Transparency data

Board minutes: 15 December 2020

Published 31 March 2021

Minutes of the 35th Board Meeting

Meeting held remotely Tuesday 15 December 2020 14:00 to 17:10

Board members present:	Others present:
George Jenkins (Chairman)	Andy Brittain (MOD Representative)
Peter Freeman	Colin Hill
David Johnston	Mike Wetherell
Marta Phillips	Malcolm Botting
Neil Swift	Ruaidhri Magee (item 3, staff matters only)
David Galpin	Simon McCullough (item 3, staff matters only)
Matthew Rees	Alan Brennan (item 4)
	Colin Sharples (item 4)

1. Welcome, apologies, announcements and declarations of interest

1.1. The Chairman welcomed members to the 35th meeting of the Board.

1.2. Apologies had been received from Mary Davies.

1.3. The Chairman announced that, in view of the situation regarding COVID-19, government guidance on this matter and in accordance with Standing Order 3.10, the Board meeting was being undertaken remotely by telephone for all Board members.

1.4. Board members were asked to declare any relevant interests. Executive members and attendees declared their interest regarding the item on the Executive Committee structure.

2. Minutes of 34th meeting of the Board, 29 September 2020, and action tracker

2.1. The Chairman introduced the minutes of the Board meeting held on 29 September 2020. Four actions were recorded from the meeting and all were complete.

• The Chairman had appointed David Johnston as a member of the Regulatory Committee for its meeting on 13 October 2020.
• The SSRO had continued to assure industry it was actively considering the issues it raised regarding the baseline profit rate methodology. The Director of Regulation and Economics had met with industry’s Defence Single Source Advisory Group (DSAG) to discuss the methodology on 12 November and had subsequently written to its Chair.
• Updates would be provided to the Board regularly on action against the recommendations made following the staff engagement survey.
• The Corporate Risk Register had been updated to include two risks flagged by the Board: information security with regards to remote recruitment and induction; and the risk that the impact of COVID-19 lasted for a significant period of time.

2.2. The minutes of the 34th meeting of the Board were approved as a correct record.

3. Chief Executive’s Report

3.1. Neil Swift, Chief Executive, presented his report to the Board. The report provided an overview of recent stakeholder engagement, including the Chairman’s recent meetings with the Minister for Defence Procurement, the Lead Member on the MOD Board and the new Chief Executive of Babcock International.

3.2. The Board noted that a report regarding the SSRO’s recommendations to the Secretary of State following its review of legislation would now be brought to the May 2021 Board meeting. The Board discussed issues that were being considered as part of the Secretary of State’s review and the links to other ongoing Departmental reviews such as the Integrated Review and the Defence Security and Industrial Strategy. The Board discussed whether the regime would benefit from the SSRO undertaking a general advisory role around single source procurement. Action: David Galpin.

3.3. The Board discussed data on outturn profits from completed contracts. It was noted that some information on this would be provided to the Regulatory Committee in January, to assist its consideration of the baseline profit rate. The executive’s intention was to include regular analysis on outturn profits in quarterly statistics bulletins at the point where sufficient data was available.

3.4. The Chief Executive noted that he had written to DG Finance after the last Board meeting regarding the SSRO’s proposed 2021/22 draft budget, and that there had been further correspondence and discussion since that time. The MOD had recently confirmed that pay freezes would be applied to the SSRO and the SSRO’s draft budget request accounted for this. It was expected that DG Finance would respond to the Chief Executive’s letter in the near future.

3.5. The Board discussed progress against the actions falling from the Tailored Review of the SSRO, and noted progress most notably on secondments, NEBM appointments and the dedicated sponsor team.

3.6. Neil Swift introduced the section of the report on staff matters, including the recommendations from the staff engagement survey and subsequent workshops. Progress had been made against all the recommendations, including the appointment of an HR Operations Manager on a six-month contract; increasing the focus on staff well-being, for example through drop-in sessions and discussion channels; and developing a training offer that included annual training in line with the SSRO’s Single Equalities Scheme.

3.7. In discussion, the Board discussed the issues that arose in the staff engagement survey regarding staff behaviours. Steps taken in response included improvements to the annual appraisal and objective setting processes and the development of personal training plans. A ‘line manager responsibilities’ guide was being drafted and a 24-hour whistleblowing service had been established through the Employee Assistance Programme.

3.8. The Chairman invited members of staff to provide their personal views. While the Executive Committee’s action plan was considered to be comprehensive, staff members noted that it was important for the Board to maintain focus on the issues raised and to communicate on progress. Staff were thought to have responded well to the new working arrangements resulting from the pandemic and largely felt well supported.

The Board

• delegated to the Chief Executive the approval and signature of the financial framework (see section 12); and
• noted the information provided in the report.

4. Long term accommodation

4.1. Mike Wetherell, interim Director of Corporate Resources, introduced a report regarding the SSRO’s future accommodation. The paper sought approval to update the business requirements set out in the existing accommodation strategy, reflecting on the lessons drawn from the pandemic. The accommodation strategy would continue to endorse the previously identified preferred option to relocate to an outer London hub on expiry of the SSRO’s current lease in 2023, with reduced workstation requirements but increased shared use space.

4.2. It was noted that the SSRO had coped well in adapting its business practices in response to the COVID-19 pandemic. The report sought endorsement of plans to include within the Corporate Plan a ‘ways of working’ project to increase its understanding of accommodation requirements following the pandemic. The project would support the adoption of smarter working practices to enable the organisation to make informed decisions about where, when and how it would work in future, optimising the use of the workplace, technology and resources. It would be undertaken with the staff and would aim to maintain, and where possible, improve productivity through a focus on outputs and enabling a better work life balance for all. It was noted that the Corporate Plan included a value around inclusion, and it was important that this value was reflected in the way the SSRO worked. The current situation provided an opportunity to show commitment to inclusivity and involve all members and staff in decisions going forward.

