Transparency data

Board minutes: 15 December 2021

Published 26 April 2022

Minutes of the 41st Board Meeting

Meeting held remotely, Wednesday 15 December 2021

14:30 to 17:00

Board members present:	Others present:
George Jenkins (Chairman)	Andy Brittain (MOD Representative)
Peter Freeman	Tara Usher (MOD Representative)
Alastair Groom	Colin Hill
Hugh Kelly	Mike Wetherell
David Johnston	Malcolm Botting
Claire Williams	David Fairs (The Pensions Regulator)
Neil Swift	Ben Johnson (item 5)
David Galpin	Adrian Wallis (item 5)
	Anthony Bende-Nabende (item 5)
	Peter Roche (item 5)
	Colin Sharples (item 6)
	Peter Regan (item 6)
	Jane McGovern (item 8)

1. Welcome, apologies, announcements and declarations of interest

1.1. The Chairman welcomed members to the 41st meeting of the SSRO Board.

1.2. The Board noted that this was George Jenkins’ last Board meeting after five years as Chairman. The Chairman thanked Board members and the wider team for their support during his tenure, which he had found to be interesting, challenging and enjoyable. He would speak to staff and inform them that he was proud of what they had achieved in the last five years, especially during the COVID-19 pandemic. He reflected on his time at the SSRO and on relationships with stakeholders. He considered the future of the organisation and recommended that such engagement should continue. David Johnston thanked the Chairman on behalf of the non-executive Board members, stating that he had caused a high performing organisation to flourish and had enhanced relationships with both of the SSRO’s stakeholder groups during his term of appointment. Neil Swift thanked the Chairman on behalf of the staff team, and Tara Usher thanked him on behalf of the Department.

1.3. The Chairman noted that an external observer, David Fairs from The Pensions Regulator, was attending the meeting.

1.4. 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 for all Board members.

1.5. No declarations of interest were made.

2. Minutes of the 40th meeting of the Board, 30 September 2021, and action tracker

2.1. The Chairman introduced the minutes of the Board meeting held on 30 September 2021. Seven actions were recorded.

• Action 111 – A Board away day had been organised and took place on 16 November 2021.
• Action 112 – The Annual Governance Review paper elsewhere on the Board agenda included a section on the MOD’s requirement for “Board charters”.
• Action 113 – The MOD Representative Protocol had been circulated to Board members for comment after the September meeting. A proposed final draft was included in the Chief Executive’s Report.
• Action 114 – The Corporate Performance Report now included data on staff turnover.
• Action 115 – Board members had provided comments on the 2022/23 profit rates recommendation consultation document after the September meeting. These comments had been factored into the final version of the document prior to publication.
• Action 116 – The Board workshop dates had been checked and confirmed as correct.
• Action 117 – Some amendments to Board and Regulatory Committee dates in 2022 were circulated to Board members on 10 December 2021 for consideration.

2.2. The minutes of the 40th 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 stakeholder engagement, including the Performance and Risk Review (P&RR) meeting with DSOP on 24 November. At the meeting, the Chairman and Chief Executive had provided an update on strategic issues, and there had been a review of the SSRO’s 2021/22 financial position, workforce planning, key issues and risks. The Chairman had met with the UK CEOs of BAES, Thales and Lockheed Martin, and on 13 December had met with the Minister for Defence Procurement. The Chairman provided an overview of the points raised in these meetings and the Board discussed matters arising.

3.2. The Chief Executive discussed recent SSRO publications, which included the outcome of the SSRO’s consultation on reporting guidance, draft guidance on when and how the SSRO may exercise its power to require the payment of costs when giving an opinion or making a determination and the 2021 Annual Compliance Report.

3.3. The Chief Executive and Chief Operating Officer provided an update on the latest position regarding the Secretary of State’s review of legislation. The SSRO continued to support the MOD’s review, including through work on amendments and variance, segmentation and overheads. It had shared its analysis of proposals from the draft Command Paper with the SSAT, following the Regulatory Committee meeting on 30 November, and had offered to meet with the SSAT to discuss its views. Board members discussed how the work carried out by the SSRO in preparation for potential changes, such as the development of a consultation on changes to guidance, would be used when the Command Paper was published.

3.4. The SSRO had recently received three requests for information under section 37 of the Defence Reform Act. The requests were for analysis of ownership, share price movements and compliance review activity.

3.5. A draft Corporate Plan for 2022-25 was being prepared for the Board’s consideration at its January meeting, and would include matters raised by the Board at its two corporate planning workshops. A workshop had been held with staff on 7 December at which David Johnston provided the Board’s perspective. The Board was provided with the current draft set of KPIs, and these would be developed and included in the draft plan that was circulated to the January meeting. Board members noted the importance of including a cascade from the SSRO’s vision through to its KPIs, and it was confirmed that this was being taken into consideration during the drafting stage.

