DefTech and the Defence Industrial Strategy

DefTech and the Defence Industrial Strategy

On Monday 8 September, the Ministry of Defence (MOD) published its Defence Industrial Strategy (DIS). If the Strategic Defence Review (SDR) was the what-MOD-must-do, then the DIS was intended as the how-MOD-will-do-it.

The DIS review identified six key themes: prioritising UK businesses; creating partnerships; providing certainty and stability; seizing the future; spreading prosperity; and enhancing the credibility of the UK's deterrence.

After consultation with members, techUK's DIS submission identified three key priorities we wanted to see addressed:

1. The MOD acting as an intelligent and reliable customer and partner;
2. The MOD acting in partnership with the rest of Government in harnessing new technologies, including in the setting of definitions and standards as well as addressing core-enabler challenges like clearances;
3. The MOD introducing reforms to streamline and restructure its fragmented and inefficient innovation ecosystem.

Against the above priorities, the DIS details a series of new commitments to drive new and improved ways of working with industry. techUK has outlined some of the most relevant of these below.

1. A new, streamlined approach to innovation and exploiting of new technologies

The DIS expands on the previously announced creation of the new UK Defence Innovation (UKDI) organisation, sitting under 3-Star leadership. UKDI brings together the Defence and Security Accelerator (DASA), Future Capabilities Innovation (FCI) and Cyber & Special Operations Command's (CSOC) J-Hub. With a ring-fenced budget of £400m a year, UKDI reached Initial Operating Capacity on 1 July and has a clear mission to ensure the greater exploitation of mature technologies already on the market (dual-use) as well as the pull-though of technologies invested in by DASA.

In addition, access to affordable Test and Evaluation (T&E) services is frequently raised by techUK members as an issue, and new to the DIS is a commitment for UKDI to conduct a 'test and evaluation transformation programme' to 'identify improvements at pace'.

1. A joined-up approach to technology adoption across government

The DIS also commits the MOD to working much more closely with the rest of government. techUK has previously raised the risk of the MOD repeating work already undertaken by DSIT's, Responsible Technology Adoption Unit, and UKDI will be responsible for 'strengthening and embedding coordination between the MOD, DBT, DSIT, UKRI, UKIC and others' to 'reduce duplication, align investment and support a whole of government approach to innovation'.

1. Dedicated support to SMEs working in the Defence supply chain

Originally announced by the Chancellor in the Spring Statement, the DIS provides further clarity on the functions of the new Defence Office for Small Business Growth (DOSBG). The Office will provide greater support for small businesses looking to enter the Defence market and will provide guidance on contracting and legal matters. According to the DIS, it will now assist with improving access to finance as well.

As part of the industry working group that helped to shape the responsibilities of the DOSBG, techUK would also like to see it promoted as an internal resource for MOD employees, helping them better understand the merits of working with SMEs and the business challenges they face.

1. Driving reforms to procurement and acquisition to exploit new technologies

The most significant reform to procurement remains the MOD's 'segmented approach' as announced in the March Spring Statement. A target of bringing major platforms onto contract with two years, 'pace-setting upgrades' (comms and sensors), within one year, and software and other 'rapid commercial exploitation' within 3-months. The DIS confirms that MOD's Defence Equipment & Support (DE&S) is responsible for the first tier, and UKDI for the last.

To make this a reality, the DIS commits the MOD to introducing technology for achieving 'digitally enabled acquisition…digital tools for contracting, design, test and assurance'. This will 'give our people the tools they need to approach the market' and allow greater collaboration with industry 'through a secure digital environment in which we can share problem statements, operational information, and digitally reflect contractual agreements as they evolve'.

1. Leveraging the opportunities and benefits of artificial intelligence across Defence

By the end of 2025, The National Armaments Directorate Group (NADG) will present a unified strategy and governance structure looking 'for further opportunities to harness the power of AI and automation to reduce costs and drive productivity and pace'. The DIS also commits the MOD to creating a protected Defence AI Investment Fund to accelerate the adoption of AI across Defence, prioritising the most promising use-cases, and facilitating a more strategic approach to AI adoption.

1. Targeted investments to tackle the digital skills shortage in Defence

The DIS commits the MOD to invest £182m to 'strengthen the future skills of the workforce and quip our Defence industry with the expertise and skills it needs'. The MOD will create 'Defence Technical Excellence Colleges' as well as creating new strategic relationships with universities making it easier for graduates to fid apprenticeships and other opportunities within Defence. Most significantly for techUK members, it will also look to develop a 'Defence Skills Passport'. This is something techUK has raised in the past as a way for those working within MOD and industry having their skills and experience recognised across the Defence Enterprise.

The challenge of implementation and measuring success

Beyond policy though, a significant challenge for techUK members remains the MOD's capacity to deliver on its commitments as laid out in the SDR and DIS. Delays in contracting and then getting invoices paid is primarily one of staffing. The MOD has now made significant and welcome commitments to increase contracting opportunities for SMEs, but with over 16000 suppliers already on its books there are questions as to whetherit has the resources to sufficiently service the increased workload this will bring. Industry recognises the need to find efficiencies, and these can best be achieved through effective contractor-supplier management, not short-term solutions that ultimately end up damaging the MOD's reputation.

Essential to making these changes a reality is addressing the culture. While the commitments at the top are strongly welcomed, they will only be achieved when translated into practical change at every level of seniority, be that civilian or military. techUK strongly welcomes the work of the Accelerating Commercial Pathways programme to identify and promote good practice through positive case-studies within the MOD and would like to see more done to change behaviours and attitudes at a working level.

Next, we await the Defence Investment Plan (DIP) which replaces the Defence Equipment Plan. Expected this Autumn, the DIP will set out the MOD's investment priorities, factoring in economic growth and setting 'a long-term procurement demand signal'.

For more on the work of techUK's Defence Programme, contact Jeremy Wimble.