Yesterday (20th December 2017) saw the release of the ‘Defence industrial policy’. Forwarded by Defence Secretary Gavin Williamson this document goes in to great detail how UK Defence have reviewed their previous policies and the way forward. The unveiling of this 3-pronged refresher of the original paper speaks volumes about the future of defence procurement and more interesting for me, the way in which Small, medium enterprises are integrated to become defence suppliers.
Here I have reviewed the 16000+ word document into something more specific and relevant for SME’s (601 words). I have also briefly summarised my thoughts at the end.
A Link to the full document appears at the bottom but for now, here is my take on this progressive policy.
Basic policy summary
Defence wish to strengthen supply chains (including at a local level)
- Help UK industry with innovation regardless of business size
- Reinforce defences commitment to providing procurement opportunities to SME’s
- Promote defences supplier portal (Link below)
- Ask key suppliers to advertise supply chain opportunities through the same portal
- Potentially provide funding to help innovation
- Monitor larger contracts and consult with SME’s to ensure greater transparency
Give the best possible value for money by providing an open platform which gives SME’s and non-traditional suppliers the chance to bid for contracts.
Great news is that Defence have an aspiration that by 2020 25% of defence businesses will be SME’s (a raise of nearly 7%).
CHAPTER 4 is of most relevance
- Nearly 6000 SME’s supply Defence
- Considerations are being made in relation to size of opportunity, likelihood of success, time/cost involved with bidding. Plans to help and make improvements in these areas.
- Improvement in increasing supplier opportunities (see below)
- Contract/supplier portal (online service, see below)
- Creating supply-chain advocacy to share good practice and encourage more effective, early market engagement.
- Defence/government engage with large, mid-tier and small suppliers through the Defence suppliers forum
Investigating ways to speed up MOD contracting for SME’s and non traditional suppliers
However, defence are already:
- simplifying new standard forms of contract
- Refining framework contracts
- Improving programme and project planning
- Learning from projects like the national shipbuilding strategy for future approach to procurement
- Investigating new initiatives for innovation including funding and increasing the pace of contracting.
- Focus on a supplier code of conduct, focusing on how communication between defence and suppliers
Innovative and competitive UK companies will have a fair opportunity for supply chain work.
Defence also wish to improve the effectiveness and continued development of its supply chain.
IMPORTANT FOR SME’s – Defence are exploring ways to improve prompt payments by prime contractors to smaller suppliers as part of a formal assessment.
My very brief summary of the work defence is doing to improve/include more small enterprises to its supply chain.
Although a great step forward it would be very interesting to know of all the 6000 SME’s, how many are actually
- micro/small business
- Veteran owned/operated business
- Armed forces covenant signed business
It seems that having 6000 business benefitting from defence and only 2000 pledging their support through the Covenant, I feel our extended military community are being somewhat let down.
Apart from the immediate comments above there is obviously a real change in how and why SME’s should do business with defence, with over 5.6 million Small businesses out there I believe there are some great opportunities to be taken advantage from in the next few years. Bravo defence and it will be interesting seeing what happens next!
Please find some useful links below:
https://www.gov.uk/government/publications/defence-industrial-policy
https://www.armedforcescovenant.gov.uk
Hope this helps,
MC
Michael Coates 