Transparency data

Board minutes: 26 March 2020

Published 14 September 2020

Single Source Regulations Office

Minutes of the 31st Board Meeting

Board Room, Finlaison House, 15-17 Furnival Street, London EC4A 1AB

Tuesday, 26 March 2020

14:00 to 17:00

Board members present:	Others present:
George Jenkins (Chairman)	Colin Hill
David Johnston	Mike Wetherell
Marta Phillips	Malcolm Botting
Mary Davies	Colin Sharples (item 4)
Peter Freeman	Monika Kochanowska-Tym (item 5)
Neil Swift	Alan Brennan (item 5)
David Galpin
Matthew Rees

1. Welcome, apologies, announcements and declarations of interest

1.1. The Chairman welcomed members to the 31st meeting of the Board. There were no apologies or declarations of interest.

1.2. 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.

No interests were declared.

2. Minutes of 30th meeting of the Board, 28 January 2020, and action tracker

2.1. The Chairman introduced the minutes of the Board meeting held on 28 January 2020. Four actions had been recorded on the action tracker and had been completed or were reported on in papers elsewhere on the agenda.

The minutes of the 30th 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, which provided an update on items not included elsewhere on the agenda. He discussed current arrangements in response to the coronavirus pandemic. All staff and Board members were now working from home, in line with government guidance. Remote IT equipment had been trialled in advance of the government’s decision and the SSRO’s IT infrastructure successfully supported such flexible working. Arrangements had been made to provide staff with the equipment needed to work from home.

3.2. Finlaison House was now closed, although the IT team was able to gain access should background infrastructure work be required to maintain resilience. Individual arrangements would be made to ensure that any staff accessing Finlaison House were not put at risk.

3.3. The Chief Executive and Directors were having regular telephone conferences with all staff, and the Executive Committee was engaging with each other and their teams regularly. The closure of schools had impacted on some staff, and the executive was looking to support those with caring responsibilities through flexible arrangements. Staff were continuing with their workload as planned. Stakeholder engagement was being kept under review and telephone meetings were going ahead wherever practical.

3.4. The Board endorsed the executive’s view that the SSRO should plan for a medium-term sustainable solution, as it was likely that the situation would last for a period of months. It was acknowledged that there would be implications for the regulatory regime and for the timetable of the review of legislation.

3.5. The Chief Executive’s Report provided an overview of recent stakeholder engagement including the Chairman and Chief Executive’s meeting with the Secretary of State, as well as Board member visits to Ampthill and Boscombe Down, the Senior Stakeholder Forum on 25 February and the presentation that the Chief Executive and Director of Regulation and Economics gave to the DE&S Board on 27 February.

3.6. Since the last meeting the SSRO had published the Compliance Methodology and a quarterly statistics bulletin. It had also published the updated Allowable Costs guidance, as well as referrals and reporting guidance. The Secretary of State announced on 13 March that he had accepted the SSRO’s profit rate recommendation and the SSRO had published several documents relating to the recommendation, the methodology and its application shortly afterwards.

3.7. Board members discussed the recent Tailored Review of the SSRO, which the Board had previously considered and endorsed, and progress on implementing the recommendations from the report. The Chairman had continued to discuss the report with the MOD and the organisations were working together to implement the recommendations.

3.8. The Executive Committee had agreed to extend the contract for hosting DefCARS with Synectics by a year. The Committee considered this to be the best option as it allowed time for greater clarity about requirements for the future of DefCARS. It also allowed for planned developments to be made.

3.9. The Board discussed the SSRO’s membership of the UK Regulators’ network, the UKRN, and Board members agreed that the SSRO should continue as an observer member for a further year, during which the executive would track the degree of engagement being undertaken and evaluate the benefits of membership.

The Board

• noted the information provided in the report; and
• provided views on the SSRO’s membership of the UKRN.

4. Corporate Plan

4.1. David Galpin, Director of Legal and Policy, presented a report on the draft 2020-2023 Corporate Plan. The plan had been further developed, following a four-week consultation period, to address the feedback received from the MOD, ADS and industry, as well as by Board members in a recent workshop.

4.2. The section on referrals in the plan had been amended to emphasise the role that referrals played in helping to establish new principles that developed the regulatory framework and kept it relevant. More detail would be added about how the SSRO intended to tackle barriers to referrals. Board members suggested some redrafting in the section on referrals. Action: David Galpin.

4.3. Additional text had been added to the section regarding the Baseline Profit Rate methodology, to clarify that the SSRO would not undertake a major review of the methodology during the life of the plan. The Board discussed profit more widely in the context of the COVID-19 pandemic.

4.4. New KPIs had been added to the Plan following discussions with the MOD. These were: responses to requests for provision of analysis or information provided within agreed timescales; stakeholders satisfied with assistance provided by the SSRO helpdesk; and substantive responses to stakeholder questions provided within 10 working days. The MOD had made further suggestions for additional KPIs, some of which would be dependent on the inclusion of new questions in future stakeholder surveys. The SSRO would indicate to the MOD that it would consider including such KPIs at the time of the next survey in 2022.

4.5. Board members considered the responses received from industry stakeholders and it was noted that several stakeholders had fed into the ADS response.

4.6. Board members approved the document and noted that the process by which it had been developed (including consultation) had been robust. Several changes were proposed to wording within the Plan. The Plan would be provided to the MOD and published on the SSRO’s website on or around 31 March 2020 in time for the start of the new financial year, with a Stakeholder Feedback summary sent to stakeholders.

