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					A Partnering
  Handbook
       FOR ACQUISITION TEAMS
Foreword
by The Defence Commercial Director
It is no secret that we have had a poor track record of delivering to
performance, time and cost on some of our major projects. This can lead
to budget instability, necessitating ‘measures’ which can mean delays
or which cut across a wide range of programmes that are crucial to our
military capability. Partnering gives us a better chance to deliver on
target against time, performance and cost by working together with our
suppliers to solve problems, manage risk and deliver successfully.

I first concluded that we             This is the first in a number   The Handbook will be
needed a Partnering Handbook         of guidance documents           developed to take account of
when I became aware of the           designed to form part           and incorporate emerging
many different interpretations of    of a clear MOD business         practice and will be improved
partnering to cover a myriad of      approach. These guidance        to meet the needs of our
contracting approaches across        documents identify mandated     business over time. As such
MOD. It struck me there was          requirements and include        it is a live document and I
no consistent understanding          examples of best practice.      therefore ask you to provide
of partnering and, more              These documents will also       my team with constructive
importantly, no standard                                             feedback; let us know where it
                                     be regarded as the standards
approach for MOD to use.                                             works for you and where it does
                                     for purposes of approvals and
                                                                     not. We will incorporate any
                                     review consideration.
This Handbook addresses in                                           necessary changes and further
clear terms what partnering is                                       best practice in future issues.
for MOD, what it is not, when        This Handbook captures the
it is appropriate, how to use it     principles and the direction    It is clear that partnering
and when it should be put into       that we will take. Over the     has a valuable part to play in
practice. If it does not address     coming months I will be         putting the Defence Industrial
these questions, or you are          issuing standardised contract   Strategy into effect, and we
left with a need for further         terms of business to include    have partnered successfully
clarification when you have read      in our contracts and more       in a number of sectors
it, please contact the Directorate   detailed guidance on how to     and projects already. The
of Defence Commercial Policy.        apply these.                    Handbook contains examples
of our successes and you should               The existence of a partnering             Best practice in relationship
read these to help identify where             contract does not mean that               management is an important part
partnering could be of benefit in your         customer and supplier have                of most successful acquisition and
procurement activity.                         all interests in common, or               procurement activity, and it is an
                                              that the supplier will not seek,          indispensable accompaniment to
Partnering is not a substitute                quite reasonably, to optimise             successful partnering. However
for competition, and competition              their commercial interests, or            partnering is not solely about
wherever feasible continues to                commercial return within the              relationships and the two things
be the preferred route, by which              parameters of our relationship            are not the same, and should not be
MoD seeks to procure defence                  with them. The MOD response               confused in thought or language.
capability. Rather, partnering is             simply requires that we wear a
a complementary approach to                   ‘partnering hat’ when working to          As I have already said, this
both competitive scenarios and                meet our shared objectives, but           improved approach to partnering is
sole source situations where its                                                        just one of a number of
                                              that we be business-like and ‘firm
deployment is perhaps essential.                                                        commercial initiatives I am
                                              but fair’ in negotiating, responding
                                                                                        introducing to drive the way we will
                                              to proposed cost variations, rate
                                                                                        conduct business in the future, to
Partnering is a valuable business             increases etc. So, for example, it is
                                                                                        reduce risks, sustain continuous
tool designed to help customer and            not our job in the MOD to take early
                                                                                        improvement and to increase the
supplier to work together for particular      decisions that do not offer value         likelihood of achieving mutually
purposes, generally to deal with              for money due to drivers such as          successful outcomes. For industry
complex, partially defined or uncertain        meeting the bonus arrangements            this could be increased shareholder
issues over a period of time. It does so      for executives among our suppliers        value; for MOD it is delivering and
by creating a contractual space where         simply because of the existence           supporting through life military
both sides can share in the benefits of        of a partnering arrangement. Of           capability more effectively and
success or the effects of failure. It calls   course, we may accommodate them           achieving better long term value for
a truce on the somewhat adversarial           in return for improved terms for          MOD and the taxpayer■
relationship that can occur where both        MOD. It remains very much our
customer and supplier have a copy of          responsibility to protect the interests
the contract and a draft writ to hand         of the MOD, the taxpayer, and the
at all times. Having said that it will not    Armed Forces we support, even in
remove such tensions altogether and           the closest and most successful           Amyas Morse
neither should it.                            partnering arrangements.                  Defence Commercial Director



                                                                                                          Partnering Handbook | 3
Contents
1     INTRODUCTION                                                     5    APPENDIX A: WHAT MY TEAM NEEDS TO DO                        25
1.1   Purpose and target audience                                      5    APPENDIX B: SUGGESTED MODEL FOR RELATIONSHIP MEASUREMENT 27
1.2   Applicability and status                                         6
1.3   Advice and support                                               6         B-1     Context                                        27
1.4   Applicable documents                                             7         B-2     Factors to consider before conducting a RMR    27
                                                                                 B-3     RMR Process                                    28
2     MOD’s APPROACH TO PARTNERING                                     8         B-3.1   Planning                                       28
                                                                                 B-3.2   Assessment                                     29
2.1   What is partnering?                                              8         B-3.3   Workshop                                       30
2.2   Why use partnering?                                              9         B-3.4   Improvement plan                               30
2.3   When is partnering appropriate?                                  10        B-4     Relationship Management Matrix (RMM)           32
2.4   Who to partner with                                              11
2.5   How to use partnering                                            11   APPENDIX C: AVAILABLE TRAINING                              33

3     HOW TO PARTNER                                                   12        C-1     Partnering theory and practice                 33
                                                                                 C-2     Induction and refresher training               33
3.1   Step 1: Project initiation – vision, aims and objectives         13
                                                                                 C-3     Initial and follow on relationship workshops   33
3.2   Step 2: Producing partnering specific terms of business           14
                                                                                 C-4     Links with practitioners in other teams;
      3.2.1 Governance                                                 14
                                                                                         secondment and shadowing                       34
      3.2.2 Achieving of value for money                               15
      3.2.3 Incentives                                                 15
                                                                            APPENDIX D: CASE STUDIES                                    34
      3.2.4 Transparency of information                                16
      3.2.5 Intellectual Property Rights (IPR)                         17        D-1     MOD/AGUSTA-WESTLAND Joint Partnering and
      3.2.6 Risk and opportunity management                            18                Relationships Team (JPART)                  35
      3.2.7 Issue resolution                                           19        D-1.1   Why partner?                                35
      3.2.8 Exit strategy                                              19        D-1.2   Scope of partnering                         36
      3.2.9 Communication                                              20        D-1.3   Implementation                              37
3.3   Step 3: Relationship management                                  20        D-1.4   Benefits, risks and challenges               38
      3.3.1 Establish the fundamental principles of the relationship   21        D-2     UK MILITARY FLYING TRAINING SYSTEM (UKMFTS) 39
      3.3.2 Initial relationship workshop                              22        D-3     MOD/DML PARTNERING FOR THE PROVISION OF
      3.3.3 Develop the relationship management plan                   23                FUTURE NUCLEAR FACILITIES IN DEVONPORT      44
      3.3.4 Agree on the principles of relationship measurement        23        D-3.1   Background                                  44
      3.3.5 Engagement with industry                                   23        D-3.2   How was this achieved?                      45
      3.3.6 Skills and training                                        23        D-3.3   Conclusion                                  47
3.4   Step 4: Compliance                                               24        D-4     DEFENCE INFORMATION INFRASTRUCTURE (FUTURE) 48
     01 Introduction
            This   It links to the commercial            from complex, high-risk            everybody involved in procuring
    Handbook       transformation objectives of          procurement where partnering       new projects is fully aware of
                   the Defence Acquisition Change        may be the chosen option, right    this Handbook, including teams
    is one of a    Programme. The Handbook               down to low risk transactional     responsible for non partnering
    number of      captures the principles and           contracting. The aim of this       projects, for which the
    new policy     direction that we wish to             work is to have clear and          principles and the disciplines
and guidance       take and it should be used            consistent contracts across        should be considered on a case
                   in conjunction with other             MOD that are legally fit for        by case basis.
documents in       relevant policies, standards          purpose; and to make it easier
   preparation     and processes such as ‘Route          for project teams to prepare       The only justification for
 that will form    to Service’ devised by teams          for negotiations and be clear      partnering is the pursuit
    part of the    in DG Combat Air. In Section          on what’s mandated and             of better value for money
                   3.2, there are a number of            what is negotiable. It will also   which needs to be continually
    MOD-wide                                                                                demonstrated.
                   high level principles that will       enable MOD to be consistent
  commercial       drive our negotiating approach        in its dealing with suppliers.
        ‘Fit for   on key commercial issues.             Ultimately, we are striving        1.1 Purpose and
     Business’     It is important that project          for consistent and robust          target audience
       project.    teams become very familiar            contracting approaches that        Whilst partnering has been in
                   with these because they will          reduce risk and which increase     existence for several years,
                   form the basis of the updated         the likelihood of project          there has been a growing
                   contract terms that are being         success and better overall         need for consistent and
                   incorporated in a series of           value for money.                   practical guidance. This needs
                   new standardised contract                                                to reflect good and latest
                   templates, the first of which is       Whilst this Handbook is focused    practice, extend the
                   scheduled to be available for use     on major, complex partnering       principles contained in the
                   in complex availability contracting   projects, many of the principles   Office of Government
                   in Spring/Summer 08.                  and business disciplines that      Commerce guidelines (AD1)
                                                         describe how to work together      and provide a consistent
                   The standardised contract             effectively within a commercial    partnering model, understood
                   templates will represent              agreement will equally apply to    both by MOD and industry.
                   the MOD ‘gold standard’ for           other projects where partnering
                   use in different commercial           is not the chosen option. It       This Handbook seeks to satisfy
                   arrangements, ranging                 is important, therefore, that      that need.


                                                                                                        Partnering Handbook | 05
• Section 2 provides an overview of         key factors in this Handbook have    Implementation and management
  the MOD approach to partnering.           been addressed. In particular        of all partnering contracts will
  This is important for all in the          partnering specific terms of          be independently monitored on
  Department, so that they are              business must be produced (see       a regular and continuous basis,
  aware of what partnering means            figure 1) and incorporated into a     throughout the life of the
  and the direction the Department          legally binding contract.            partnering contract.
  is moving in.
• Section 3 provides a more              • A Relationship Management Plan        1.3 Advice and support
  detailed route map which all             (RMP) must be in place and active.    The Directorate of Defence
  acquisition teams must comply            Relationship Workshops are            Commercial Policy is the first
  with if they are planning a              mandatory along with a                point of contact on points of
  partnering contract.                     formal mechanism for measuring        partnering, policy.
                                           the relationship.
1.2 Applicability and status                                                     Directorate of Defence Commercial
This handbook is mandatory for all new                                           Policy – Partnering Policy Team:
MoD Cat A and B projects, competitive    • Acquisition teams are required        0117 91 32608
and non-competitive,                       to measure the relationship on a       DDefCP-PAT-AD@mod.uk
in that:                                   regular basis and take steps to
                                           improve wherever possible. The        Detailed implementation advice and
• Acquisition teams must fully             outcome of the measurements           project support will be provided by
  evaluate partnering as a                 and the steps taken for               the Partnering Support Group:
  procurement option. The evaluation       improvement will be subject to        01225 467794
  of partnering must be demonstrated       independent assurance (from
                                                                                 DESComrclPETPartnering SpGp
  in Procurement Strategies and            outside the project).
                                                                                 mBox@mod.uk
  Business Case submissions.
  The overriding consideration for       Projects that are committed             The Partnering Implementation
  partnering is improved Value for       contractually will not be bound by      Working Group (PIWG) is currently
  Money and the evaluation must          this policy unless the parties agree    the joint MOD/Industry forum
  consider the potential benefits of      otherwise. However, where major         tasked with identifying and
  partnering against the overhead        changes are contemplated to an          disseminating good practice in
  that partnering brings with it.        existing contract, or where a project   relation to partnering. Contact
                                         could gain significant benefit from     details for industry and MoD
• Where partnering is the chosen         the introduction of partnering to       members can be obtained from the
  option, the acquisition team must      improve performance, then project       Partnering Support Group.
  be able to demonstrate that the        teams should explore the option.
This Handbook will be reviewed          AD5: Commercial Policy Group         AD6: Commercial Policy Guideline
periodically and updated to             Guideline No 9, Building and         No 5, Codes of Practice governing
incorporate evolving good practice      Sustaining Effective Relationships   principles for establishing mutually
and learning from experience.           Available from                       satisfactory relationships. Available
If you have any comments or             CPG Guidelines & Notes               from CPG Guidelines & Notes.■
suggestions for improvement, or if
you need further guidance, please
contact the Directorate of Defence
Commercial Policy.

