2. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 2 Breakout Session # 1306 Tony Alcock, Bid Director for Soldier Systems, Thales 11 April 2006 2.45 to 3.45 pm Partnering Initiatives of the UK Ministry of Defence

3. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 3 Partnering – the challenge seen by UK MOD In response to a background of confrontation and a track record of late and overspent programmes: “a comprehensive task to change a culture founded on suspicion, confrontation and inflexible attitudes to one that favours and seeks : –openness, co-operation, understanding and trust –equitable apportionment of risk and reward –continuous improvement” UK MOD

4. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 4 What do UK MOD think it is? A commitment to achieve : –excellence in the timely supply of high quality products / services and excellence for all those involved –an attitude of mind that builds on UK MOD's procurement policies –long term best value for money –a culture of trust and openness / no surprises but it is not a (legal) partnership !

5. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 5 Some basics Competition remains the key tool in achieving value for money Appropriate benchmarking reassures UK MOD that partners remain competitive in the market place Taut contracts support partnering arrangements Partnering arrangements are suitable for the procurement of services, equipment and material People are a key asset.

6. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 6 Deciding to partner (1/3) Initial study to  scope MOD's requirement  identify and capture total acquisition / service costs  define technical, financial, commercial and operational boundaries for the partnering arrangement. Procurement strategy  defining the suitability and benefits of partnering  need, cost, differing procurement options

7. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 7 Deciding to partner (2/3) Identify the contractor  by competitive tender  may require a bespoke consortium Soft Issues Questionnaire Supply Chain visibility Competitive studies.

8. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 8 UK MOD’s decision path Have you examined all other Public Private Partnership options? Have you examined all other Public Private Partnership options? Can the requirement be expressed in output terms at the outset? Can the requirement be expressed in output terms at the outset? Is the supply market mature, very competitive and capable? Is the supply market mature, very competitive and capable? Is there scope for innovation in how the services / products are delivered and will innovation increase VFM? Is there scope for innovation in how the services / products are delivered and will innovation increase VFM? Can risks be readily identified and realistically allocated by those best able to manage them? Can risks be readily identified and realistically allocated by those best able to manage them? Will more cooperative and collaborative ways of working increase value for money ? Will more cooperative and collaborative ways of working increase value for money ? Is the procurement complex, and/or high risk? Is the procurement complex, and/or high risk? Yes No Formal tender and contact award Following normal procedures Formal tender and contact award Following normal procedures Yes No yes No Yes Partnering

9. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 9 Deciding to partner (3/3) UK MOD states the following attributes for a partner: –Committed to delivery –Committed to the relationship with UK MOD –Committed to developing the defence business –Committed to excellence.

10. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 10 Phase 1 – Defining the characteristics Typically: - Innovation / industry leadership - Total cost management / sensible pricing policy. - Commitment to UK MOD - Benchmarking activity - Rigorous, professional management - Commitment to quality - Sound financial status / balanced customer portfolio - Supply chain management - Effective use of information systems - Culture, values and behaviour - Personnel issues.

11. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 11 Phase 2 – Supplier Categorisation Candidate industrial partners appraised and categorised : –Grade A Fully meets all aspects of the characteristic –Grade B Partially meets all or some of the aspects of the characteristic –Grade C Reactive only to need to meet characteristic, shows no proactive approach –Grade D Does not and shows no desire to meet characteristic.

12. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 12 Phase 3 – Create collaborative relationship "MOD will only want to develop a partnering relationship with those suppliers having a significant number of Grade A or B classifications…

13. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 13 To be agreed at the outset a change procedure performance monitoring arrangements and the associated information requirements (benchmarking) mechanisms for problem solving and dispute resolution Intellectual Property partnering termination and exit strategies risk management contract pricing and payments performance incentives post-project evaluation.

14. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 14 Why was our programme selected? It is important Customer wanted best use of his support team Maximise User input Encourage innovation, best value for money It was part of a trial

15. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 15 Partnership Development Programme Aim to put hard measures on perceived soft issues. Action taken to improve the issues Conduct review & Compile results Partnering Principles Report to Steering Group Compile and conduct corrective actions Relationship Review proc. and prog. defined Facilitated Joint IPT-Prime Partnering workshops Review Implementation procedures & measures Development of Joint Vision & Strategy Relationship Measures Defined 2. SCRIA Facilitation 3. Ongoing Development & Review 1. Joint Buy-in

16. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 16 Assessments «The SCRIA* programme, which operates across the UK defence sector, promotes a Code of Practice for working in a co-operative supply chain geared to adding value at every stage. It recognises that developing the right behaviours, culture and skills of our people is fundamental to success » assessments to support the partnering process enable two way awareness and understanding joint actions to drive continuous improvement. * Supply Chain Relationships in Action

17. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 17 Assessments – Process Overview Presentation and workshop to all team members concerning the approach and process for benchmarking the performance of the relationship E-mail survey sent to all PCMO and IPT team members requesting their scores Receipt of data by independent SCRIA Partnering Advisors Analysis and review of data by a joint workshop forum Production of Assessment Report

18. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 18 Personal Relations Information Exchange Auditable Definitions for Benchmarking

19. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 19 Communications Design for Service Continuous Improvement Working Together Assessments – Results

20. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 20 What benefits have we seen? Improvement communications –Co-location, one team, shared data Continuous improvement –EVM, joint Risk Register Increased value for money –Cost savings, periodic joint replanning

21. April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 21 Conclusions Needs buy in at all levels, from all stakeholders Takes time and effort to implement and maintain Requires process and metrics Increases efficiency Produces a “one team” culture The only way forward