DSIS #2: Creating the world’s best business environment for innovation

Last week ADS began a blog series on the Defence and Security Industrial Strategy (DSIS) and what our members believe it should address. This week we will look at how the DSIS could help to create the world’s best business environment for innovation. Industry believes that agile forms of contracting that focus on desired outcomes can deliver the Armed Forces and the wider national security community what they need more quickly and effectively.

The UK is home to many of the world’s leading defence and security companies and is a global hub of innovation on cutting-edge technologies. The DSIS offers the opportunity for industry and Government to move further towards more meaningful collaboration that is underpinned by a greater appetite for disruption and risk by Government.

The UK fundamentally faces a technology delivery challenge and to meet this challenge existing procurement and commercial rules must be addressed. These rules should focus on delivering a technological, doctrinal or systemic advantage to our Armed Forces and the wider national security community. ADS’s members believe that procurement and the acquisition process must reflect and encourage the pace of technology, not hinder it. This can be done through utilising modern processes such as innovation partnerships and frameworks. More importantly, the Government must move beyond setting excessively detailed specifications and towards sharing its challenges with industry, so that intellectual capital is dedicated to finding innovative solutions and not dealing with process.

A key barrier to the adoption of innovation by Government is the culture of risk avoidance in commercial decisions. This has inevitably led to a focus on cost at the expense of necessary change to existing practises or technologies. A DSIS that wants to address the challenges of modern technology adoption should promote a new culture of risk understanding and active management in procurement. In slower time the Government must also review how the Treasury’s guidelines are geared up to foster innovation, not simply manage financial risk.

Looking specifically at the defence equipment programme, ADS believes that greater attention must be given to the role of innovation in the support and through-life management of a capability. Support accounts for an increasingly large part of the annual Defence budget; consequently, innovation in this area could result in huge savings across the department and the creation of much more efficient way of working and delivering equipment. Elsewhere, the DSIS must help to remove barriers to entry for SMEs who might otherwise bring new thinking and innovative solutions to bear. One major hindrance that the DSIS must address is the security vetting system, which is part-way through a reform programme and facing funding constraints, both of which need resolving.

Many of the reforms suggested above will be challenging to deliver, as they may go against years of orthodoxy. However, ADS believes that the DSIS offers a unique opportunity to re-engineer our procurement and commercial rules to deliver a strategic edge to the UK through innovation, and in doing so support our national prosperity as well.

Please do check back next Wednesday (15th April) for our next update. To read the other blogs in this series please see below: