Corporate report

Chair's newsletter December 2022

Published 20 December 2022

Dear Stakeholder,

As the year draws to a close, I wanted to update you on the outcome of our Capability Review and the work of the SSRO.

Capability review

In our Corporate Plan, I set out our intention to step back and consider whether we have the right skills, knowledge and expertise to deliver on our ambition – a capability review. I would like to thank all those who took the time to contribute their feedback and insight. With over thirty senior contributors, drawn equally from industry and the MOD, we have a clear view of stakeholder perspectives. I was particularly pleased that the majority, across industry and the MOD, believe that we perform our core role well, reaffirming the stakeholder survey findings from earlier this year.  Our professionalism and the improvements in effectiveness made over the last seven years were noted.

However, some consider that the full benefits of the Single Source Regime are yet to be realised. Achieving these will require both the SSRO and its stakeholders to challenge and consider what can be done differently. A common understanding of the SSRO’s role is needed and this must reflect the feedback that most stakeholders want us to play a wider role to help realise the benefits of the Regime.

A strategic shift

We agree that the time is right for the SSRO to take this next step. Early next year, we will be sharing with you our draft Corporate Plan for 2023-2026. This will set out a strategic shift. With the Single Source Regime maturing, we intend to place greater focus on helping the MOD and industry realise the benefits of using the regulatory framework. You will see us on the ground, working more closely with you; using our skills to support commercial and other staff in using the tools and guidance we have developed, whilst retaining our independence. Priorities we are actively considering include:

• updating and improving our pricing guidance;
• promoting and building the use of DefCARS to deliver insights; and
• giving better and quicker issue resolution, including through increased and more structured pre-referral engagement.

Getting the most out of contract data

We have already taken initial steps on this journey. DefCARS now contains over seven years of data collected on a comparable basis across more than 480 contracts worth around £72 billion. This is a rich source of information, and we plan to enable greater utilisation by both the MOD and industry. We have successfully re-platformed DefCARS securely into the public cloud, providing greater resilience, improved analytical capability and better user access.

The baseline profit rate and cost guidance

In January, we will be making our independent 2023/24 rates assessment to the Secretary of State. We set out our current thinking on the methodology in the autumn. I hope this was helpful.

Building on our updated allowable cost guidance targeting overheads and indirect costs, we have also issued draft supplementary guidance on inflation. Thank you for your feedback. We aim to publish the guidance shortly.

Wishing you a merry Christmas and a happy new year

We have an ambitious agenda for 2023, which we look forward to engaging with you on. In the meantime, I wish you a merry Christmas and a happy new year.

Hannah Nixon