1.4 Applicable documents
There are a number of applicable
documents called up in this
Handbook.

AD1 Office of Government
Commerce guidelines [Effective
Partnering: An Overview for
Customers and Providers. OGC
website,
OGC - Effective Partnering: An
overview for customers and
providers

AD2 The Defence Values for
Acquisition are available on
www.MoD.aof

AD3: MOD’s transparency policy
(Currently in development)

AD4: IPR strategy Available from
 http://www.aof.dii.r.mil.uk/aofcon-
tent/tactical/toolkit/content/topics/
iprpol.pdf



                                                                                                Partnering Handbook | 7
02 Part two
  MOD’s approach to partnering

  2.1 What is partnering?          • Projects where non-            is underpinned by a structured
  In the past there have been        legally binding partnering     and rigorous approach to
  different interpretations of       charters/principles are in     relationship management.
  the term ‘partnering’ and          place, which cover the way
  variances in its practical         we work with industry in       Contracting in this way provides
  application across MOD.            delivering those projects.     strong incentives for the
                                   • Long term partnering           partners to work in a more
  Partnering has been used to        arrangements between           collaborative manner, giving
  describe many different            the former DLO and key         a greater chance of delivering
  arrangements at; the business      suppliers.                     the capability required within
  (strategic) level; the DIS                                        acceptable performance, time
  sector level and at individual                                    and cost parameters.
                                   All of these different
  programme/project level.         approaches have been
                                                                    Partnering is not easy. In
                                   described as “partnering” and
                                                                    particular, it is essential
  Examples that illustrate these   this has resulted in confusion
                                                                    to set unambiguous limits
  differences are;                 on what partnering is and how
                                   it should be applied.            on partnering obligations
                                                                    to ensure that the MOD’s
  • Long term partnering
                                   For the avoidance of doubt,      objectives, rights and
    agreements for the
                                   partnering in the MoD is now     remedies under the contract
    DIS rotary wing sector,                                         are not jeopardised or
    where there are a set of       defined as;
                                                                    undermined by continued
    legally binding business                                        poor supplier performance or
    agreements with Agusta          “a procurement approach
                                   that uses partnering specific    poor contract management
    Westland.                                                       and governance. There may
                                   terms and conditions to
  • Alliancing arrangements,       enable the successful delivery   also be wider legal, political,
    such as the initial            of joint objectives”.            and presentational issues
    contract on CVF which                                           with partnering and these
    requires the MOD and           Partnering creates legally       should be highlighted and
    industry to drive towards      binding obligations and hard     addressed in business cases
    mutually agreed goals.         contractual commitments and      and procurement strategies.
Partnering is not about compromise,     contracts entered into under a more   • They bind the parties in terms of
nor de-scoping the requirement to       traditional approach in that:           relationship management. The
make savings and it is not about the                                            parties agree a formal system for
relaxation of contractual obligations   • They set out the joint objectives     managing their relationship which
if it all becomes too difficult.           of the parties whereas a              includes periodic measurement and
                                          traditional approach details          improvement activity. Traditional
It is also not about simply               the MoD aims which industry is        aprroaches do not place the same
maintaining a cordial relationship        required to meet.                     emphasis on the relationship
or generally working together.          • Partnering considers the core         aspects of the contract.
On the contrary, partnering is            values of the organisations         • Partnering utilises joint
about the partners committing             involved and looks to align           identification, assessment and
to working together to deliver the        these into values that are “best      management of risk with the
joint aims. Partnering requires staff     for project”.                         possibility of risk sharing and
to take a firm but fair approach                                                 incentives which encourage the
                                        • Partnering considers the
when negotiating or responding to                                               proactive prevention of those risks.
                                          different drivers that MoD and
proposals that could change the deal.                                           Traditional approaches generally
                                          industry have and identifies
                                          and agrees the common project         look to transfer risk to the
 Partnering is not a substitute for                                             contractor, even where they may
                                          drivers. Traditional approaches
competition. The requirements of                                                not be best placed to manage it.
                                          may identify the drivers of
the Competition Act 1988 still apply
                                          the customer but may not
and all contracts must be placed
in accordance with all aspects of         fully assess the impact of the      2.2 Why use partnering?
Competition Law.                          constraints upon industry in        A number of common themes emerge
                                          aligning with these.                from successful partnering.The
Partnering does not come without        • They are governed by a joint        themes detailed below form the basis
cost both in terms of funding for         management board with a             of the decision to partner.
partnering activities and resource to     joint decision making process
implement and manage partnering.          giving both parties rights and      • Overall project costs have been
                                          responsibilities for decisions. A     reduced by joint efficiency
How is partnering different?              traditional approach has a MoD        improvements against overall
Partnering contracts differ from          led governance structure.             target costs.



                                                                                                 Partnering Handbook | 9
• Traditional approaches are            of pitfalls that teams need to           consultation with Other
  challenged and new ways of            understand:                              Government Departments, for
  working are explored, driving                                                  example: HM Treasury, Business
  innovation and flexibility, reducing   • Although the terms ‘’partnering’’      Enterprise and Regulator,
  cost and improving performance.         and ‘’Partnership’’ are frequently     and the Office of Fair Trading
• Greater transparency and                used interchangeably, partnering       will result in key stakeholder
  openness on business objectives         should be distinguished                concerns not being addressed,
  has increased confidence between         from the legal concept of a            leading to delays in project
  the parties, allowing them to plan      Partnership. Partnering does not       approvals.
  more effectively - knowing what         constitute the creation of a legal   • Business circumstances may
  the impact of decisions will be on      ‘Partnership’ as defined in the         change during the life of a
  the project.                            Partnership Act of 1890, neither       project which materially affect
• It strengthens the ability to           does it involve the formation          the decision to partner.
  challenge those elements of the         of a new joint business entity.
  contract which do not add value to      Partnerships carry a legally
                                          enshrined joint responsibility for   2.3 When is partnering
  the capability required.
                                          debts incurred by the partners           appropriate?
• Understanding and overlaying
                                          in pursuit of the joint business     Partnering must be evaluated
  each parties’ respective
                                          activity and care must be taken      as an option for all new CAT A
  governance and assurance
                                          to ensure that legal Partnerships    and B projects. It should also be
  processes has reduced the time
                                          are not inadvertently formed.        considered for other projects where
  taken for projects to commence.
                                        • Competition Law prevails.            the potential benefits of partnering
  This reduces the cost of doing
                                          Partnering is not a substitute for   are judged to warrant the level of
  business with MOD and reduces
                                          competitive procurement and          investment required. Partnering is
  acquisition life cycle time.
                                          teams need to be aware of this       unlikely to be appropriate or provide
• Incentivised pricing arrangements                                            benefit for requirements with a
  and a joint pain share, gain share      at all times and consult with DCL
                                                                               value of less than £5 Million.
  arrangements drive project              staff as necessary.MOD teams
  efficiencies and provide an              should ensure that all regulatory
                                                                               The decision whether to partner or
  opportunity for increased returns       demands are addressed. This
                                                                               not is a complex one and will not be
  for industry.                           will include compliance with the
                                                                               decided on one point alone. A starting
                                          Competition Act 1988.
                                                                               point is to address a
                                        • EC Procurement Regulations           number of questions at project
Potential issues, risks and
                                          must be complied with.               initiation stage, some of which are
pitfalls of partnering
Partnering can present a number         • There is a risk that insufficient    detailed below. If the answer to any of
the questions is yes then partnering     2.4 Who to partner with                 procurement are more likely to
must be fully evaluated as part of the   A key decision is who to involve in     be potential partners.
procurement strategy. Initial advice     the partnering agreement and how      • Willingness and ability to partner.
and guidance on whether partnering       to link them into the overarching       The potential partners have to be
is appropriate must be sought from       partnering contract.                    willing and able.
the Partnering Support Group.
                                                                               • Information and data from
                                         Partnering looks to involve members     suppliers. What is to be provided,
• Are the requirements                   of the supply network and link them     in what format and when.
  susceptible to change because          into the risk-sharing, incentive
  they are evolving?                                                           • Proven track record on partnering
                                         based arrangements.
                                                                                 type projects. Where the supplier
• Is the approach incremental and
                                                                                 has worked successfully with
  is technology insertion likely?        Determining which suppliers
                                                                                 the MOD before or with other
• From previous experience is            to include in the partnering
                                                                                 contractors.
  there potential for efficiencies       arrangement requires joint
  in the delivery of the equipment/      consideration of the following:
                                                                               2.5 How to use partnering
  service?
                                         • The value which each supplier       With the increasing emphasis on
• Will the solution need to be                                                 longer term contracting and ever
                                           provides. Those whose work is
  developed during the duration            a key component of the contract     more complex procurements,
  of the project?                          value are likely to be partnering   we need to adapt our traditional
• Are there strong mutual                  candidates.                         procurement approaches to meet
  dependencies where joint                                                     these demands.
                                         • Criticality. Those who have a
  management would be of benefit?           critical impact on the programme
• Are project risks particularly                                               Section 3 of this Handbook
                                           outturn are likely to be
  difficult to predict/quantify            candidates for partnering.          mandates the steps that acquisition
  and consequently is the best                                                 teams must take in order to prepare
                                         • Dependency. If a supplier is in a   for engaging with potential partners
  approach for the parties to work         sole source position for some or
  together on risk identification,                                             on a more informed basis.
                                           all of the contract then they are
  assessment and management?               likely to be a potential partner.   The guidance in this handbook
• Is there a sole source of supply       • Scope for improvement.              should be read in conjunction with
  or is competition weak?                  Suppliers demonstrating a           other policies and processes such
• Are there key restructuring or           proactive approach to               as the DE+S ‘Route to Service’■
  rationalisation issues to                improving performance with
  be addressed?                            the aim of benefiting the



                                                                                                 Partnering Handbook | 11
     03 Part threeHow to partner

     Effective    Partnering requires a strong                                              Successful Project Delivery
                  lead from the client and the                                                     Performance, Time, Cost
    partnering    client will define the scope of
     demands      partnering. Acquisition teams
          early   must be fully prepared as
                  “intelligent customers” before                                                       Joint Objectives
planning on,      they engage with industry.                                                           Aims,Vision and
                                                                                                      Business Drivers
 the evolving                                                                                           Joint Risk &
procurement       This section provides a route                                                       Opportunity Mgt                          Key factors to be addressed
                                                                                                                                                   in detail to develop
                                                                                                      Risk identification
                  map to develop, implement, and                                                      Joint risk registers                      partnering specific terms
      strategy    sustain partnering relationships.
                                                                                                  Effective risk management

and the joint     It should be read in conjunction                                            Transparency of Information
                                                                                                      What is required?
  relationship    with other related policies and                                                         By who?
                                                                                                   Open Book requirements
                  processes such as the ‘Route
management        to Service’ process deployed in                            Management &            Issue Management            Communication
          plan.   parts of DE+S. The key factors                               Governance
                                                                    Responsibility & Authority,
                                                                                                    Resolve at lowest level
                                                                                                      Speedy resolution
                                                                                                                                 Effective Communication
                                                                                                                                 Links to stakeholders
                  that need to be addressed are                        Management planning,         Escalation procedure         Partnering Updates
                                                                   Relationship measurement            Joint process
                  identified in Figure 1.
                                                                   IPR Management                 Incentives/Protection of VFM                Exit Strategy
                                                                     Jointly agreed                    Shared Pain/Gain                      Detail agreed