3.6. The Chief Executive provided an update on the recruitment of a new Board Chair. MOD officials had put a submission to the Minister regarding the appointment, and the Minister was due to appoint a candidate in advance of 3 January 2022. In order to facilitate a smooth transition, the Chairman had considered whether to nominate a lead non-executive Board member, who could be appointed as interim Chair should a permanent appointment not be possible in the near future. Board members agreed that David Johnston would act in this role.

3.7. Following the resignation of the Chief Operating Officer, who was due to leave his post in June 2022, the Chief Executive intended to recruit a direct replacement through an exercise beginning in January. He would discuss an outline recruitment strategy with the new Chair before proceeding. Alongside traditional routes, he would explore opportunities to encourage a diverse range of applicants including through the UK Regulators Network.

3.8. There were currently four independent members of the referrals panel, and the Board considered the potential for future recruitment to the panel. It was agreed that the Chief Executive would submit to a future meeting a strategy for developing the panel and a community of experts. Action: Neil Swift.

3.9. At its March meeting, the Board had approved the procurement strategy for the three core IT services. The current contract was due to end on 1 April 2022. The bids that had been submitted for the new contract had failed the assessment on separate elements of the evaluation. The procurement exercise would now be rerun in 2022, and to maintain service continuity the SSRO would seek to procure new short-term contracts of up to 12 months with the existing providers. Board members asked about business continuity and resilience in these circumstances and were assured that as the incumbent providers would be asked to extend their contracts there would only be minimal risk of any continuity issues arising, and this risk was being actively managed.

3.10. Recent government guidance was clear that office workers should work from home where possible, and the SSRO had therefore advised staff that the SSRO continued to operate on the basis of hybrid working and that staff should work from home if they could do so. While individuals could continue to attend the office, they should have a clear reason for doing so and this should be agreed with their line manager.

3.11. The MOD had launched a review of its Head Office. The SSRO was liaising with the MOD on this and other changes underway at the Department, and an update would be provided in due course.

The Board

• considered whether to fill potential skills gaps on the referral panel;
• agreed that the recruitment panel to appoint a Chief Operating Officer would comprise the Board Chair, the Regulatory Committee Chair and the Chief Executive, with an independent member as appropriate;
• delegated approval of the recruitment documents relating to the appointment of a Chief Operating Officer to the recruitment panel, noting that any appointment made by the panel would be subject to approval by the Board and would require the consent of the Secretary of State; and
• noted the information provided in the report.

4. Corporate Performance Report

4.1. Neil Swift, Chief Executive, introduced the Corporate Performance Report, which provided an update on how the SSRO was performing against its corporate priorities as set out in the Corporate Plan. All Directors then discussed issues arising within their work areas.

4.2. Board members discussed the indicators in the corporate performance report relating to the MOD’s use of statutory reports. The SSRO had a range of actions that would encourage the use of statutory reports, including the annual Compliance Report. The Corporate Performance Report was also showing a steady increase in open reporting issues, which were raised internally through reviewing reports. The SSRO was seeking to understand the issues being raised and continued to manage, prioritise and take action where appropriate.

4.3. Board members asked for further data to be provided in future about whether the number of log ins to DefCARS was increasing or decreasing. Action: David Galpin.

The Board reviewed and commented on the Corporate Performance Report.

5. IT services group consultation

5.1. David Galpin, Chief Operating Officer, introduced a paper regarding the SSRO’s development of an IT services activity group, which might be used to benchmark a profit rate for defence contracts for the provision of IT services. The paper set out proposals for how the SSRO should respond to stakeholder feedback on the development of the comparator group.

5.2. The SSRO had recently consulted on the proposed comparator group, and the consultation had helped to generate useful discussions about activity types. Three detailed responses had been received from industry and the MOD had expressed support for the SSRO’s work in this area, indicating that the MOD would work with the SSRO and industry on further development of the profit rate band. The SSRO had also met with representatives of techUK’s Defence and Security Board to discuss issues arising.

5.3. The SSRO was continuing to investigate areas where stakeholders did not agree with its proposals or had proposed significant changes. It was considering potential modifications to the proposed activity description, NACE codes and text search terms to take account of stakeholder feedback. Further work would be needed to conclude the position, and the SSRO intended to publish a summary response setting out the nature of feedback received to date and identifying the further work required to determine the feasibility of an IT services activity group. This would be followed up with a concluding position on the consultation after the March 2022 Board meeting.

5.4. In discussion, Board members signalled their support for publishing a consultation response at this point, while continuing to work towards a concluding position. The Board suggested further areas where research could be undertaken or links could be made.

  The Board:

• agreed the approach to responding to stakeholder feedback on the IT services activity group consultation;
• approved publication of the consultation response; and
• noted that the concluding position and supporting analysis will be presented to the Board in March 2022.

