Air Commodore Rob Woods OBE Chief of Staff (Air), Defence Equipment & Support Royal Air Force the Team…

A Warfighters View: Weapon System Availability – A Collaborative Challenge Air Commodore Rob Woods OBE Chief of Staff (Air), Defence Equipment & Support Royal Air Force The Team….. Mr Richard Hamilton BAE Systems plc Air Cdre Rob Woods MoD DE&S Mr Geraint Spearing MoD DECA Gp Capt Simon Vicary MoD DE&S Mr Ian Cole MoD DECA Mr Ian Manley MoD DE&S UK Defence Equipment & Support (DE&S) “To equip and support our Armed Forces for operations now and in the future” DE&S’s Role • Procure & support equipment, through life, for UK’s Armed Forces for both current & future operations • MOD’s lead department for commercial activities • Manage relationships with MOD, the Front Line & Industry DE&S HQ, MOD Abbey Wood, Bristol, UK DE&S Budget to Spend 2019/20 • £10.8 Billion Core Spend: − £5.4 Billion for Purchase of New Equipment − £5.4 Billion for Equipment Support • £3.9 Billion budget for Air Domain, 56% of which for Support Air Domain Portfolio Backdrop for Transformation in Support: 2000-05 • Strategic Defence Review 1998 –Smart Acquisition •Similar lessons learnt over multiple operations; urgent need to improve • DLO Strategy •Increasing demand for UK military capability across the globe –20% Savings & ‘Transformation Staircase’ •Nature of operations changed •Need to find efficiencies • Air & Land End-to-End Review • Defence White Paper 2004 • Government Efficiency Review 2004 • Formation of DE&S – Preserve current & future capability End-2-End Review of Air & Land Logistics - 2003 • Simplified lines & levels of support - From 4 x Lines of Maintenance to 2 x Levels: Forward & Depth • Creation of Depth Support Hubs for platforms - Tornado @ Marham and Harrier @ Cottesmore • ‘Contracting for Availability’ - Tornado Future Support - ATTAC Phase 1 & ROCET • Reliable & consistent supply chain - Reduced in-theatre delivery Op TELIC from 4-7 to 1-2 days; in NW Europe from 28 to 7 days • Application of ‘Lean’ techniques - Training & migration to Continual Improvement National Audit Office Report - Jul 2007 ‘Transforming Logistics Support for Fast Jets’ “The Department made significant reductions in the cost of support to fast jets; the Tornado and Harrier Project Teams’ costs reduced from total of £711M in 2001-02 to £328M in 2006-07, providing cumulative savings of some £1.4Bn over the 6-year period.” “The Department has continued to achieve broadly the same level of performance in terms of flying hours throughout the transformation. On this basis, the Department’s transformation of logistics support represents good value for money to date …although there are risks…” 2003-11: Air Efficiency – Target v Achievement £M 500 Achieved 400 Target 300 DLO/ DE&S 200 100 Front Line 2003/04 <ul style="display: flex;"><li style="flex:1">04/05 </li><li style="flex:1">05/06 </li><li style="flex:1">06/07 </li><li style="flex:1">07/08 </li><li style="flex:1">10/11 </li></ul>•11 The UK’s Support Transformation Staircase Today’s Support Solutions • Relationship between DE&S and Industry largely stabilized; ‘post- Levene’ relationship between DE&S and Air Cmd still in work • Have developed areas where analysis of Perspectives 1 & 2 match, and increasingly tailored contracts on proven ‘good practice’: – Governance is key: Programme Boards now regularly making tough decisions; SDSR 2015 provided real opportunities to grow capability – CEO DE&S has driven the ‘S’ back in DE&S – Set requirements early on - focus on teamwork, transparency & trust between SROs & DE&S Delivery Teams – Coherence in Deployed Space, and greater emphasis on Safety Continuing Efficiencies Realised in Support Attack Helicopter IOS: 21% savings over 5 years - Dec 14 Hercules IOS: 17% savings over 6 years - Dec 15 ATTAC: 18% savings to Out of Service - Jul 16 Merlin IOS: 20% savings over 5 years - Apr 15 Chinook TLCS: 23% savings over 5 years - Jan 15 Hawk Support: 8% savings over 4 years - Mar 16 TyTAN Launch - July 2016 An Industry View: Weapon System Availability – A Collaborative Challenge Mr Richard Hamilton Manufacturing & Support Director, BAE Systems plc Typhoon Total Availability Enterprise (TyTAN) •10-year deal for all aspects of Typhoon operational support – Brings together several legacy contracts into one arrangement – 10 year framework allows industry to make long term investments to optimise support ••Target price 38% lower than previous arrangements – Unachieveable through “business as usual” negotiation with single-source supplier Reinvestment of support savings directly in platform capability development The Challenge For the UK MOD SAVE MORE • Funding stream for UK Typhoon Support insufficient Reduce Operating Costs based on current run rates • Tornado Out of Service Date driving required Typhoon Capability Enhancements • Operational commitments driving need for improvements to how Typhoon is operated in the UK Fleet <ul style="display: flex;"><li style="flex:1">DELIVERMORE </li><li style="flex:1">SPENDMORE </li></ul>Increase Competitive Advance Reinvest Savings in Capacity For BAE Systems • Driving recurring support costs down will allow recycling of c.