’s Corporate Governance Framework and Code of Conduct, which had been updated following review.

8.2. The Corporate Governance Framework had been updated to clarify responsibilities between the Board and its sub-committees. Members suggested that the Code of Conduct should be extended to include members of staff who were appointed to sit on a referral committee. The Board asked for the section relating to confidential information to be subject to a legal review, to ensure that it fully covered information disclosed during referrals. Both documents should then be published. Action: Graham Payne.

The Board approved the:

• Corporate Governance Framework; and
• Code of Conduct.

9. Corporate Performance Report

9.1. 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.

9.2. The Board discussed whether the objectives within the report provided the right balance between delivering what was under the SSRO’s control and what was more output driven, such as stakeholder engagement. It was agreed that ratings should in future be amended to reflect the executive’s subjective judgement of the outputs or outcomes from a project, rather than measuring inputs.

The Board:

• reviewed and commented on the Corporate Performance Report.

10. Minutes of the 4 October 2018 Regulatory Committee

10.1.Peter Freeman presented the minutes of the Regulatory Committee meeting on 4 October 2018 and provided an overview of the meeting on 26 November 2018.

10.2.At the later meeting the Committee had discussed the profit rate, draft guidance on referrals and reporting guidance. The Committee’s main focus was on the review of legislation, the deadline for which had been brought forwards to 2020. The Committee had asked the executive to seek further information on stakeholders’ priorities for this more targeted review.

10.3.Terence Jagger provided an overview of the Referral Committee’s consideration of the ongoing determination. The anonymised version had been agreed with the parties and was due to be published in January.

The Board:

• noted the minutes.

11. Minutes of the 21 November 2018 Audit Committee

11.1.Marta Phillips presented the minutes of the Audit Committee to the Board, and informed the Board that the NAO had appointed new auditors to the SSRO.

11.2.Following a discussion at the Audit Committee, all non-executive Board members were asked to undertake training on unconscious bias. The training should be tailored to the Board level. Action: Graham Payne.

11.3.The Board noted in particular Marta Phillips’s comments about the Audit Committee’s consideration of the Corporate Risk Register and the associated risk appetite for each of the risks. It considered the balance of risks and risk appetite and decided that it was satisfied with the current risk profile. It was agreed that the Board would consider the SSRO’s corporate risk register once per year. The first time would be in March 2019 and this would be added onto the Board’s future business. Action: Neil Swift.

The Board:

• noted the minutes.

12. Future Board business

12.1.The Chairman presented to the Board a two-page document showing the business of all Board and sub-committee meetings until December 2019. The Board noted the content of the report.

The Board:

• Commented on the future Board business.

13. Any Other Business

13.1.Date of the next meeting

13.2.The next meeting of the Board would take place on 29 January 2019 at 2:00pm.

** These minutes have been redacted for publication.