4.3. In discussion the Board noted that while there was likely to be pressure to reduce office space, it was important for the SSRO to retain a physical centre. Several international organisations had proved that it was possible to operate using such a hybrid model, but their success depended on the retention of some shared office space.

4.4. The Chairman invited members of staff to provide their personal views, and points made included that it was important for the SSRO to retain an office, that they were supportive of the ways of working project to inform the accommodation strategy, and that the organisation had adapted well and provided an excellent set of tools that enabled successful home working.

The Board:

• endorsed the proposal to include within the Corporate Plan a ‘ways of working’ project; and
• approved the updated business requirements and endorsed the previously identified preferred option to relocate to an outer London hub on expiry of the current lease in 2023, with reduced workstation requirements but increased shared space use.

5. Corporate governance review

5.1. Neil Swift, Chief Executive, introduced a report that proposed amendments to the Corporate Governance Framework. The SSRO was required to review the document annually, and the review was undertaken each December.

5.2. The changes proposed resulted from three sources: recommendations from external organisations, including the UKGI’s Tailored Review of the SSRO and GIAA’s internal audit reports; internal reviews, including the project to improve the SSRO’s response to reporting issues and the Chief Executive’s response to the staff engagement survey; and a consideration of whether significant changes should be made to the table of delegations. In view of the forthcoming appointment of new non-executive Board members and a Chair, it was not considered appropriate to make significant changes to the committee structure or the powers exercised by committees or named individuals at this time.

5.3. The Board agreed the changes, which included the amendment of the Referral Committees’ terms of reference to ensure that the description of panel members was consistent throughout; some additions to the Audit Committee Terms of Reference to ensure they were consistent with the HM Treasury Handbook; and amending the table of delegations to clarify that the Director of Legal and Policy was able to make minor and uncontroversial changes to all guidance.

5.4. The report also proposed amendments to the Code of Conduct for Board and referral panel members. Changes were made to the sections on responsibilities of Board members, gifts and hospitality, employment and political activity in order to ensure the Code was in line with the Cabinet Office’s updated Code of Conduct for Board members of public bodies.

The Board:

• approved the changes to the SSRO’s Corporate Governance Framework (Appendix 1 of this report); and
• approved the changes to the Code of Conduct (Appendix 2 of this report).

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.

The Board reviewed and commented on the Corporate Performance Report.

7. Minutes from Regulatory Committee meeting of 24 November 2020

7.1. Peter Freeman presented the minutes from the meeting of the Regulatory Committee. The Committee’s business had included the provisional work on the baseline profit rate, the review of legislation and the development of rules for awarding costs on referrals.

The Board noted the minutes.

8. Minutes from Audit Committee meeting of 26 November 2020

8.1. Marta Phillips presented the minutes from the meeting of the Audit Committee on 26 November 2020. The Committee had discussed the corporate risk register, including the amendments that the Committee had previously asked the executive to make to it. The Committee was content that the risks identified in the register and the individual risk appetites were correct.

8.2. The Committee endorsed the recent work to support the remote working and well-being of staff and was pleased to note several recent successful recruitment exercises. It had also reviewed the SSRO’s progress against its Single Equalities Scheme.

8.3. The Committee had undertaken a detailed review of risks relating to cyber security and had received a presentation and discussed emerging issues about the SSRO’s resilience in this area with the Head of IT and IM.

8.4. The Board discussed the recent increase in the SSRO’s audit fee by the NAO.

The Board noted the minutes.

9. Executive Committee structure

9.1. The Chairman invited executive members and attendees of the Board to leave the meeting for this item. The non-executive Board members, the MOD Representative, the Chief Executive and Head of Governance remained in the meeting for the discussion.

9.2. Neil Swift introduced a report that considered the structure of the Executive Committee following the recent resignation of the Director of Regulation and Economics. The report presented two options for the future structure. The recommended option was that the two executive director roles (Director of Legal and Policy and Director of Regulation and Economics) should be merged to revert to a single role of a Chief Operating Officer. This would be in line with the Defence Reform Act, which set out two specific executive posts: a Chief Executive and Chief Operating Officer, and would represent a return to the SSRO’s previous structure of a single director for the teams that covered the SSRO’s regulatory functions.

9.3. Neil Swift stated that such a change to the structure would result in several benefits, including greater coordination and cohesion across operational teams. The SSRO had developed a significant depth of corporate and regime knowledge within the wider team, alongside improved organisational capacity at the level below the Directors. Spreading skills, knowledge and credibility across several people at this level would increase succession and retention and lead to greater resilience, making the SSRO less susceptible to future shocks. Should the Board approve the option, a review of the structure and roles below the Chief Operating Officer role would be undertaken, and the resources released would be applied to this. The recommendation would be cost neutral.

9.4. The Board considered the risks relating to both options. It considered points in favour of the recommended option, including resilience, the flexibility and cohesion that would result from combining two teams under one leader with greater opportunities to take on responsibility, development and progression within the team. It also considered points in favour of remaining with the current structure, including that it reduced organisational risk for leadership to be spread across two directors rather than one, and that a degree of churn and recruitment from external sources could be healthy for organisations.

9.5. The Board requested further information and clarity about the underlying issues that the recommendation sought to address and about the implications of each option. It also sought further information about the succession planning that had previously been considered by the Audit Committee. It was agreed that the non-executive Board members should meet again to consider these issues and agree the way forward. Action: Neil Swift.

The Board discussed and commented on the actions.

10. Future agendas and any other business

10.1. The Chairman introduced the two-page document showing the business of all Board and sub-committee meetings for the next year. The next meeting would take place on 26 January 2020 at 2:00pm.