Transparency data

Board minutes: 16 June 2022

Published 9 January 2023

Minutes of the 44th Board Meeting

Meeting held remotely, Wednesday 16 June 2022

10:00 to 13:00

Board members present:	Others present:
Hannah Nixon (Chair)	Anthony Bende-Nabende (for item 7)
Peter Freeman	Colin Hill
Alastair Groom	Ben Johnson (for item 7)
David Johnston	Jane McGovern (for items 10, 11, 12)
Hugh Kelly	Mark Preston (MOD Representative)
Neil Swift	Peter Regan (for item 9)
Joanne Watts (not item 7)	Peter Roche (for item 7)
Claire Williams	Colin Sharples (for item 9)
	Mike Wetherell

1. Welcome, apologies, announcements and declarations of interest

1.1. The Chair welcomed Joanne Watts, Chief Regulatory Officer (CRO) and Executive Board member to her first Board meeting and also Mark Preston who was observing as MOD Representative in place of Tara Usher.

1.2. The Chair noted that since David Galpin’s resignation there was no one present from the executive to advise on legal matters; to address this, the Board agreed that Alan Brennan would attend future meetings in order to provide advice when required.

1.3. Joanne Watts declared a financial interest that was in the process of being resolved. Because of this, it was agreed that the CRO would remove herself from any Board conversations where there could be the potential for any bias or conflict of interest.

2. Minutes of the 43rd meeting of the Board, 30 March 2022, and action tracker

2.1. The Chair introduced the minutes of the Board meeting held on 30 March 2022. Five actions were recorded and their status was noted.

• Action 128 – DSOP agreed to send a letter setting out the arrangements for the Chair’s appraisal.
• Action 129 – the Corporate Resources Team were arranging a timetable of site visits for Board members and staff for 2022/2023.
• Action 130 – the BPR paper to come to the September Board would recommend the inclusion of an IT Services benchmark for 2023/2024.
• Action 131 – the Framework Document had been agreed and was published on the SSRO’s website on 30 May 2022.
• Action 132 – The Executive presented an example of a revised corporate risk register format to the June Audit Committee and that this would be further developed for a fuller discussion in due course.

2.2. The minutes of the 43rd meeting of the Board were approved as a correct record.

3. Chair’s Introduction

3.1. The Chair reiterated her wish for the Board to meet outside of a formal Board setting and Colin Hill and the Corporate Resources Team had been tasked with organising an away day for Board members in September. Board members had been emailed regarding possible dates, and the secretariat would email again with some further options. The away day would likely take place over two days and could include discussions on a range of items such as: the next steps on data; referrals; or the commercial supply chain.

3.2. The Chair referenced the Chief Executive’s report and noted the SSRO had recently published several announcements on its website, including: the Corporate Plan; news of the appointment of the new Chief Regulatory Officer; the Framework Document; the Annual Chair’s Letter; together with the forthcoming baseline profit rate consultation. The intention was to bring all of these to stakeholders’ attention through a newsletter, which would be published shortly after the Board meeting.

4. Chief Executive’s Report

4.1. Neil Swift, Chief Executive, presented his report to the Board. The report provided an overview of stakeholder engagement, including the Chair’s meeting with the Minister for Defence Procurement on 10 May and the Chair and Chief Executive’s attendance at the Regulatory Policy Institute’s annual conference on 11 May.

4.2. Recent SSRO publications included the launch of consultations on the reporting guidance and the development of an IT services activity group.

4.3. The capability review tender had attracted interest from two of the four providers contacted. Two firms had elected not to submit bids due to the comparatively small contract value available, but it was hoped that the remaining two firms would submit compliant bids ahead of the deadline. A discussion followed regarding the scope of the review and to ensure the appointed consultants had full access to the identified parties whose views would support the final report.

4.4. The Chief Executive provided an update on the procurement of the SSRO’s IT Managed Services and Security Operations Centre service providers. Because the process was delayed by 12 months the contract values may breach the agreed values. The Board was therefore requested to approve a maximum total contract value of £1,638,000 to permit some flexibility when the contracts come to be agreed. It was noted that any additional resource would be accommodated within the overall GiA budget in future years and would not create any recurrent funding issues.

4.5. An update on the DefCARS project was provided, and it was confirmed that, following some initial issues that had been overcome in discussion with the contractor, the minimum viable product (MVP) phase has been concluded successfully and the project remained on schedule to provide a fully functioning system within the given timeframe. It was hoped that the additional functionality and enhanced performance gained through Power BI would prove to be useful to the MOD, as the new SSRO system was designed to fit with their own system developments.