                  Detailed partnering terms of
                  business and a library of existing
                                                                                          Relationship management
                  partnering contracts are being                                  Effective leadership – demonstrating right behaviours
                                                                                 Culture - the right core values, attitudes and approaches
                  developed to provide more                                       Skills and resources for partnering – the right people
                  specific information and support
                  for the commercial practitioner.     Figure 1:      Factors driving development of partnering terms of contract
  Step 1: Project initiation – vision, aims and objectives


  Step 1 is a   Establishing a clear                likely to cause problems                            partnering approach likely to
                understanding of the business,      on cost estimations/                                enhance successful delivery
MoD activity    sector or project is essential      projections?                                        and provide improved value
    which is    if the relationship is to be      • Is there a well developed                           for money?
   repeated     aligned with overarching            specification for the                          • What drives MOD and
                objectives. The establishment       partnering requirement?                         Industry and do potential
        with    of individual and then shared
                                                  • What opportunities are there                    partners have experience
    industry    aims and objectives will help
                                                    for continuous improvement                      of working in a partnering
  at point of   to focus on project outcomes.                                                       environment? Figure 2
                                                    e g improvements on speed
                For example, proposals for                                                          illustrates some potential
    industry                                        of change?
                ‘business transformation’ and                                                       drivers. What are the
engagement      efficiency programmes should       • What are the principles of
                                                                                                    aspirations of each party?
                be considered and agreed at the     operating/how do we intend to
   on vision    outset, in terms of investment      conduct business?                             • Who are the key
   aims and                                                                                         stakeholders and are their
                and projected returns.            • What are the critical
                                                                                                    views fully understood e g
 objectives:                                        success factors?
                                                                                                    HM Treasury, DASA/DESA
                Each of these questions should    • What are the benefits? Is a
                be addressed to establish the                                                       Office of Fair Trading, IAB.
                MODs Business Model:
                                                   MoD                                                                                  Industry
                • Shared vision, aims and
                                                                                           Reputation
                  objectives?
                  •     What are we here for?                                          Successful Delivery/
                                                                              VFM     customer satisfaction     Deliver anticipated profit
                  •     What are we trying to
                                                                                         Mutual success
                        do and by when?                  Public Accountability                                    Maintain market advantage
                  •     Is there clarity over                                          Effective workforce
                                                         Flexibility to compete                                   Satisfy shareholders
                        the desired outcomes                             in future   Incentivised performance
                        and objectives?                                                                         Build industrial base
                                                          Robust industrial base        Environment with
                  •     Is there clarity on the                                         right behaviours
                        relationship required?
                • What are the key risks and
                  what are the consequences
                  if they occur? e g are
                  technological advances          Figure 2: Examples of MOD and industry drivers



                                                                                                                   Partnering Handbook | 13
• Is there senior level support in         It is important to recognise that the     objectives is a key step in forming the
  MOD for a partnering approach?           partners may have mutually                relationship along with collective
• Do prospective partners have an          exclusive objectives. MOD will seek       openness, trust and transparency.
  appetite for partnering?                 successful and affordable project
                                           delivery and require suppliers to         Once agreed, the vision, aims and
• What are the opportunities for
                                           drive down costs. Industry will seek      objectives will be incorporated
  collaborative core management
                                           to maximise shareholder value,            into the procurement strategy,
  structure and co location?
                                           market share and market advantage.        relationship management plan and
• What is the approach for                 Recognition of these different            overall team strategy/plans.
  dissolving the contract should
  circumstances make it necessary?

 Step 2: Producing partnering specific terms of business
The following advice relates to the        working to reduce relationship risks,     • A ‘senior responsible owner’ for
preparation of partnering terms of         and demonstrating that best practice        partnering who is a senior member
business and each aspect shall be          is being implemented.                       of the customer organisation for
considered for all partnering contracts.                                               the product or service.
                                           Partnering requires the                   • A clear management structure
Some of these partnering specific           establishment of an effective               including the appropriate board
terms of business relate to                management structure, supported             structure, and the terms of
commercial aspects that have               by a two way governance framework.          reference for each board.
presented MOD and industry with            Within the relationship the teams
                                                                                     • A shared ‘service level
implementation difficulty in the            delivering the business will be made
                                                                                       agreement’ with the end
past. These areas will require far         up of both MOD and industry people,
                                                                                       customer for the product or
greater clarity, rigour, consistency       on a best-for- project fully integrated
                                                                                       service.
and certainty in interpretation and        basis, avoiding “man-marking”.
                                                                                     • Clearly defined roles and
application in the future.
                                           In addition to the joint project board,     responsibilities, enshrined in a
                                           the business, sector or project should      set of structured delegations.
The following sections consider the
key factors and provide information        establish an independent ‘client’         • An agreed code of conduct
on building up a solid commercial          board within MOD, whose role is to          governing behaviours of the
base for subsequest detailed               ensure that MOD’s requirements              parties, with appropriate “steps
negotiations/contract preparation.         and objectives are met and value for        to take” for anyone who is non
                                           money is protected.                         compliant.
3.2.1 Governance                                                                     • Agreement on which tools
The purpose of governance in               In establishing management and              and processes are to be used
partnering is to ensure that the           governance arrangements you should          to discharge the day-to-day
appropriate controls are in place,         ensure that there is:                       business of the contract.
• Agreement on the governance              Acquisition teams should recognise        • The need for continuous
  structure and of the exact               that generally achieving quality and        assessment and demonstration
  processes to be used.                    timeliness is an effective way of           of VFM irrespective of whether it
• Clarity about how the governance         ensuring cost effectiveness.                is competitive or non competitive
  and assurance structures and                                                         environment.
  processes will operate and that they     VFM analysis demands an objective         • Rights to post cost major
  are aligned.                             consideration of available options          contracts (where appropriate).
• Agreement on key performance             with the aim being to reduce as far as    • Require primes to maximise
  indicators that relate to shared aims    is practicable the level of uncertainty     effective competition throughout
  and objectives, including business       in meeting the requirement.                 the supply network.
  transformation agreements.                                                         • Apply NAPNOC (No Acceptable
                                           Key factors driving best Value For          Price NO Contract) team pricing
• An agreed performance review
  mechanism in place which                 Money include;                              approach to any non competitive
  supports a robust audit process.                                                     elements of the contract.
• An agreed mechanism for                  • Clarity on the requirement/             • Agree and audit overheads and
  assessing the impact of any                capability required (generally            profit based on existing costs and
  potential change of scope.                 output based).                            revenue change prior to entering
                                           • Create and sustain a robust               the contract.
3.2.2 Achieving Value for Money              whole life ‘should cost’ model          • Assess the MoD and Industry
Value for Money is the optimum mix of        and best value baseline.                  track record with relation to
quality, time and cost considerations      • Agreement on optimal risk                 achievement of VFM in the
which meet the stated requirement.           allocation whereby risk is taken          particular sector/marketplace.
VFM analysis demands an objective            on by the party best placed to
consideration of options available to        manage it.                              3.2.3 Incentives
achieve the desired outcome.               • Clearly define and evaluate the         Contracts and relationships
                                             potential trade offs to realise         between MOD and industry should
Value for Money for the taxpayer is at       best VFM.                               be incentive based to improve
the heart of all Defence Acquisition and                                             capability delivery and ensure delivery
                                           • The need for a clear and robust
in all procurement activity value for                                                within performance, time and cost
                                             audit trail with relation to VFM        parameters. Incentives need to be
money must be continuously assessed
                                             decisions and the agreement of          seen in the light of common objectives
and demonstrated. Partnering
                                             VFM stakeholders in the decision        to which both MOD and its’ suppliers
contracts are no different and have
the same requirements as any other           making process e g Treasury,            subscribe. Principally these are:
mechanism in Value for Money terms.          DASA/DESA.
                                           • Agree incentives to reward              • To support the operational
One expression of Value for Money is;        improved efficiency, ‘better than          capability deployed by the
“the optimum mix of time cost and            usual’ performance, innovative            Commanders-in-Chief in the field,
effectiveness”                               solutions and cost reduction.             at the front line of defence.


                                                                                                        Partnering Handbook | 15
• To improve standards of service             structured, TCIF pricing offers a         “Open Book” for which MoD already
  delivery, maintain and improve              powerful incentive to continuous          has a set of policy principles.
  reliability and performance.                improvement and cost reduction in
• To drive down the through life              long term relationships, with the         It is emphasised that this guidance
  cost of ownership, from initial             benefits shared by both parties.           relates to relevant data. An insistence
  acquisition to disposal.                                                              on providing unnecessary data can
                                              The pricing mechanisms should             lead to additional cost, distraction and
• To establish equitable sharing              be supplemented by performance            frustration - hence the importance at
  arrangements of risk and reward             based incentives e g Earned Value         the start of the arrangement of agreeing
  and mutual benefit from gain                 Management and Gainshare that             the information that is required, how it
  sharing opportunities that arise.           drive continuous improvement.             will be exchanged, recorded and used.
• To maintain or enhance industrial
  competitiveness in home and                 Incentives should also include the        Key questions:
  overseas markets.                           opportunity for suppliers to gain
                                              greater returns if they are               • What is the purpose of the
• To establish a fair balance between
                                              consistently successful against             information request and how will
  value for money for the taxpayer
                                              agreed delivery metrics.                    the information be used?
  and reasonable returns to industry.
                                                                                        • Who requires the information?
                                              3.2.4 Transparency of information
In certain sectors of the defence industry,   Openness and trust underpin               • How often will the information
these factors will mean MOD and industry      successful partnering. Key to this is       need to be accessed / gathered?
engaging to develop longer term               the provision of information from all     • What are the agreements and
commercial relationships, often in            parties in the format and timescales        understandings with relation to
the form of long-term partnering.             agreed. The requirements for access         open book?
The prospect of these longer term             to information should be specified in      • What kind of information should
commercial relationships should be            the commercial arrangements between         we expect?
a major spur to good performance,             the partners and should not necessarily
                                                                                          •    Financial accounts
if supported by appropriate incentive         be confined to non-competitive
arrangements. One of the most critical        contracts. It is important that the         •    Management accounting
of these will be the selection of the         agreement is properly documented                 information
most appropriate and effective pricing        and where such required information         •    Accounting systems and
mechanism e g Firm, Fixed or Target           is not provided as agreed,early action           records
Cost Incentive Fee.                           is taken to resolve the issue.              •    Procurement policies and
                                                                                               processes
In the light of the movement towards          The transparency area will form
                                                                                          •    Technical information
high value, long term partnering,             an important element of the
MOD pricing policy is expected to             standardised terms of business work         •    Performance information
develop in the direction of the far           and further guidance on this will be             relating to previous projects
greater use of Target Cost Incentive          provided in due course. The further          •    Time sheets and other
Fee type arrangements. Properly               guidance will include information on              source data
   •    Business information             Of course, transparency works both       3.2.5 Intellectual Property Rights (IPR)
   •    Order intake details and         ways, so MOD will need to agree with     The MOD has an agreed overall strategy
        resource profiles                its partners what information it is      for dealing with IPR [AD4], approved
                                         obliged to provide, the format, how      at Ministerial level and industry are
   •    The control regime
                                         often and what the information will      aware of the principles. This should
   •    The company’s governance         be used for. Care should be taken to     be applied to partnering contracts.
        structure                        provide only that information required
   •    Information required for         to undertake the contract or project.    At the outset of partnering an
        audit purposes                   Project teams are required to:           objective assessment must be
                                                                                  carried out regarding the approach
                                         • Have a joint disclosure agreement      to IPR and user rights. Partnering
One simple means of testing                in place and a common                  provides an opportunity to engage with
whether information access/                interpretation of reciprocal           industrial partners (including their
provision under the umbrella of
                                           transparency. The disclosure           key suppliers) on IPR matters early
transparency is adding value to
                                           agreement should also include          in the life of projects, recognising the
the business that covers the points
                                           information regarding the              MoD and its partners have differing
above and can be applied by both
                                           company’s governance structure         and often conflicting interests on this
partners is to use the TAURUS test:
                                           and details of personnel and           topic. MoD’s primarily interest is in
                                           procurement processes.                 securing adequate rights of access
 Timely - Does the information reach
the recipient in time for requisite      • Operate an ‘open book’                 and use in industry’s IPR to meet its
decisions to be made?                      approach to verify cost and            future business needs in return for
                                           obtain continuing access to            the contract funding it provides. IPR
 Accurate – Is the information be-         cost, schedule and performance         owners within industry have an interest
lieved to be accurate, or accurate at      information.                           in protecting their IPR from access
the point of delivery?                   • Use the companies existing             and use by others unless with the
                                           management information system.         owner’s express consent.
Understandable – Does it make sense?       Where this does not provide the
                                           fidelity of information required        The advantages of partnering can
Relevant – Is it consistent with the       then additional requirements           best be realised by addressing the
understood use? Do you as the re-          should be agreed in advance.           following points before the main
questor really need the information?                                              procurement decision point is
                                         • Agree a definition of
                                                                                  reached on the project concerned:
                                           “allowable costs”.
 Up to Date – Is it recent enough to
                                         • Independently audit any of the         • Agree a long-term IPR strategy
still be of use?
                                           agreement information.                   for the project concerned,
 Serviceable – is the information pro-   • Ensure that the partner(s) flow           including an understanding of
vided in a format that can be easily       the above, where appropriate, into       the respective positions of MoD
used by the recipient?                     the supply network.                      and its industrial partner and



