Article: Challenges of the DIS - Mark Kane

15 Jan 2007

Compass Magazine - January 2007: Interview with Mark Kane

You've just been appointed as project director responsible for implementing the air sector Long Term Partnering Agreement - what does this involve?

The Defence Industry Strategy (DIS), announced in December 2005, is aimed at providing greater transparency of future defence requirements and, for the first time, setting outindustrial capabilities needed in the UK to deliver them.

The strategy recognises:

• The significance of sustaining through-life capability (cradle to grave)
• The need for transformation of the air sector and that military capability must be value for money and affordable.
• A need for a much more open and transparent dialogue between the Ministry of Defence (MOD) and UK defence industry, enabling more effective planning of investment in people, skills, technologies and facilities
• The importance of the MOD and industry partnering to deliver all of the above.

My role, sponsored by Ian King, is to work with the UK MOD to agree how we respond to these challenges while ensuring BAE Systems remains focused on establishing a sustainable air sector business both for our customers and for shareholders. This response, once agreed, will come under the banner of a Long Term Partnering Agreement (LTPA). This means that Air Systems and CS&S will work closely together to seek opportunities to provide industrial capabilities needed to support the front line in a more effective way.

The challenges outlined in the DIS require industry to respond - what does it mean in reality?

This means a totally different mindset for ourselves, the MOD, our suppliers and supporting business processes.

By having a more open dialogue with our customers and working in partnership, BAE Systems can proactively plan our workload as we will understand what front-line defence capability is needed and how we can deliver that. This will allow us to focus our investment in our skills and facilities more effectively to ensure our size and shape reflects customer requirements. Additionally, we and the customers have not given sufficient importance to buildingin the most effective through-life solutions when designing systems.

Our customers want us to work more closely with them to ensure that the full military potential of our products is realised early in their lifecycle, and adapted quickly and cost-effectively through-life.

What has been BAE Systems' past involvement in this type of business?

There are already some notable examples in the air sector of innovative partnering arrangements.

Availability and affordability

On Harrier JUMP (Joint Upgrade and Maintenance Programme), the RAF and BAE Systems are together maintaining aircraft and, in parallel with day-to-day operations, upgrading the GR7/7A aircraft to GR9/9A standard.

Every milestone in the five-year evolution of the GR9 programme has been met or exceeded, and the JUMP programme has delivered the planned £44m savings with the GR7 to GR9 upgrade time reduced from 52 to 35 weeks.

On the Typhoon programme, Direct Line Feed (DLF), the spares initiative that works on the basis of you select what you want, take what you need and only pay for what you consume is now in operation at RAF Coningsby. Availability of this range of low-cost spares has increased from 45 per cent to 99 per cent within the six months of DLF operation, increasing customer confidence and performance.

Partnering with the MOD

Our partnering approach - joint goals with incentives, co-located teams, end-toend processes, sharing information, consolidation of existing contractual arrangements, and robust business frameworks - all seem logical things to do but they take a lot of time and effort. Early successes are giving us enthusiasm to progress but we have further to go.

Our Combined Maintenance and Upgrade approach on Tornado has resulted in a 35 per cent reduction in downtime.

We are also building on this experience to develop partnered support solutions on new platforms such as Nimrod MRA4 and Typhoon to ensure the appropriate support infrastructure is in place for when the platforms go into service.

Shaping military capability

We are working closely with the MOD on developing their capability requirements for unmanned vehicles via the Contract Definition and Risk Reduction Phase (CDRRP) leading to the anticipated, Taranis demonstrator programme.

Progress has been made with the customerover the last few months of negotiation on the Typhoon Future Enhancements Phase 1 contract.  This contract will provide an increased air-tosurface capability to Tranche 2 aircraft.

Performance

We have successfully combined the useof rapid engineering techniques and novel partnering arrangements with other UK industry to achieve very short "paper to first flight" times on our internal UAV (unmanned air vehicle) programmes. We are seeking ways to see how this approach can be deployed more widely.

You will also recall that I said that future military capability planning is critical to the strategy. This has fuelled our approach to the development of new products - particularly in the area of Autonomous Systems.

You've been in post a couple of months now - what's been achieved so far?

Since my appointment I have been working very closely with my counterpart in the MOD, IPT leader Richard Sims. Already evident is that both the UK MOD and BAE Systems understand the scale of the challenges ahead and are committed to working closely together in reaching a transformation deal that makes sense to both sides.

We recognise that we must transform the way we do business. For the MOD, the transformation must deliver:

• Capacity reduction leading to cost savings
• Sustainment of industrial capabilities to support the front line
• Cost-effective delivery of industrial capabilities/capacities.

For BAE Systems, the transformation must deliver:

• Strategic dialogue on forward business and capabilities
• A sustainable and profitable business
• A coherent customer with a strategic business approach delivering the right incentives for optimum behaviour.

We have also agreed the framework by which both organisations will work together in taking this project forward.

We also recognise that these changes require our supply chain to respond, and we will be working with our partners in the supply chain to achieve the transformation.

Within BAE Systems, we have created an Integrated Air Sector LTPA team withsenior level representatives from both CS&S and Air Systems.

The MOD has mirrored this organisation in creating a dual accountable IPT, and I am confidentthis joined-up approach forms a solid foundation for driving transformation.

What's are your priorities going forward?

The team are working towards a critical milestone for the end of 2006 when we/UK MOD aim to sign a Foundation Contract.

The Foundation Contract is aimed at derisking the key elements of an LTPA, provide confidence to both parties and pave the way for the negotiation of a full and legally binding LTPA by the end of 2007.

If you had three messages to give to our readers what would they be?

• Transformation is not an option - the business will look and feel different in the future
• This is an air sector transformation and we must all work together to make this happen.
• You are integral to making the transformation happen.

Mark Kane