£0.5bn into capability programmes Enhance Typhoon Product • Enhanced operational effectiveness of the Typhoon weapon system to support UK RAF requirements • Typhoon Export sales dependent upon cost efficiencies being realised DO MORE TyTAN – A Step Change in Typhoon Support – Joint Plan •Agreement signed Jul 2016 Replaced existing multiple support contracts with a single output-based availability service Jointly developed by BAE Systems and MoD under Future Support Operating Model project during 2015/16 ••Delivers flying hours, simulator availability and pilot training in support of the Typhoon Force Command Plan Transformation programme a critical enabler Enterprise “One Team” integrated approach to ensure success ‘Enablers’ are multi-organisational in nature Investment of cash; energy and leadership TyTAN Features & Performance Management ••Highly integrated enterprise approach (BAES/RAF/DE&S) Only one main Performance Indicator - Pay Per Flying Hour FLYING HOURS NON-FLYING SERVICES – Simple measure that is used to drive delivery and behaviour – Other indicators used for management information only COST RESILIENCE •“Key Resilience Indicators” act as safety net to protect military output and operational flexibility CONTROL – e.g. Bank of Hours, Inventory health TyTAN - Performance Management <ul style="display: flex;"><li style="flex:1">Payment </li><li style="flex:1">Governance </li></ul>• Flying HourAchievement •KPI 1 - Training andMission Support •KPI 2 - Airworthiness &Safety •European OPMI Non-flying Flying Services Hours Deliver... One Enterprise Whilst ensuring... Cost Control Resilience Key Resilience Transformation Indicators • Continuous Improvement <ul style="display: flex;"><li style="flex:1">• Recycling for capability </li><li style="flex:1">• KRI 1 - Flying HourResilience </li></ul>• KRI 2 - Supply Chain Resilience • KRI 3 - Safety & Availability Modifications Embodiment Typhoon Total Availability Enterprise (TyTAN) • 10 year, Output Based contract with Price Per Flying Hour (PPFH) • 40% Savings reinvested into future capability • Output based services (Flying Hours and Simulator Availability) • Avionics provider (Leonardo) fully integrated into the Joint Avionics Service (JAS) • Long term deal providing better incentives for Transformation • Operates as a single Enterprise (BAES, RAF and DE&S) Enterprise Enablers 25 Enterprise Leadership TyTAN RSO Typhoon Force Commander Air Cdre Mark Chappell •• FH achieved Recycling for capability No 1 Group Delivery Lead DE&S Delivery Lead BAE Systems Delivery Lead UK Support (TyTAN) Delivery Director Deputy Force Commander Gp Capt Jez Milne Deputy Head FAST – CapSust Ian Manley Alison Ballard ••• CP & IYDP Transformation Fly the Plan ••• Contract Management European interfaces Strategic Support Planning ••• Service delivery Transformation Cost reduction Relentless focus on: Doing the right thing, at the right time, in the right place Driving out/avoiding waste Delivering the Command Plan 26 Joint Governance Structure 6-monthly 2-Star TyTAN Review TyTAN Senior Perfomance Review & Quad Monthly with every 3rd meeting being 1* Quad Enterprise Operation and Transformation Review Monthly Monthly Enterprise Strategic Planning Cell Review Operation TyTAN Change Review Board Fin/Comm Performance Review Working Group Blue Box - Reviews - Service Delivery Team Leads 27 Transformation Cultural Change – The Challenge Changing legacy cultures and behaviours key to TyTAN’s success Three dimensions of change; BAE Systems – DE&S – Air Command BAE Systems Front Office vs Back Office European Collaboration Requires all teams to be focused on the priorities of the solution; Flying Hour & Pilot competency Maintaining Airworthiness Achieving Transformation & Efficiency Enabling Recycling for Capability From Customer / Supplier to Partnering to Enterprise 28 TyTAN – What have we learnt? •••Early alignment of objectives (around operational output) is crucial Re-investment of support savings is a powerful incentive to all Trust takes time to build; transformation and cultural change is a c5 year process; long term security is needed to enable investment Relentless focus on: Doing the right thing, at the right time, in the right place, with the right behaviours •••Customer has to change too and work in a highly integrated way with industry for the common good Driving out / avoiding waste Leadership demonstration of changed behaviours essential Delivering the Operational Output All parties need a mature understanding of each other's business, motivations and cost drivers 29 Conclusions & Future Relationships • Identify good practice inter-organizationally & adopt it • DE&S and Industry will continue working together: trust achieved through shared values - ‘win-win criteria’ - clear contracted responsibilities & open communications • Innovation & coherence - together • Consider intelligent support on future Foreign Military Sale platforms • Remain flexible - resources likely to need further balancing • Make Plan A work; reflect that perhaps there never was a Plan B… “The Snowplough Test” Question. Who gets the snowplough out in the morning ? Answer. It’s now our industry partner because…… ……..it’s in their interest for us to fly!

Air Commodore Rob Woods OBE Chief of Staff (Air), Defence Equipment & Support Royal Air Force the Team…

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