4.6. The Chief Executive asked Mike Wetherell to update the Board on seeking new accommodation. The Board was informed that two options had been explored, with two office locations in Canary Wharf. Both offices provided the requisite facilities (meeting rooms, breakout space), but only one had the ability to achieve the necessary security accreditation required. A potential third option of sharing with another government agency was also being explored and an update would be brought to the next Board meeting.

4.7. The Chief Executive’s report included a new set of terms for a proposed People Committee and also a revised set for the Audit Committee, as the responsibility for reviewing HR-related policies would move across from Audit to the new committee. The Board agreed to the creation of the new committee and the amendment to the terms of reference to the Audit Committee, and for these changes to be reflected in the SSRO’s Corporate Governance Framework. Action: Mike Wetherell

The Board:

• noted the information provided in the report
• agreed to extend the ITMS and SOC contract value to a maximum £1,638,000
• approved the terms of reference for the People Committee
• approved the amendment to the terms of reference to the Audit Committee

5. Introduction from the Chief Regulatory Officer

5.1. Joanne Watts, the recently appointed CRO, was invited to give a summary of her career history, her initial impressions of the SSRO since joining and what her areas of focus would be in the immediate term.

5.2. Joanne provided the Board with a brief description of her qualifications and time spent within the defence industry, HMRC and the MOD. Looking ahead she stated her priorities were: to understand the work of her team and the pressures they faced; the likely implications for the regime that would follow the review of legislation; and ensuring the new DefCARS system was properly bedded in.

6. Corporate Performance Report

6.1. Neil Swift, Chief Executive, introduced the Corporate Performance Report, which provided an update on how the SSRO was delivering against its corporate priorities as set out in the Corporate Plan. All Directors then discussed issues arising within their work areas that were not covered in greater detail elsewhere on the agenda.

6.2. The Corporate Performance Report would be submitted to the MOD as part of the Performance and Risk Review process, and Board members discussed changes to the report in advance of submission. Action: Neil Swift

The Board reviewed and commented on the Corporate Performance Report.

7. Baseline Profit Rate Methodology

7.1. The CRO recused herself from the meeting for this item. Ben Johnson, Anthony Bende-Nabende and Peter Roche joined the meeting and the Chief Executive introduced the paper seeking agreement to conduct a public consultation on the baseline profit rate methodology between 20 June and 16 August 2022.

7.2. The Secretary of State had requested that the SSRO engage with stakeholders to be able to establish a market-based benchmark for 2023-2024 utilising the SSRO’s established methodology. The Secretary of State had also proposed that any consultation should seek to remove the effects of COVID-19 from the baseline profit rate and capital service rates assessments.

7.3. The Board noted the methodology for assessing the rates for 2023-2024 would be presented to the Board in September for its review, and subsequently put to the Regulatory Committee and Board in January 2023 to approve the final recommendation.

7.4. The Board agreed that engagement with stakeholders should maintain a strong focus on the methodology, whilst acknowledging that issues may be raised by industry or the MOD in response which would be dealt with in future periods, as signalled in the consultation document.

7.5. The Board further agreed that the public consultation should commence on 20 June and close on 16 August 2022.

8. Strategy for the Experts Panel

8.1. The CRO re-joined the meeting and Neil Swift introduced the paper, which described the current position and the need to ensure that there were sufficient numbers of panel members available to support the SSRO should it be called upon to give an opinion or make a determination.

8.2. It was noted that the terms of engagement for two of the four existing panel members were due to end in September 2022, which would leave the panel with insufficient numbers to ably address any referrals that came in, noting that panel members should not have any conflicts of interest when asked to participate in a referral process.

8.3. It was proposed that the number of panel members should increase to six, to allow for a potential increase in referrals. The Board agreed that six would be an optimum number, but that the results of the capability review should be received and understood before any recruitment commences. The Board agreed that this approach was appropriate, but to ensure the panel remained equipped to handle referrals in the short term, those panel members whose terms were due to end would be asked to continue in their roles for a period of up to a year.

8.4. The Board discussed the expansion of the current referral panel to create an experts’ panel that could be utilised for other areas of work beyond referrals. It was agreed that the skills that the current members brought to the table were invaluable and could be beneficial but before looking to expand the current membership the recommendations that result from the capability review should first be properly understood.

8.5. The required backgrounds and specific experiences of any future panel members would be considered in due course, but it was emphasised that any future members must be able to carry out their responsibilities for the SSRO in an independent manner that was free of any conflicts of interest.