6. Stakeholder survey

6.1. David Galpin, Chief Operating Officer, introduced a paper on the SSRO’s third stakeholder survey, which included a proposed question set to be used when the survey was issued in early 2022. The survey was in line with the SSRO’s Corporate Plan 2021-2024 and supported the SSRO in understanding how it was perceived by stakeholders. It also measured performance against several of the SSRO’s key performance indicators and helped the organisation to set its strategic direction and plan stakeholder engagement.

6.2. The survey questions had been updated from the question set used in 2020, reflecting stakeholder feedback and developments in the SSRO’s corporate plan. Some of the less informative questions had been amended, while the majority had been maintained to allow for consistency and the measurement of changes in performance.

6.3. The MOD was supportive of the SSRO seeking stakeholders’ views through the survey and had provided feedback regarding the proposed recipients of the survey, the survey methodology and the survey questions. It was agreed that further meetings should take place with the MOD regarding the encouragement of a high response rate from relevant stakeholders at the MOD. Action: David Galpin.

The Board:

• commented on the proposed question set in Appendix 1;
• noted the changes to the questions set out in Appendix 2; and
• noted the feedback from the MOD’s SSAT in Appendix 3 and the SSRO’s responses.

7. Annual governance review

7.1. Mike Wetherell, Interim Director of Corporate Resources, introduced a report that proposed changes to the SSRO’s Corporate Governance Framework. The changes had been drawn from various sources, including recommendations from external organisations such as GIAA, DSOP and internal reviews related to the SSRO’s governance.

7.2. Board members considered the changes, and the Chair of the Regulatory Committee noted that the amendments proposed to the Regulatory Committee’s terms of reference were acceptable and reflected the discussion at the most recent meeting of the Regulatory Committee.

7.3. It was noted that the Audit Committee had discussed whether its terms of reference should reflect action to mitigate climate change, or whether this should be considered elsewhere within the SSRO’s work. Action: Neil Swift.

7.4. The report also proposed that no amendments should be made to the Code of Conduct for Board and referral panel members, and this was agreed by the Board.

The Board:

• approved changes to the SSRO’s Corporate Governance Framework; and
• approved the Code of Conduct.

8. Procurement plan for outsourced financial services

8.1. Mike Wetherell, Interim Director of Corporate Resources, introduced a report that sought the Board’s approval to procure an outsourced financial support services contract. This would ensure continuity of service when the current contract expired on 30 September 2022.

8.2. Ahead of the procurement exercise for the new contract, the SSRO’s Finance Team had carried out some early market engagement to assess any new technologies that might now be available and also the level of interest from potential suppliers.

8.3. It was proposed that the SSRO approach the market, via Find a Tender, with a maximum five-year, three-month contract offered via an initial three year and three months’ term, with a further, optional, two single year extensions (a 3.25+1+1 years contract). It was expected that the SSRO would be able to award the contract by the end of February 2022, with the contract entered into before the financial year-end to avoid resourcing clashes. Service commencement would take place on 1 October 2022. The cost of the core service was expected to stay within budget provision, and any additional advisory services would be reviewed and approved if required.

8.4. Board members discussed the current provision of financial services and the risks relating to the procurement.

The Board:

• approved the procurement of a five years and three months contract (3.25 +1 +1-years) for outsourced financial services, which had an estimated contract value of £375,000 inc VAT;
• delegated to the Chief Executive Officer the authority to approve the award of the contract and thereafter enter into contract on behalf of the SSRO; and
• noted the procurement plan in Appendix 1.

9. Minutes from Regulatory Committee meeting of 19 October 2021 and 30 November 2021

9.1. Peter Freeman presented the minutes from the meetings of the Regulatory Committee on 19 October 2021 and 30 November 2021. On 19 October, the Committee had considered the latest position on the Review of Legislation and approved the annual Compliance Report and cover letter that accompanied it. On 30 November, the Committee had considered the preliminary findings of the exercise to recommend a baseline profit rate.

The Board noted the minutes.

10. Minutes from Audit Committee meetings of 21 September 2021 and 25 November 2021

10.1. Alastair Groom presented the minutes from the Audit Committee’s meetings on 21 September 2021 and 25 November 2021. At its November meeting, the Committee had considered the annual assessment of its own performance and had approved a report to the Board that found the audit assurance process to be fully effective. It had discussed corporate risks at length and had received a useful presentation on IT security, a report from internal audit and an update from the finance team on the progress of the preparation of the accounts.

The Board noted the minutes.

11. Future agendas and any other business

11.1. The Chairman introduced a two-page document showing the business of all Board and sub-committee meetings for the next year.

11.2. The next meeting would take place on 27 January 2022 at 10:00am.