The Board:

• approved the Corporate Plan;
• agreed the Corporate Plan should be formally submitted to the MOD and published on or around 31 March 2020;
• approved the proposed Stakeholder Feedback Summary and agreed that it should be provided to stakeholders who were invited to comment on the proposed plan; and
• authorised the Chairman, after consultation with the Chief Executive, to sign off the final documents before publication, provided they remain consistent with the Board’s views.

5. Review of legislation

5.1. David Galpin, Director of Legal and Policy, presented a report that provided an update on the SSRO’s review of legislation. The SSRO had received a significant number of responses from stakeholders during the recent consultation in relation to contract profit and reporting requirements and was considering the feedback received.

5.2. The MOD’s view had been that it was not appropriate to provide feedback on the consultation in view of the Secretary of State’s own review, although it was considering whether to provide feedback on the aspects that were not related to proposals on legislative changes. The Board considered the responses received and the points made by industry respondents to the consultation.

5.3. The Board considered emerging thinking on the SSRO’s recommendations relating to the Defined Pricing Structure, amendments and variance, overheads, the cost risk adjustment and the profit on cost once adjustment. It also considered the scale of intervention that might be included in the recommendations, including whether changes to legislation, regulations, guidance or further work would be required.

5.4. The report provided an overview of the current status of the MOD’s work on the Secretary of State’s review of legislation and the principles guiding that review.

5.5. It was noted that the COVID-19 pandemic was likely to impact on the timings and focus of the MOD and SSRO’s reviews. The Board considered a range of factors relating to the impact of COVID-19 on the workstream and on stakeholder engagement around the review. It was agreed that the SSRO should engage at an appropriate level with the MOD on such issues and regarding its own timetable. The SSRO should continue to develop its response according to the timetable set out at paragraph 3.3 of the report: including a Board workshop on 6 May and approval at the Board meeting of 28 May.

The Board:

• agreed the arrangements at paragraph 3.3 of the report.

6. Review of Board effectiveness

6.1. The Chairman introduced the annual review of Board effectiveness, and thanked Board members for their contributions to the review. The Chairman had undertaken the review by taking into consideration the Board as a whole, the operation of Board committees and the contributions of individual members.

6.2. The recommendations from the review included that new NEBMs should be appointed to the SSRO Board from a wide and diverse range of candidates; that a plan should be developed to improve engagement between non-executive members and staff so that such engagement became part of the ethos of the organisation; and that there should be an appropriate level of detail in Board papers, for example through clarification in the Corporate Governance Framework of which associated publications should be approved by a specific Committee and which should not.

6.3. The Board noted that, while the current situation made it difficult to implement some of the recommendations around Board engagement, the Chairman and non-executive members would take opportunities to join the regular all-staff phone calls. In discussion it was agreed that the recommendation around the Regulatory Committee’s quorum would not be implemented.

The Board:

• approved the recommendations from the Board effectiveness review 2019/20.

7. Corporate Risk Register

7.1. Mike Wetherell introduced the report, which presented the SSRO’s Corporate Risk Register (CRR) for the Board’s consideration.

7.2. A significant recent change had been made to risk 5 (business continuity), which was now rated as red pre-mitigation in view of COVID-19. The steps taken to mitigate the risk had reduced the rating post-mitigation to amber, but the executive recognised the situation was fast-moving and was monitoring and responding to it accordingly in line with government guidance. In discussion, the Board noted that the risk had crystallised and that it was now an issue rather than a risk and should be treated separately to other risks in the register. This change would be made to the CRR. Action: Mike Wetherell.

7.3. The Board considered the risk around skills and discussed the creation of an expert panel. There had been some internal discussion about the status of the panel and how it would feed in to the SSRO’s governance processes. Proposals would be brought to a Board workshop at an appropriate time. Action: Matthew Rees.

The Board:

• considered the Corporate Risk Register.

8. Corporate Performance Report

8.1. Mike Wetherell, Interim Director of Corporate Resources, introduced the Corporate Performance Report, which provided a regular update on how the organisation was delivering against its priorities as set out in the 2019-22 Corporate Plan.

8.2. The Board recommended that the executive should engage with the MOD regarding possible flexibility around carry-over of budget to the next financial year as a result of delays in payment caused by COVID-19 supply issues. Action: Mike Wetherell.

The Board:

• reviewed and commented on the Corporate Performance Report.

9. Minutes from Regulatory Committee meeting of 23 January 2020 and update from meeting of 18 March 2020

9.1. Peter Freeman, Chair of the Regulatory Committee, presented an update from the Committee’s meeting held on 23 January 2020 and provided an update from the meeting on 18 March 2020, which had focused almost entirely on the review of legislation.

The Board noted the minutes and update from the Committee.

10. Minutes from Audit Committee meeting of 12 March 2020

10.1. Marta Phillips presented the minutes from the meeting of the Audit Committee on 12 March 2020. She reported that the interim financial audit had been carried out by the NAO. The NAO was intending to commence its audit on 20 April and was confident that it could do so remotely.

10.2. The Board noted Marta Phillips’s comments about the Audit Committee’s consideration of the Corporate Risk Register and the associated risk appetite for each of the risks. It considered the balance of risks and risk appetite and decided that it was satisfied with the current risk profile.

The Board noted the minutes from the Committee.

11. Future agendas and any other business

11.1. The Chairman introduced the 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 28 May 2020 at 2:00pm.

11.3. Executive members left the meeting.

12. Chief Executive’s performance discussion

12.1. The non-executive members of the Board discussed the performance of the Chief Executive over 2019/20. Following the discussion, the Chairman would use the views shared to inform his subsequent appraisal meeting with the Chief Executive.