The Board agreed:

• to offer extensions to two referral panel members whose terms were ending this September
• to reinstate the number of panel members to six but to await the results of the capability review before instigating any form of recruitment to the panel
• delegate to the decision to extend the terms of the existing panel members to the Chair, and supported by the Chair of the Regulatory Committee and the CRO

9. Stakeholder Survey

9.1. Colin Sharples and Peter Regan joined the meeting and the CRO introduced the paper. The paper reported the findings of the biennial stakeholder survey, which the Board noted were largely very positive and demonstrated continued progress following the promising results of the 2020 survey.

9.2. The survey results also included areas that respondents felt could be improved. These areas were: DefCARS; SSRO values; staff skills; SSRO engagement mechanisms; and SSRO support to industry in engaging with the regime. It was noted that work was already underway to address some of the issues included within the responses and other actions were planned, including using the results to inform the next corporate plan and help establish the KPIs that would be used to assess progress against the plan.

9.3. The response rate to the survey was 20%, which was considered above average, and the respondents came from across industry and the MOD and represented a broad range of roles and seniority. The Board noted that further consultation was to be conducted with MOD and industry stakeholders as part of the Capability Review.

9.4. The existing engagement strategy was presented as an appendix to the main paper and the Board was invited to provide feedback on the current approach by 31 July 2022; an updated engagement strategy would be presented to the Board at its meeting in September.

9.5. The Board agreed that the full report and the summary slide pack would be published on the SSRO website, accompanied with supporting text.

The Board:

• Considered the findings of the report
• Agreed to review the current stakeholder strategy
• Approved the publication of the full survey report and its summary

10. Budget 2022-2023 forecast

10.1. The latest forecast was presented to the Board. It was noted that whilst currently forecasting an overspend, through the use of unallocated budgets and delaying recruitment to vacant posts the Executive was confident of meeting the 2 per cent spending target KPI. This position was further aided by the assurance given by the MOD Representative that all costs incurred in recruiting a new Chief Executive, up to a maximum of £100,000, would be covered by the MOD.

10.2. The Board had previously approved a 1 per cent increase to the salary budget for 2022-2023, based on assumptions given by the MOD in November 2021. Subsequently, it was reported that the pay remit guidance had been published, recommending a 2 per cent increase, with up to 3 per cent if accompanied by an approved business case. It was noted that an increase of a further 1 per cent to the pay budget would cost c£45,000, and that with Board approval, a 2 per cent increase could be afforded from savings elsewhere in the budget. As the financial position continued to be monitored, a further update on affordability would be provided to the People Committee.

The Board:

• Considered the latest financial position
• Approved the Executive to seek a 2 per cent increase in the pay budget for 2022-2023 in accordance with the published pay remit guidance

11. Update from the Audit Committee meeting of 7 June 2022

11.1. Alastair Groom reported that the Audit Committee had reviewed the annual report and accounts for the financial year 2021-2022 and it had approved them for distribution. It was noted that the scheduling for reviewing the documents was impacted by the need to allow time for ministerial review, and the NAO and DSOP would be asked to consider future scheduling to accommodate the review process. Action: Tara Usher and NAO

11.2. The Committee received the annual internal audit report from the GIAA and also reviewed the corporate risk register and considered the risk appetite for each risk.

The Board noted the update

12. Annual Report and Accounts

12.1. The draft Annual Report and Accounts for the financial year 2022-2023 were presented, and it was noted that the final audit report had yet to be approved and signed by the Comptroller and Auditor General (C&AG), which was scheduled for 8 July. The report was currently with the Minister for Defence Procurement for his review.

The Board:

• Reviewed the Annual Report and Accounts
• Confirmed that the SSRO’s financial statements should be considered on a going concern basis
• Approved the report for presenting to the C&AG

13. Minutes from Regulatory Committee meeting of 19 May 2022

13.1. Peter Freeman presented the minutes from the meetings of the Regulatory Committee on 19 May 2022. The Committee had considered several papers relating to the SSRO’s statutory functions.

The Board noted the minutes.

14. Future agendas and any other business

14.1. The Board discussed the planned end dates of the contracts for the Chief Executive and interim Director of Corporate Resources, the outcomes of which would be communicated directly to the individual employees.

14.2. The Chair introduced a two-page document showing the business of all Board and sub-committee meetings for the next 12 months.

14.3. The next meeting would take place on 27 September 2022 at 10:00am.