                                                                                                     Partnering Handbook | 17
   associated key suppliers, including    to use (and have used) the rights to       partnering approach it is essential
   user rights to be granted.             maintain capability and compete future     to identify the actual level of risk
• Establish plans for the                 work. This policy is followed because      involved, our respective appetites
  exploitation for of the IPR to be       the contractor is generally best placed    for risk and allocate risk to those
  generated under the contract            to exploit the IPR it creates under        best placed to manage it and exploit
  concerned, whether without or           such contracts, especially whether         opportunities where they arise.
  outside the project.                    that IPR builds upon its pre-existing      Acquisition teams should:
                                          (background) IPR. In more limited
• Agree the IPR ownership
                                          circumstances, MOD may wish to take        • Ascertain upfront the overall
  position particularly in instances
                                          ownership of the rights itself,              level of risk, the appetite to
  where suppliers may wish to
  use background IPR in their                                                          manage risk, and the basis for
                                          Partnering is less likely to provide         apportionment – which risks are
  proposed solutions.                     IPR benefits once the main contract           managed by individual partners
• Identify (as far as possible)           is placed. However benefits might             and which are to be shared.
  planned information and data            arise in situation where for example
  delivery requirements under the                                                    • Agree shared aims and objectives
                                          third party rights are identified
  contract, recognising that further                                                   (what drives industry), to maximise
                                          during the course of the project
  clarification may be required                                                         the possibility of opportunity
                                          contract that could interfere with
  during the course of the contract.                                                   realisation.
                                          contract performance or delivery.
• Establish rights to share revenue       Partnering principles can be               • Negotiate a joint ‘pain and gain’
                                          used here to establish a mutually            mechanism for shared risks (not
  arising from the contractor’s
                                          acceptable way forward.                      profit adjustment).
  permitted commercial
  exploitation of any IPR generated                                                  • Agree pricing for risk and funding
  during the contract.                    In all circumstances it is essential to      mechanism – including incentives
                                          gain expert advice from our internal         for realising opportunities.
• Put in place arrangements to
                                          IPR subject matter experts – including       Consider whether risk funding
  safeguard suppliers’ interest in
                                          when you are developing and agreeing         should be kept outside of the
  their IPR.
                                          the project specific IPR strategy. Where      pricing arrangement, to be
• Agree the arrangements for the          appropriate they will seek legal opinion     jointly managed or to be
  management of IPR.                      from our internal MOD legal team.            managed by MOD if those risks
• Agree on an exit strategy and                                                        will fall to us. The overarching
  how IPR will be handled under           3.2.6 Risk and                               financial approval must always
  that strategy.                          opportunity management                       be in the forefront of thinking.
                                          A key characteristic of partnering is      • Actively manage risks to create
On the subject of IPR ownership, MOD      joint management of risk, including          opportunities for improved
will generally follow its normal IPR      the creation of mechanisms which             business outcomes.
policy of placing ownership of rights     incentivise the proactive prevention       • Cooperate with primes to ensure
arising from contract work with the       of risk and the active exploitation          coherent treatment of risk
contractor, but securing a free licence   of opportunities. In considering a           throughout the supply network.
• Assess with industry partners          It is important that Issues should    3.2.8 Exit strategy
  whether we jointly have the            not be left to fester and strict      In any legal arrangement we must
  required skills and competences        time limits need to be applied to     recognise that there is no such thing
  to effectively manage risk and         resolution procedures.                as a ‘partner for life’. Requirements
  realise opportunities.                                                       may change or be cancelled for
• Seek to achieve commonality with       The existence of a pre-agreed         operational reasons, or partners
  industry partners in the use of risk   joint MOD and industry procedure      may fail to perform. Major Projects
  tools, techniques and practices.       demonstrates trust and confidence     are obviously not “flip in flip out”
• Consider seeking a contingency         and provides a practical method of    type contracts however it is prudent,
  fund for high impact low               resolving difficult issues quickly.   from the outset, to consider what
  probability risks that are outside                                           provisions need to be put in place
  the contract. The contingency          The key considerations:               if exit is a consideration. In forming
  must be within the overall                                                   an exit strategy, the partners should
  financial approaval.                    • Define the criteria for what        agree the criteria that would trigger
                                           constitutes an issue.               an exit and in particular establish.
• Develop supplier data and down
  selection criteria to evaluate the     • Agree an issues resolution
                                           procedure for both pre and post     • An understanding on “reasons for
  performance of suppliers, who
                                           contract periods.                     exit” e g operational reasons or
  successfully identify, mitigate and
                                         • Agree where specific                  failure to perform.
  manage risk.
                                           responsibilities and delegated      • A clear and agreed articulated
                                           authority lies within the issues      mechanism for triggering exit
3.2.7 Issue Resolution                     resolution process                    from the contract. The strategy
Like any relationship, partnering                                                needs to be creditable and realistic
                                         • Put strict time limits on the
will throw up difficult issues. The                                              and should be assured as part of
                                           resolution of issues.
terms must set out how these                                                     the assurance and governance
“issues” will be identified and          • Aim to resolve issues at the
                                                                                 process.The exit strategy also
managed through to resolution.             lowest level, but be willing to
                                                                                 has to be financed from approved
                                           escalate to senior levels in the
                                                                                 funding lines.
The essential point here is that you       event of stalemate.
                                                                               • Where appropriate, a clear
should aim to resolve problems and       • Keep senior staff informed.
                                                                                 compensation agreement in the
issues informally and at working
                                                                                 event of “exit” with associated
level without automatic recourse to      If the issues resolution procedure      financing.
formal action (ie: Dispute Resolution    is unsuccessful then it may be
Procedure). However, there will be       necessary to activate formal          • Transparency of information
occasions both pre and post contract     contractual remedies such as            regarding any factors that might
where agreement cannot be reached        Dispute Resolution. Detailed            endanger the contract.
and this is why an issues resolution     advice and guidance on Dispute        • Ownership rights regarding any
procedure is needed to ensure a clear    Resolution is available from            MOD tangible assets, or materials
route for escalation.                    DDefCP area.                            purchased under the contract.


                                                                                                  Partnering Handbook | 19
• Rights to use/exploit any                managing the expectations and           Suggested tools and approaches to
  information needed for the               perceptions of stakeholders.            aid communication:
  ongoing delivery of the product
  or service.                              Essential to this will be ensuring      • Simple organisational structures
• Arrangements to ensure that              that partners communicate a               and clear points of contact.
  Crown Servants retain adequate           unified message, both to their own      • Stakeholder maps/analysis and
  knowledge/skills/competence              staff and their wider organisations,      authority levels.
  to maintain delivery of the              utilising shared data environments,     • Regular and timely dialogue at
  product or service in the event of       co-location etc wherever possible.        all levels.
  exercising the exit strategy.            Many of these undertakings will
                                                                                   • IT, document standards and
• How to ensure ongoing security           form part of the contract terms
                                                                                     shared data environment.
  of supply, or operational                – especially obligations for senior
                                           management to meet at regular           • Annual ‘whole team’ seminars
  sovereignty, and the right to                                                      and road shows or events, jointly
  nominate certain elements of the         intervals and agreements on a
                                                                                     fronted by industry and MOD senior
  supply chain.                            common communication process
                                                                                     leaders.
                                           for instance. In support of this, a
• How to retain the services of key                                                • Joint induction programmes.
                                           communications plan should detail
  elements of the supply chain in the
                                           further how communication will be       • Joint newsletters, PR material
  event of exercising the exit strategy.
                                           maintained consistently throughout        and websites – for internal and
                                           the project life so that all people       external use.
3.2.9 Communication                        are aware of progress and success
Effective and continuing                   and are able to contribute to ideas     The RMP should detail the key
communication will play a key role         for continuous improvement, and         stakeholders right through the supply
in helping to develop partnering           that it is partnering which is making   network and how they will be involved
behaviours and culture, and in             the difference.                         and affected by a partnering approach.


