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Defence Advisers Council Presentation “ The times, they are a-changing ” Tips from the experts for achieving procurement excellence
The Defence Advisers Council
Planning Expertise Legal Services Financial support and advice Funding advice and backing Risk Mitigation DAC Services
Defence Advisers Council - 9 October MOD Key Strategic Issues The Future - right balance between complexity and effectiveness Procurement / Commercial model International dimension Conflicts of interest Legislation Engagement International partners – keep informed and enable them to support our proposal Conflict of Interest - address issues in a robust but pragmatic way Legislation - Ensure appropriate legislation is in the Parliamentary Session Stakeholders - engage all stakeholders in developing and testing our ideas
C ontribution made by the Aerospace & Defence sector to SW region’s GDP: –£2.3bn directly to the economy –supports 41,000 jobs –Supply Chain provides another £3.2bn –and 59,000 jobs … in the South West alone Rationale?
AIM : Streamline the “provision” of products and services for client companies where “defence” is end-user. Help simplify the approach to MOD procurement. Enable contracts to be agreed more swiftly. Ensure long term fiscal stability of the contract. The Defence Advisers Council
So you want to do business in the aerospace, advanced engineering, defence and/or security sectors? The Defence Advisers Council
“ The AOF is the authoritative source of policy and good practice for all members of the MOD and our Industry partners concerned with acquisition” Strategy Considerations Invitation To Tender Tendering And Contract Award Contract Administration Alliancing Conflicts of Interest Due Diligence Influencing the Supplier Network More Effective Contracting Partnering Private Finance Initiatives Public Private Partnerships Acquisition Operating Framework
So you know the language? Please translate - Conops? - Defstans? - Defcons? Is your system at TRL level 3 or 5? ( Technology Readiness Level )? Will you pass the ASEMS standards? ( Acquisition Safety and Environmental Management System ) Where do you get advice for WOME ( Weapons, Ordnance, Munitions & Explosives ) development? ….. Answer: DOSG ( Defence Ordnance Safety Group ) You have ISO 15288, but are your Enterprise Processes in date? Quick Test
Funding – get advice on funding for working capital, fixed assets and other sources of finance Risk Management – we help customers assess, manage and develop strategic risks, business continuity and succession planning Industry participation – we support and host “industry” events for our clients, with sector based experts Collaboration – we use our national and global supply chain contacts to help support SMEs Specialist Advice
strategically 1.Have you prepared and planned strategically? buy 2.Is it very clear why MOD should buy from you? confidence 3.Would MOD have confidence in your organisation? routes to market 4.Are you clear which ‘routes to market’ are best? funding options 5.Have you identified your funding options? 6.Do you communicate clearly through ‘Strategy Reviews’? Planning Tips
1. Funding – get expert advice on funding for working capital, fixed assets and other sources of finance 2. Financial Information – sector based experts regularly support industry events/briefings and liaise with customers 3. Collaboration – through its national and global supply chain contacts the bank helps WEAF and DAC to support Aerospace and Defence SMEs in the South West and wider afield Banking Tips Key Areas
An Example: NatWest is helping to promote and support excellence in the South West Aerospace & Defence sectors with the launch of: “WEAF award categories for 2013”. Banking Assistance * Successful implementation of business improvement * Using innovation and technology for growth * Growing business through new markets and products
Key messages Be prepared for change: defence spend will be less but still high value, commercial aerospace will see ramp up of volumes. Innovate: MoD and Primes are looking for financially sound, innovative, and competitive suppliers. Financial efficiency: make the most of tax and other financial opportunities. Grant funding: still available BUT requires planning eg Regional Growth Funding in excess £70m secured by Aerospace and Defence companies in the South West, last year Review your strategy: seek opportunities to partner, strengthen your position through acquisition, sell non- core business ….. Get your due diligence/advice right!! Sustainability: ensure you have a robust financial plan, with genuine contingency. PwC Tips
Be competitive: Tax and financial efficiency = cash savings Be efficient: Tax planning to save cash: R&D tax claims can return cash and reduce corporation tax. Registered patents offer opportunities to pay tax at 10% rate. Be Sustainable: Buyers look for robust company processes, finances and compliance systems. Use experts to review your systems, conduct a financial audit and help you ensure compliance. Without sustainability you can miss out by failing at the tender stage. PwC Answers
Liability for defects Liquidated damages Liability for delays Cancellation rights Ownership of intellectual property Fixed prices Payment terms Crossing the Legal Minefield Understand the contract you sign Some DEFCONS are negotiable, some are not…. 534: Prompt payment 566: Change of control 703: Intellectual property rights 649: Passing of ownership And many others! THE MINES…..
Defence buyers want more collaboration What does that mean? What is you best legal solution? Crossing the Legal Minefield Legal contracts are changing Risks are being shared You need to protect your business COLLABORATION IS THE KEY TO SUCCESS….. SO WHAT HELP IS AVAILABLE
If you value your proprietary technology then protect it! Own your IP - once captured, it is an asset adding significant value to your business. Get trade mark protection for your brands / company name. Your technology or “innovation” is potentially valuable & it may be patentable. Paying UK corporation tax? A granted patent in the UK could reduce your tax bill (“Patent Box”). IP rights are legal rights providing the owner with the right to exclude third parties from doing something: o IP rights are exclusory – but do not necessarily create a right to commercialize/use. o Be aware of the IP rights of others. Can you/ should you guarantee that your offering is free of any IP infringement risk? To survive long-term, SMEs need to get IP and make use of it. IP Tips
WEAF can help you: Link collaborations/clusters/companies into Government funded R&D drives Develop supply chains with accredited business improvement programmes Help with the formation of collaborative ventures/joint-venture companies Up-skill workforces through proven and recognised training programmes Support sales and business development through networking & “meet-the-buyer” events throughout the year + Senior Management Briefings from the Primes Provide marketing platforms at major industry events e.g. FIAS & DSEI Deliver the ultimate regional networking opportunity - WEAF annual conference Link with academic partners (universities at Bath, Bristol, Bournemouth, Exeter, & Plymouth & the Knowledge Transfer Network to exploit emerging technologies). Promote innovation through a prestigious annual “Excellence in Innovation” Award WEAF
Our approach means we: Share your ambitions – we learn to understand our clients business, not just the numbers. Deliver expertise – we aim to bring benefits to you before you get desperate. Make things simple – we enable you to get on with running your business and spend less time worrying about ‘our’ specialities. Provide a dedicated sector team – our expert team aims to support our clients to realise their aspirations by pooling our common knowledge for your benefit. SUMMARY
Key messages for today collaboratively“Preparing for Change” means working collaboratively with other aerospace, defence suppliers and security suppliers and customers Get your: –planning right, –your collaboration right, –your contracts right – and of course – GET YOUR FINANCES RIGHT Avoid the mines in the minefield! Defence Advisers Council
DEFENCE ADVISERS COUNCIL Abel & ImrayJim WEAF: Barry Warburton Nat West: Paul Severs VWV: Richard Brown AugMentor: James Short PwC: Duncan Stratford QUESTIONS?