 Step 3: Relationship management
Best practice relationship                 performance and delivering              Establishing and sustaining the right
management is an important                 better value for money. However,        culture and associated behaviours from
part of many successful business           with increasing technological           the outset has been identified by NAO
enterprises and it is a key factor         complexity, globalisation, industrial   and others as a critical part of overall
in making partnering contracts             consolidation and the continued         project success.
work.                                      emphasis on through life solutions,
                                           relationships between MOD and           This section sets out the MOD approach
The relationship between MOD               industry will in the future need to     to relationship management in
and industry will remain rooted            be even closer and more open to         acquisition projects including those
in continuously improving project          achieve the required outcomes.          following a partnering approach.
The section looks at the key principles     3.3.1 Establish the fundamental        • Acting in a confrontational way.
of relationship management.                 principles of the relationship         • Taking challenge as a personal
                                            Behaviour describes the way in which     criticism.
Complementary guidance is contained         people act and interact with others.   • Using knowledge or information
in the Commercial Policy Group              The Defence Values for Acquisition       as a power lever over others.
Guideline No 9, Building and Sustaining     (DVfA) (AD2) place great emphasis
                                                                                   • Automatically resorting to formal
Effective Relationships [AD5].              on using the right behaviours (link
                                                                                     communications.
                                            to the DVfA Toolkit: http://defence
MOD is not alone in placing emphasis        intranet.diiweb.r.mil.uk/NR/
on the importance of relationships          rdonlyres/08E37503-D0E8-4C0A-          You must detail the behaviours
and cultural/behavioural aspects of         B05A-FE5B98C292ED/0/Defence            expected of team members in your
contracting. Industry initiatives include   ValuesforAcquisitiontoolkitv20.ppt).   RMP and all team members should
the SBAC SC21 (Supply chains for the         The following behavioural traits      work in accordance with the DVfA.
21st century) which aims to improve         drawn from the DVfA, are helpful
relationships and effectiveness within      to gain an understanding of what is    Culture Describes the accepted
supply networks.                            essential in developing an effective   collective behaviour within a group
                                            business relationship:                 or organisation “the norm”. Effective
The readiness of the team and                                                      organisations require a common
the individuals within to partner           Positive                               set of cultural values that act as
is a critical point and the right           • Effective listening and taking       the ‘corporate glue’, driving team
preparation is essential. In simple            notice of the opinions of others.   members towards the aims and
                                                                                   objectives through commonly accepted
terms all project team members              • Considering the impact of your
                                                                                   understandings, practices and
must understand the strategy                   action on others.
                                                                                   methods. Where these values are not
for relationship building and be            • Being approachable.                  fully embedded, teams are likely to
educated and trained on the subject.
                                            • Thinking and doing “best for         suffer from inconsistent approaches
This change in approach should
                                               project”.                           and attitudes in the treatment of
not be underestimated and teams
                                            • Accepting constructive challenge     business matters. Leadership plays
should consult with groups such as                                                 a key role in developing the culture
the Partnering Support Group for               in the way it was meant.
                                                                                   of organisations, and in a partnering
advice and support.                         • Doing what you say you will do.
                                                                                   context leaders will need continually
                                            • Working flexibly.                     to display the positive behaviours and
What needs to be done?                                                             values upon which the relationship
The following sections describe                                                    depends, and actively encourage and
                                            Negative
the process for developing the                                                     support them in others.
relationship management plan.               • Being dismissive of others and
Detailed guidance and support on              “carrying on regardless”.
                                                                                   The following questions need to be
the subject can be obtained from the        • Talking down to people.              considered as the basis of the initial
Partnering Support Group.                   • Distrusting as a default.            RMP. This is a key document for any



                                                                                                      Partnering Handbook | 21
project team adopting a partnering       smart acquisition, however there is    • How will the team become
approach and information on what         now more emphasis on the MOD/            integrated and how/when will
needs to be included in the RMP          and industry business relationship       they engage with industry?
is contained in Commercial Policy        and how teams will partner.            • How will the team measure
Guideline No 9 (AD5).                    Workshops consider key objectives        each individuals ability to
                                         and challenges for the team and          partner? (Personal objectives
• Will we both need to be flexible and    enable the team to establish how         relating to partnering behaviours
  responsive to change?                  the relationship will be built and       can form part of the formal
• How will innovation be                 sustained moving forward.                performance agreement of all
  encouraged?                                                                     members).
• How is an open and transparent         Some of the areas that need to be
                                                                                • What happens to individuals
  relationship to be established and     covered in the initial workshop are:
                                                                                  (including senior members) who
  what information/data is required,                                              display non partnering behaviour
  for what purpose and when?             • How much do individual team
                                                                                  on a regular basis?
                                           members know about building
• How are risks and opportunities                                               • When will the initial strategies
                                           effective relationships and how
  jointly identified and managed?                                                  be produced e g project initiation
                                           will the team be educated on
• How important is the need to             the subject?                           documentation and procurement
  work effectively together and what                                              strategies?
  do we need to focus on (sustained      • What are the key requirements of
  improvements, cost reduction,            the business relationship – core
                                           values, ways of working, vision      The product of the initial workshop
  innovation)?
                                           and objectives?                      includes:
• Where does the importance
  of being able to work together         • Do all team members including
  rank against cost, time and              seniors understand partnering        • Key objectives including
  performance considerations?              and relationship principles and        relationship objectives and the
                                           are they fully bought into the         levels required. Agreement on
• Who is responsible for managing the
                                           concept and approach?                  core values and ways of working.
  relationship aspects of the project?
                                         • What is expected of Team Leaders     • Key issues that the team face
• What are the ethics that will shape
  the relationship?                        e g will team leaders lead by          eg the team is not educated on
                                           example and how will their             relationship/partnering issues
                                           performance in the relationship        and need support.
3.3.2 Initial relationship
                                           area be measured?                    • Identification of skills gaps and
workshop
                                         • What organisational and cultural       proposals for education and
Relationship workshops need to be
held in the early stages of project        influences are there and what          training events.
initiation. Relationship workshops are     are the likely differences           • Key risks, including barriers
similar to the “breakthrough” type         between MOD and industry               and blockers to an effective
sessions that were prevalent under         cultures and approach?                 relationship.
• Identification of a responsible           address the differences. Further        teams need to establish jointly how
  officer for relationship                  detailed advice on issues to measure    relationship management will be
  management aspects of the                and a suggested model on how to         taken forward. The steps outlined
  project.                                 conduct measurement                     above need to be repeated with
                                           is contained in Appendix B.             industry to develop what now becomes
3.3.3 Develop the relationship                                                     a joint RMP. In addition the partners
management plan                            The process of assessment is, in        need to share their experiences on the
Once the initial workshop has been         itself, a key contributor to building   subject of relationship management
                                           confidence in the relationship. There    and partnering.
completed the team needs to develop
the RMP. Detailed guidance on this is      may be instances where non advocate
                                           assessments may help if there are       The outcome of the joint work will be
contained within CPG Guideline No.
                                           issues that are proving difficult for    a joint RMP which will include:
9 (AD5). The plan needs to include
timetable for implementation.              the partners to resolve.
                                                                                   • Agreed joint vision aims and
Experience has shown that if a             These are the some of the key points      objectives.
team is new to partnering, gaining         to consider:                            • Agreed base partnering specific
an understanding of new ways of                                                      terms of business.
working, the behaviours and cultures       • What is the strategy for
                                                                                   • Agreed principles on building
required can take time. Typically a          relationship measurement? What
                                                                                     and sustaining an effective
working level understanding can take         is measured, who measures and
                                                                                     relationship.
up to 3 months and this should be            over what timeframe?
factored into the planning cycle.          • What is the process for
                                             assessment - interviews, written
                                                                                   3.3.6 Skills and training
                                                                                   Traditionally, MOD skills
3.3.4 Agree on the principles of             responses or other means?
                                                                                   requirements were determined by
relationship measurement                   • What tools will be deployed,          a procurement approach that was
In any project there will be objectives,     for example, maturity models,         often transactional by nature and
targets and key performance                  propensity to partner, critical       where individual skills development
indicators measuring performance,            success factors or dash board?        was strongly biased towards
cost and time. It should become            • Ensure that Governance and            functional competence. In the past,
the norm that we also measure the            action management is well             commercial relationships tended
effectiveness of the relationship.           defined to enable progression of       to be arms length and sometimes
                                             key issues.                           became adversarial when there
Relationship assessment and                                                        were difficult commercial issues to
                                           • How will inappropriate behaviour
management is key to enabling the                                                  resolve. With increasing pace and
                                             be dealt with?
partners to compare performance                                                    complexity in acquisition, the skills
objectively on how the relationship is     3.3.5 Engagement with industry          and behaviours we require now place
progressing, understand any differences    When potential industry partners        even greater emphasis on the ability
they may have and decide how to            have been identified, MOD and industry   to operate effectively in a partnering



                                                                                                     Partnering Handbook | 23
environment. This means that in       continuous change and sustain          establishing mutually satisfactory
addition to functional knowledge,     constructive relationships.            relationships [AD6] is central to
we expect our people, and those in                                           this policy. This is a huge challenge
industry, to be able to communicate   On the latter, the Commercial Policy   and MOD is introducing a number
and influence business outcomes,       Group Guideline No 5, Codes of         of initiatives to up skill acquisition
to be flexible and responsive to       Practice governing principles for      teams and to improve learning and
                                                                             development. These will include
                                                                             opportunities to exploit joint
                                                                             training and other education events
                                                                             to develop commercial and business
                                                                             acumen.

                                                                             Effective partnering relationships
                                                                             rely heavily on the individuals
                                                                             involved having the requisite
                                                                             skills, competences and training.
                                                                             Appendix C describes the current
                                                                             suite of partnering training
                                                                             available to MOD teams. This is
                                                                             under review to bring in further
                                                                             new courses to reflect latest
                                                                             partnering thinking and practice.


                                                                              Step 4: Compliance
                                                                             Appendix A contains a compliance
                                                                             schedule, listing those things that
                                                                             teams must do to be ready to make
                                                                             a commitment to partnering. This
                                                                             schedule will be integrated into
                                                                             the cross Department approval,
                                                                             commercial assurance and due
                                                                             diligence processes. Failure to
                                                                             comply is likely to delay the approval
                                                                             and contract award process. ■
a Appendix a
 What my team needs to do

 Initiation       • Does the project fall within the mandated policy criteria for a partnering     MANDATORY
                    contract to be considered?
 Consideration    • Is a partnering contract aligned with MOD’s industrial and competition
 of partnering      policy?                                                                        A full evaluation
 in the           • Is there clear endorsement to a partnering contract from senior decision       of these
 procurement        makers in MOD?                                                                 requirements
 strategy                                                                                          in the
                  • Has an initial relationship workshop taken place?                              procurement
                  • Is there clarity about the desired outcome, and how to define the objectives,   strategy is
 Initial key        milestones and targets in order to achieve it?                                 mandatory.
 considerations   • Is it clear what kind of relationship this business needs with its industry
                    partners and is partnering appropriate?
                  • Is it clear what resources are needed (people and money) to make a
                    partnering contract work, through life?
                  • What do we know about the track record of prospective industry partners
                    (market analysis)?
                  • How does a partnering contract offer best value for money?

 Pre-contract     • Confirm the proposals for risk allocation are equitable and that the joint      MANDATORY
 approval stage     risk management mechanisms are clearly understood and agreed.                  Produce a RMP
                  • Is there agreement on the joint governance arrangements to be                  Incorporate
 Partnering is      implemented?                                                                   partnering specific
 selected as the • Is there an agreed exit strategy and can the requirement be re-competed         terms of business
                                                                                                   into the contract.
 preferred option   effectively if necessary?                                                      Undertake
                                                                                                   MoD / Industry
 Key              • Is there an agreed process for escalating and resolving issues/disputes?       relationship
 considerations • Are there agreed metrics to measure contract performance and the                 workshops and put
 before the         health of the relationship?                                                    in place a formal
                                                                                                   measurement
 contract is      • Is the RMP ready to operate?                                                   /benchmarking
 placed           • Have the high level principles for the relationship been agreed?               mechanism for the
                                                                                                   relationship



                                                                                                Partnering Handbook | 25
Pre-contract     • Is it clear what information and data will be shared, the mechanisms for             MANDATORY
approval stage     sharing it, and the people responsible for authorising disclosure (an open           Produce a RMP
                   book environment)?                                                                   Incorporate
Partnering is    • Is the MoD/Industry team ready to partner and have they prepared correctly?          partnering
selected as        (eg have breakthrough workshops, skills assessment, training etc) been               specific terms
the preferred      carried out?                                                                         of business into
option                                                                                                  the contract.
                 • Does the team have the leadership, skills, values and attitude required to
                   establish and sustain an effective partnering arrangement?                           Undertake
Key                                                                                                     MoD/Industry
considerations   • Are customers, key stakeholders and teams in MOD and industry fully briefed
                                                                                                        relationship
before the         on the partnering contract and their respective obligations?
                                                                                                        workshops
contract is      • Have the partnering specific terms of business been incorporated into the             and put in
placed             contract?                                                                            place a formal
                                                                                                        measurement
                                                                                                        /benchmarking
                                                                                                        mechanism for
                                                                                                        the relationship

Post contract   • Confirm the process/arrangements for joint risk sharing and management post            MANDATORY
actions           contract award.
                • Put in place a programme to include relationship workshops/events, focussing on       Review the
Implement         the awareness and understanding of relationship issues.                               relationship
the RMP and     • Implement the joint relationship management and governance framework/                 regularly
partnering good   structure.                                                                            through
practice                                                                                                life using
                • Operate the disclosure/transparency strategy.
                                                                                                        the agreed
                • Implement and measure progress against the agreed partnering terms of business,       mechanism
                  aims and objectives?                                                                  and criteria,
                • Individuals have personal performance objectives relating to the partnering           and obtain
                  relationship and behaviours.                                                          independent
                • Agreed procedure working effectively for issue resolution.                            verification.
                • Use communications to let team members (and external stakeholders) know how
                  and when partnering is making a difference – celebrate the successes.
                • Ensure there is clarity over the actions and obligations of both partners, and that
                  these are managed.

                 Note: These aspects will form part of the through-life commercial assurance process.
b Appendix b
 Suggested model for relationship measurement

 B1 - Context
 Base-lining involves a               review”, is easy to understand       • Facilitate and encourage
 qualitative and quantitative         and deploy and is therefore            dialogue.
 assessment of the relationship       applicable to all stages of
 and should confirm joint                                                   • Highlight risks and consider
                                      relationship development               risk reduction activities
 understandings of how the            and throughout the project
 relationship is at that point, how   lifecycle.                           • Create (influence)
 it is to be managed and key          The benefits of holding an RMR          expectations.
 issues between the parties.          include the following:               • Build personal relationships
                                                                             between interacting
 The Relationship Management          • Develop an improved                  stakeholders.
 Review (RMR) process provides          understanding of the
 a mechanism to evaluate                customer/supplier
 relationships against a Code                                              It should be noted that
                                        relationship.
 of Practice (CoP). It could be a                                          holding a RMR will not in-
 tailored CoP, or a generic version   • Reveal opportunities for           itself fix a poorly performing
 e g SCRIA or similar.                  improvement.                       relationship, only completing
                                      • Identify issues/problems that      the improvement actions will
 The RMR process, based on              if resolved will help improve      deliver sustainable business
 the principle of “plan, do,            supply chain performance.          benefits.

 B2 - Factors to consider before conducting a RMR
 The scope and scale of               involved, the extent of the          The following critical success
 activities undertaken to             stakeholder population to be         factors should be considered:
 assess and improve supply            engaged and the objectives of
 chain relationships will be          the exercise. A decision matrix      • Senior sponsorship –
 determined by factors such as        can be constructed and used to         management from both parties
 the maturity and complexity          measure risk and complexity            must have the responsibility
 of the relationship, the risk        and to indicate the level of           and authority to dedicate
 incurred by the parties              facilitation required for the RMR.     resources and resolve issues.


                                                                                       Partnering Handbook | 27
• Commitment – both parties must            visible and agreed by both              • Resources – both parties will need
  demonstrate a commitment to               parties.                                  to make the necessary resources
  improve the relationship.               • Ownership – parties must take             available to complete the agreed
• Process and approach – the                shared responsibility for the             improvement and action plan.
  process to be used must be                resolution of issues.


B3 - RMR Process

The process suggested here                to define specific sites and locations      Understand and agree criteria
provides a structure for assessing,       to which the review relates. It is        A RMR typically takes the form of
improving and reviewing the               vitally important that the definition is   a perception appraisal, in terms
relationship between two parties,         relevant to the work to be undertaken     of face-to-face discussions, a
involving multiple stakeholders in        and that any improvement activity can     questionnaire or facilitated workshop.
both organisations who interact on        be implemented by the participants of     A data gathering tool should support
a regular basis.                          the review. In most cases, it is better   this review. It is important to reach
                                          to take a bottom-up approach rather       agreement on the approach to be
The RMR process can be broken             than top-down.                            deployed and with whom. Often,
down into four stages: planning,                                                    facilitators (internal or external) are
assessment, workshop and                  Points to consider include:               employed and arrangements have to
improvement plan.                         • The level of engagement needs           be made to allow them to complete
                                             to be appropriate for the type of      their work, particularly when working
B-3.1 Planning                               business being undertaken.             across different locations.
Relationship definition
                                          • The review should be balanced
At the outset, it is important to define                                             Information can be captured in
                                             and include all stakeholders.
the level at which the relationship is                                              3 ways: interview, workshop and
required to be managed. This may          • At least one participant from           questionnaire. All have advantages
be at company, business unit, project        each organisation must have            and disadvantages. Consequently,
or team level. For large, complex            responsibility and authority to        when developing a RMR, thought
organisations, it may also be necessary      deliver the desired actions.           should be given to the most
appropriate techniques to enable the   etc), each with a number of            Points to consider include:
process.                               characteristics (usually 5- see
Points to consider include:            the example RMM at the end             • Establishing a consensus can
                                       of this section). These are then         be difficult, but differences in
• Agree the process, tools and         consolidated by the facilitator to       perception will provide material
  techniques to be used.               develop organisation-wide views          for debate.
• Agree the timetable.                 of the relationship. Maintaining       • Encourage reinforcement of poor
                                       confidentiality of individual’s          perceptions with comments.
• Deploy stakeholder briefings and
  training where necessary.            inputs is critical to the success of
                                                                              • Focus on the relationship state
                                       this phase.
                                                                                and its’ characteristics rather than
B-3.2 Assessment                       Points to consider include:
                                                                                attempting to improve against
Understand supplier and customer                                                any sort of marking/scoring
perceptions                                                                     mechanism.
                                       • Data capture activities should
                                         run concurrently – minimising
This phase relates to the assessment
                                         the risk of cross-contamination      Gap analysis
of the relationship and usually
comprises two elements; data             of results.                          Undertaking a gap analysis of the
gathering and consolidation.           • Challenge rogue results (ie very     two sets of results will highlight
                                         low or very high).                   the major differences in perception
Data gathering using a Relationship    • Scoring mechanism should             of the relationship. The objective is
Measurement Matrix (RMM)                 not be used to compare one           to understand the key issues that
is the means of capturing                customer-supplier relationship       are impacting performance of the
the views and perceptions of             with another.                        business. Equally, there may be some
individuals within the supplier                                               trends or key themes that are worthy
and customer organisations.                                                   of discussion at the workshop.
                                       Compare perceptions
All participating stakeholders
complete a questionnaire               The two sets of data collected in      Points to consider include:
(issued by and returned to the         the previous activity are compared
facilitator), assessing areas of a     to identify where the two groups       • The gap analysis chart plots the
relationship (communications,          agree that the relationship is the       average from all participants
capability management, continuous      same and key differences that            which can obscure individual low
improvement and commercial,            impact performance.                      perceptions.


                                                                                                Partnering Handbook | 29
• Relationship improvement goals         an objective comparison between           both parties. The relationship
  should be jointly agreed by the key    the partners. Achieving consensus         characteristics table (see below)
  stakeholders of both parties.          is particularly important, as this        summarises the attributes of each
• Consistency of participants is         demonstrates agreement on a               type of relationship. Participants
  important for reviewing progress.      baseline or starting position for the     should agree which relationship
                                         relationship, prior to identifying        style is appropriate for the business
B-3.3 Workshop                           any joint improvement activity. As        being transacted between the
Discuss & capture issues                 relationship management is a two          parties and their future strategic
This activity should be conducted        way process, both parties need to         objectives and engagement plans.
jointly. Where there are known           agree and understand the other’s
to be difficult issues to address,        position.                                 Points to consider include:
the facilitator will ensure that the
discussions are kept on track and        Points to consider include:               • Think about interim targets.
personal agendas do not over-ride                                                  • Use the relationship
the purpose of the session. Similarly,   • Failure to achieve consensus              characteristics table to identify
the facilitator manage the process         typically results in a failure to         the type of relationship required.
to deliver the desired outcome, and        achieve the desired outcome.
                                                                                   • Participants must agree and own
prevent the discussion from becoming     • This step is not easy, don’t rush it.     the “to-be” target
too deeply drawn into discussion over    • Use consensus as baseline profile
particular issues.                         for future reviews.
                                                                                   B-3.4 Improvement plan
The results of the assessment                                                      Produce and update action plan
should drive the agenda, with the key    Agree the “to-be” target                  The action plan should contain the
discussion points identified during the   Having gained an understanding of         key actions agreed to meet the
data gathering and analysis.             the as-is, equally important is the       “to-be” target. Typically, these
                                         process of establishing a target to       will be set against the key themes
Agree consensus position                 be achieved during the forthcoming        / issues discussed in the workshop.
In comparing the two perceptions,        period. It is important that joint        The plan should also include a date
it should be possible to agree           agreement is reached because              for the next review, typically within
consensus on the “as-is” position.       any planned activity needs to be          6-12 months. Actions should focus
The use of an assessment tool            jointly implemented, particularly         on overcoming the perception gaps
helps considerably as it provides        as activity will be required by           and addressing those issues that
are perceived to be holding the          Report outcomes                        included as part of the regular
relationship back.                       As a minimum, all participants in      quarterly business review between the
                                         the RMR should be given a copy of      parties.
Equally, there may be issues that the    the final results and agreed action
key stakeholders are keen to promote     plan. Senior sponsors in both          As part of a closed-loop process, one
in the relationship and actions          organisations should be briefed as     of the objectives of this review is to
should support those. Completion         to the effectiveness of the process,   understand any issues or
of improvement actions within the        its outputs and recommendations for    opportunities as a consequence of
RMR cycle time may be challenging,       future events                          actions taken following the previous
therefore it is advised to focus         Points to consider include:            RMR cycle (ie method chosen, level of
attention on 5 or 6 key actions based                                           participation and deployment of the
on the outcome of the analysis and       • Involvement does not stop at the     review). This should then be taken
workshop that will help to achieve the     end of the workshop event.           forward into the planning activity for
desired relationship.                                                           the next review cycle.
                                         • Senior sponsors will want to see a
                                           return on their investment.
Points to consider include:                                                     Points to consider include:
                                         • Advertise success.
• Think about outcomes, not                                                     • Was the process deployed
  problems.                              Where are we now? (Review)               effectively (ie were the right
• Remember - achieving small             After an agreed period, established      participants included)?
  improvements is preferable to not      within the action plan, the key        • Have actions been completed and
  achieving “blue sky” targets.          stakeholders in the relationship         improvements embedded?
• The improvement action need not        should meet to review progress         • Is it appropriate to review progress
  be with the party that identified the   against the plan. This may be            and repeat the process?
  issue/problem.




                                                                                                   Partnering Handbook | 31
B4 - Relationship Management Matrix (RMM)
As part of a structured relationship                    desired relationship. It provides                          organisations who interact on a
management review process a RMM                         a mechanism to evaluate the                                regular basis.
(such as below) allows teams to                         relationship between two or more
assess their relationship against                       parties, typically a customer                              This matrix focuses on key
the chosen Code of Practice and                         – supplier relationship, involving                         elements of the relationship, each
define and characterise their                            multiple stakeholders in both                              with a number of key attributes. ■

                  0. Failing                   1. Reactive                      2. Performing                 3. Co-operative              4. Collaborative
1.                No/Limited meetings          One way (transactional)          Regular meetings &            Frequent communication.      Join strategic governance
Communication     or communications            Communication. No agreed         communication structure       Points of contact are        focused on communication,
Planning          structure with no            points of contact. Meetings      with clear and consistent     known and mapped.            relationship and performance
                  defined points of contact     focus on addressing              points of contact, Contact    Meetings focus on both       planning. stake holder maps
                                               problems/issues                  maps documented               short-term actions &         define roles & responsibilities
                                                                                                              long term planning
2. Information    Secrecy prevails. No         Information provision is         Information provision is      High quality information     High quality information is
Exchange          sharing of information.      limited to contractual           limited to contractual        (clear, accurate & timely)   freely available in a shared,
                  Reliant on formal,           obligations, clarification may    obligations, clarification     is provided in advance of    open, environment
                  written comms                still be required                may still be required         requirements.
3. Problem        Blame culture prevails,      Firefighting culture, focused     Identifies problems            Proactively suggests         Joint activity to pre-empt
Solving           no acknowledgement of        on resolution rather than        early and communicates        solutions to emergent        and mitigate any problems/
                  problems                     prevention                       recovery plans in advance.    and potential problems.      issues.
4.                No/ poor response to         Responses to enquiries           Responses to enquiries are    Responds to predicted        Responses provide
Responsiveness    enquiries and requests       are reactive and often lack      timely and compliant          requirements                 suggestions for
                                               definition                                                                                   improvement
5. Behaviour      Little/no behavioural        Recognition of different         Behaviours demonstrate        Behavioural standards        Joint behavioural charter
                  standards exist              behavioural standards            appreciation of               agreed, managed and          deployed
                                                                                professional and ethical      maintained
                                                                                standards
6.Strategic       No awareness of              Limited awareness of the         Shared awareness of           Some joint, project          Full visibility, understanding
Alignment         each other’s business        other party’s strategy. No       each other’s strategy and     specific, strategic           & alignment of strategies.
                  strategy                     activity to capture benefit or    understand impact on own      planning between the         Impacts are known and
                                               develop opportunities            strategic planning process    parties                      jointly managed
7. Through-       Through-life Capability      Recognition of Through-life      Through-life Capability       Through-life Capability      Through-life Capability
Life Capability   Management not               Capability Management            Management limited to         Management concept           Management is jointly
Management        considered                   concept. Activities limited to   contractual obligations       jointly integrated at a      embedded within business
                                               specific project requirements                                   project level                processes

8. Solution       Little/no participation in   Little, or late, participation   Solutions reflect the          Parties engaged at           Full collaborative
Developments      developing solutions         in developing solutions.         participation of both         early stage of solution      participation (multi
                                               Requirements modified to fit       parties. Investment to meet   definition. Investment to     business, cross functional
                                               current products/processes       development milestones        improve performance          teams). Investment focused
                                                                                                                                           on joint objectives
9. Value          Focus solely on cost         Concept of ‘Value’ is            ‘Value’ is considered in      ‘Value Added’ is jointly     Sophisticated measures of
                  & price - ‘Value’ not        recognised and defined            decision making               measured. Targets            ‘Value Added’ are employed.
                  defined.                                                                                     established.                 Targets achieved/exceeded.
         c Appendix c
                 training and education

  Partnering The ongoing development of           Learning (DaLearning) run          required, both as an individual
    is one of the commercial system means
               that commercial training will
                                                  the Collaborative Working          and as part of the team. There
                                                  Workshop, which aims to            should be an induction pack
   a number be continuously reviewed and          provide managers at MOD            for new entrants in which key
       of new updated where needed.               Band D/C2 level with an            principles and ways of working
commercial                                        appreciation of the theory of      are identified. Induction
               At the present time the            partnering, and a practical        can be supplemented by
   initiatives following courses are available    approach towards the               periodic refresher training
  which will which relate to partnering;          planning and implementation        and briefings at which senior
require new                                       of a partnering culture.           leaders can convey their aims
               C-1 Partnering theory                                                 and expectations. This will give
     training and practice                        DDefCP will be developing a        new entrants the opportunity
 courses to Core Competence Training              further Collaborative Working      to clarify what is expected
                                                  Event aimed at Band C1 and
    be put in Courses                                                                of them, and provides an
               There is a clear link between      above. In the meantime, there      opportunity for the leadership
        place partnering behaviours and MOD       are a number of available          to reinforce their commitment
                 core competence frameworks.      courses available aimed at the     to behavioural requirements.
                 Many of the current core         more senior members of both
                 competence training courses      MOD and industry acquisition       C-3 Initial and follow on
                 will provide awareness and       teams who require expert level     relationship workshops
                 understanding across a range     training. Advice on these should   The partnering process
                 of subjects that can then be     be sought from DDefCP.             includes an initial relationship
                 used in a partnering context.                                       workshop at which all
                 The training described below     C-2 Induction and                  team members will receive
                 is in addition to current core   refresher training                 education awareness sessions
                 competence training.             All teams will experience          on the key elements of
                                                  turnover and care must be          partnering. Following the
                 Partnering Specific Training      taken to induct new entrants       initial relationship workshops
                 Courses                          with the culture, ways of          it will be important to hold
                 Defence Acquisition              working, and the behaviours        regular follow on workshops.




                                                                                                 Partnering Handbook | 33
Follow on workshops will address
any issues that are raised during
the procurement cycle and place
emphasis on the behaviours required
and how to achieve them.

C-4 Links with practitioners in
other teams; secondment
and shadowing
One of the best sources of advice
are those “experts” who have “been
there and done it”. Increasingly,
more teams have experienced
partnering and they will be able to
share knowledge/experiences – what
went well and not so well.

Secondments, interchanges and
shadowing are other useful ways to
find out more about partnering, from
a MOD and industry perspective. ■
                                   d Appendix d
                                           Case Studies

                                           The following case                between 1992 and 1996
MOD/Augusta-                               studies comprise two              – necessitating a significant
                                                                             ramp up of manpower in the

    Westland                               examples (D1 & D3) of
                                           contractual partnering
                                                                             sector. There were no further
                                                                             programmes launched over the
                                                                             following 10 years and industry
      JPART                                and two (D2 & D4) that
                                           demonstrate a best
                                                                             found it difficult to predict when
                                                                             the planned future programmes
        Joint Partnering and               practice approach to              would come along.
Relationships Team (JPART)                 partnering.                       As a result, industry did not
 Simon Barker, MoD/Agusta-Westland JPART
                                                                             have the appropriate volume
                                           D-1.1 Why partner?                or type of work to sustain the
                                           In summer 2004, a significant      core skills onshore that were
                                           reduction in planned              needed to provide the technical,
                                           helicopter procurement spend,     airworthiness and safety support
                                           establishment of a new Future     for the platforms currently
                                           Rotorcraft Capability(FRC) IPT    in service. If these skills
                                           to review all future rotorcraft   were to be maintained cost-
                                           capability requirements and a     effectively, then the business
                                           further delay to major planned    relationship between MOD and
                                           requirements whilst the optimal   industry needed to change.
                                           way forward with this reduced     Industrial predictability of MOD
                                           budget was sought, brought        requirements and needs had to
                                           key issues to a head that         improve, but not at the expense
                                           had challenged the business       of jeopardising the military
                                           relationship between MOD and      flexibility that operational
                                           the rotorcraft industry over      commanders demand. The
                                           the previous 20 years. Major      optimal way forward appeared
                                           procurement programmes            to be to create a more solid,
                                           (Apache, Merlin Mk1 and           longer-term relationship
                                           Merlin Mk3) were all contracted   where both MOD and industry


                                                                                          Partnering Handbook | 35
would undergo a process of business       with everything that this entails. The      Heathrow Terminal
transformation. MOD would work            contract is a reminder to all of what       5 etc) to understand the key
with industry to improve its visibility   they promised to do. If it remains a        success factors.
of needs and requirements, in return      mechanism for apportioning blame         • Employment of an independent
for more cost-effective output and a      and seeking retribution at the first        organisation to undertake
commitment to sustain the critical        sign of difficulty, then a partnering       stakeholder assessments.
resource needs onshore.                   arrangement is not the solution.           This established not only the
                                                                                     willingness and appetite for
A partnering approach was assessed        D-1.2 Scope of partnering                  partnering, but also helped
as the optimal way to tackle the          Once the justification had been made        understand the stakeholder
issues. It allows the buyer supplier      that a partnering arrangement was
                                                                                     desires and issues surrounding
relationship to be retained, creates an   the best way forward, five key actions
                                                                                     the business relationship.
environment where the buyer takes         were taken by MOD and Agusta
business decisions in the knowledge       Westland, to enable a scope to be        • Full, frank and open debate
of the impact this will have on the       developed that had maximum chance          between the leaders of both
supply base and develops a mindset        of delivering the required mutually        sides of the arrangement,
of everything the buyer does, has         beneficial outcome:                         to ensure that all issues and
an impact on the suppliers ability                                                   objectives for both parties were
to perform. Creating a collaborative      • A full-time joint team with              tabled, debated and understood.
continuous improvement philosophy           independent leadership was             • Rigorous development of a suite
around this construct meant a               established – the Joint Partnering       of measures of success that would
partnering arrangement was the best         and Relationships Team                   be jointly owned and that would
way forward. Above all a partnering         (JPART) - to develop a scope             address not only the concerns
arrangement is a deal, and one where        that would deliver maximum               and issues that had been raised
it must be evident that both parties        mutual business benefit, and              in the stakeholder assessments,
benefit. It also drives a mindset that       independently challenge both             but also encapsulated the agreed
if one party is having difficulty, it is     partners to adopt as much of this        objectives identified by the
an obligation on the other party to         scope as possible. The team also         leaders.
engage, be supportive and to assist in      researched successful partnering       • The development of a
overcoming the difficulty. Without this,     arrangements existing in other           joint business case for the
the traditional blame culture remains       sectors (automotive, oil and gas,        financial and human resource
   requirements for JPART to                parties to develop a single plan      • Significant effort was put into
   enable frameworks to be                  to drive cost out, performance up       creating the right measures or
   developed between the teams to           and time down. If the “how”, is not     performance indicators. Measures
   embed partnering.                        adequately and repeatedly tackled,      were created which were truly joint
                                            then as soon as external pressures      in terms of delivery, recognising and
                                            and strains challenge the “what”,       reinforcing the objectives of both
D-1.3 Implementation                        then the working relationship           parties and they driving the right
Once the Strategic Partnering               disintegrates and traditional           behaviours within the project teams.
Agreement (SPA) was signed on 22nd          confrontation results. This has a     • Putting in place a governance
June 2006, the community embarked           massively detrimental impact on         structure which was not over-
upon the transformation journey             output and performance.                 burdensome, yet gave clarity
to implement the arrangement. In                                                    of purpose was key. A two star
no particular order or priority, the                                                policy group meets quarterly and
                                         • To support this, investment is
following have been the key activities                                              focuses on the strategic policy and
                                           being made in supporting both the
of JPART and the teams to make this                                                 direction of the arrangement and
                                           leadership and the project teams
project a success.                                                                  a one star management group,
                                           to develop and embed the same
                                           core values, the right                   meeting 6 times a year, focuses on
• JPART clearly identified to the           behaviours, strong relationships         implementation and delivery.
  leaders that “how” we are going          and a totally collaborative            • Engagement of the wider
  to work together is equally              approach to delivering the               stakeholder community is key to
  fundamental for success, as              performance outputs.                     the delivery of this arrangement.
  “what” we are going to do. JPART       • Clarity of what the arrangement is       The measures cannot be delivered
  is clear that the relationship           and what it isn’t was an important       if transformation focuses on the
  aspect is actually the harder            early step in avoiding confusion         IPTs and their industrial interfaces
  part – putting commercial                as the arrangement was flowed             alone. The activity must engage
  frameworks in place is well              out across the breadth of the            the entire value chain, from the
  understood by both parties and           community. Simply, it was not            MOD centre, through to the Front
  in a partnered environment it is         an abandonment of value for              Line Commands and out into the
  all about creating a contractual         money tools, or the competitive          rotary wing supply network.
  framework that adequately and            construct, nor was it another stick    • Partnering requires strong and
  appropriately incentivises both          to beat industry with.                   charismatic leadership to initiate,



                                                                                                    Partnering Handbook | 37
  yet if the arrangement is to endure,   arrangement is expected to deliver     groups, who feel different degrees
  investment needs to be made            is greater operational output,         of “ownership” of this arrangement,
  in enablers that minimise the          faster and cheaper than before,        which in turn influences the levels of
  impact of people churn and provide     coupled with an effective, healthy     commitment to do things differently.
  supportive frameworks for the          and sustained design authority
  teams to deliver the outputs. Effort   onshore to support current rotary      Finally, successful partnering requires
  is therefore being focused with the    wing assets. The arrangement is        a fundamental shift in the way
  HR organisations on such things        delivering greater openness through    buyer and supplier interact, without
  as codes of conduct, partnering        the earlier airing of challenges       removing the contractual basis of
  maturity models, reward,               and a confidence to share difficult    project delivery. It requires clear vision,
  incentivisation and recognition        issues which are then debated in a     strong leadership and very explicit
  frameworks, training programmes,       mature and constructive manner.        demonstration of the values and
  secondments and exchanges.                                                    behaviours that are required from the
• Finally, the arrangement needed        Industry now has greater               project teams to deliver the expected
  to build upon (and not conflict or      understanding of the issues and        performance improvement. Whilst
  confuse) the change programmes         challenges facing MOD and the          the MOD and AgustaWestland leaders
  already underway within the MOD        MOD is better informed about the       have acknowledged the importance
  and industry. Coherence with           challenges facing industry and the     of ensuring the “how” is given
  Defence Industrial Strategy (DIS)      impact programme decisions will        priority investment and attention, the
  and AgustaWestland Integration         have on the whole supply chain. The    appreciation of how difficult this part
  was a must. Everything that            project teams are now also beginning   is, and the levels of investment (time
  the SPA sets out to achieve was        to look at programmes to tackle key    and money) required to instil enduring
  consistent with the DIS, the           risks and issues collaboratively.      change is just beginning to emerge,
  Defence Values for Acquisition                                                and remains the key challenge for the
  and the AW transformation              The fundamental challenge is how       teams as they move forward. ■
  programme.                             to bring the entire value chain
                                         into positively contributing to
                                         performance improvement, so that
D-1.4 Benefits, risks                     there is one common plan across the
and challenges                           whole community. MOD in particular
The main benefit that this partnering     has a multitude of stakeholder
                                                       The UKMFTS will deliver a cost       standards of the training
UK Military Flying                                     effective, coherent, flexible and
                                                       integrated tri-service training
                                                                                            system would invariably
                                                                                            evolve to meet changing
Training System                                        capability over a 25 year
                                                       period to cater for the future
                                                                                            front line requirements.
                                                                                            UKMFTS therefore needed
                                                       flying training needs of the UK
      (UKMFTS)                                         Armed Forces. UKMFTS covers
                                                       the period from the entry of
                                                                                            to be flexible to meet these
                                                                                            constraints without undergoing
                                                                                            incessant contract revisions.
                                                       students who have passed             A Pay and Performance
  Simon Frame (Bid Evaluation & Partnering Manager)    through Aircrew Selection up
         Sue Dowdeswell (Senior Commercial Officer
                                                                                            Mechanism (PPM) which
                         and Head of Integrator/TSP)
                                                       to the point they leave UKMFTS       incentivised alignment of
                                                       ready to enter their respective      interests and goals, along with
                                                       Operational Conversion Units         a robust contractual change
                                                       (OCU).                               mechanism was therefore
                                                                                            essential.
                                                       Due to the long-term nature
                                                       of the relationship required         An extensive convergence
                                                       between industry, the MOD and        process allowed the MOD and
                                                       the three services following         industry to refine potential
                                                       an extensive procurement             procurement models which
                                                       strategy analysis and market         would meet the requirement,
                                                       sounding exercise it was             test the commercial deal
                                                       concluded that the adoption          structure including the risks
                                                       of a contractual partnering          which the MOD was seeking
                                                       approach (a form of Public           to transfer to Industry, and
                                                       Private Partnership) would           the PPM. The process also
                                                       best harness the collective          provided industry with an
                                                       skills of MOD and industry.          opportunity to develop their
                                                       The approach will utilise a mix      consortia so that they had
                                                       of Private Finance Initiative        the necessary skills to meet
                                                       (PFI) and Smart conventional         the demands of the Invitation
                                                       acquisition to deliver a series of   To Negotiate (ITN) and also
                                                       capabilities incrementally over      served to enable the wider
                                                       a 5 to 7 year period. During this    IPT and services to gain an
                                                       period (and beyond) the output       understanding of industry’s



                                                                                                        Partnering Handbook | 39
commercial drivers and motivations      This relationship was to be unlike   as MACE was also rejected on the
, which were key to breaking down       a conventional customer/supplier     grounds that the PPP/PFI nature
some of the perceived barriers to       relationship in that the ability     of UKMFTS meant that issues
working with industry in a partnering   to apply the best practice would     across the major areas would be
manner.                                 require discussion and challenging   interlinked or interdependent, and
                                        by either party. As the TSP was      numerical systems that scored bid
As a result of the incremental          expected to provide a continuously   components separately would not
approach to capability delivery         improving system, (and was to be     reveal the cumulative risk effect of
outlined above it did not make          incentivised to do so under the      seemingly small issues.
commercial sense to seek to             PPM) the achievement of which
fix price all of UKMFTS at the          would be facilitated by working in  The next step was to define exactly
outset. The intention was that          a partnering manner, Partnering     what we meant by partnering and
the requirement for these future        was grouped with continuous         how it would be evaluated. Due
capabilities would be refined and        improvement as one of the major     to the long-term nature of the
the delivery solutions developed        evaluation areas.                   relationship, during which there
jointly between the MOD, the three                                          would be numerous changes of
services and industry. This would       The other two major areas were      personnel, the definition and
require new ways of working and the     technical (training design, system  evaluation of partnering also had
evaluation process had to recognise     implementation and detailed         to address the support, direction,
that only a fraction of the bid would   solutions for the first packages    culture and long-term goals of the
feature a fully–developed technical     of work to be implemented) and      bidders parent companies, and
solution (along with its associated     commercial (legal and financial).   ultimately the MOD and services.
fixed price). A high proportion of       Each was given equal importance     After contacting numerous projects
the evaluation process therefore        (not ‘weighting’) in the evaluation and organisations, who often
focused on the bidders ability to       scheme in that the bidder had       limited their approach to defining
demonstrate the competences which       to reach a minimum standard in      appropriate behaviours, the IPT
would be required from an industry      each of the three evaluation areas. was put in touch with partnering
appointed Training System Partner       There was no weighting which        consultants [Soma Consulting Ltd]
(TSP). One of the key competences       favoured one area over another.     via the NAO. Initial work focussed
would therefore be the ability          This approach was adopted because on the IPT communicating the
to work constructively with the         the IPT wanted to make it very      approach behind the UKMFTS
multiple stakeholders that made         clear that it regarded successful   construct and jointly developing
up the MOD, services and TSPs           partnering as critical to the       with the consultants an appropriate
subcontractors over a long period       success of the UKMFTS project. A    evaluation model which would
– i.e. partnering.                      numerical weighting system such     cover the issues that we deemed
important to the success of the        – because it was more relevant. The      support and alignment for
MOD-industry relationship.             areas were:                              partnering together and with the
                                                                                MOD and services. Evaluated
The final model was based upon the     • Consortia understanding –              through interviews with
Peters and Waterman “Seven-S”            medium importance                      selected employees, customers
model which not only addressed           How the bidders understanding          and suppliers at selected
the behaviours required to sustain       of partnering is portrayed in          projects. [How the parent
a partnering relationship, but also      the tender documents, within a         companies would support
covered the background areas             specific partnering section, and       working with us in the future?]
which would require alignment            throughout their bid [how they
to support successful project            intended to work with us            To achieve stakeholder buy-in to
delivery. Some areas of the model        on UKMFTS].                         what was a novel approach and to
were defined as “critical” – being                                           provide objectivity through using
the most enduring and difficult to     • Behaviours in the bid process –     multiple viewpoints, the evaluation
change – this is where partnering        medium importance                   team consisted of a core team,
capability is demonstrated at the                                            made up of members of the IPT
strategic level. The partnering          How do behaviours exhibited
                                         by the bid teams reflect the        and Customer 2, and a larger
model and evaluation process was                                             alternating team made of additional
presented to the bidders in separate     required behaviours for a
                                         successful partnering approach.     members of the IPT, Customer 1
two-stage meetings, which allowed
                                         Evaluated through pre- and          and tri-service representatives
them to discuss the presentations
                                         post-bid response workshops         of the wider user community.
and return with questions. To
                                         to provide formative and            This and an extensive education
evaluate the background areas
                                         developmental feedback to the       and training scheme covering
which would support the bidders
                                         bid teams on group dynamics         partnering, the contract, risk and
ability to align with the MOD and
                                         and behaviours, and through         reward in payment mechanisms,
services (and vice versa) the
                                         evaluating behaviours within        PFI/PPP deals and service provision
partnering evaluation was divided
                                         negotiation meetings and solution   contracts in general helped to
into three areas. These three areas
                                         development workshops. How          address some of the concerns
were prioritised as they provided
                                         they are working now?               expressed about partnering, the
evidence with which to populate
the different areas of the model.                                            most common of which were;
prioritisation meant that when         • Underlying organisation
there was conflicting evidence, the      assessment – high importance        • Partnering is about “Fluffy-
priority went to the evidence area       How do the underlying member          bunny stuff” / “Tree hugging”/
assigned the higher importance           organisations operate to ensure       “Being Nice”.



                                                                                               Partnering Handbook | 41
• The bidders will “shampoo”            • The contract must act as an           It was anticipated that the bidder
  themselves for evaluation.              enabler not a blocker to the          which would achieve the best
• Would we obtain consistent and          project.Complex long term             partnering evaluation result would
  credible results?                       contracts require a different way     be the one that demonstrated that
• Surely Partnering won’t really be a     of working but partnering is not an   it had understood the link between
  discriminator?”                         excuse for a poor contract.           successful partnering and project
                                        • A taut contract which makes           success. Support from parent
• Partnering will undermine the                                                 organizations and key figures within
  contract”.                              clear which party is bearing and
                                          managing risk is still needed.        those bodies would also be essential
• “Partnering develops naturally                                                to ensure that the partnering approach
  anyway” [at the project level         • and bid evaluation model.
                                                                                was part of the organisational culture
  during the implementation phase].                                             and hence could be sustained and
                                        The reality and perception of equity    developed over the long-term.
                                        of treatment was of paramount           Evidence for this would be expected
The core and wider evaluation           important in what could be seen
team received additional training                                               to be found throughout the bid. Some
                                        as a ‘subjective’ evaluation area,      generic evaluation findings were:
covering partnering, evaluation         especially in view of the fact that
and interview techniques and the        (to our knowledge) a partnering
interpersonal skills and behaviours                                             • The honesty of bidders – and this
                                        evaluation of this nature had not         was consistent with customers
that were needed to work in a           been carried out before. To ensure
cooperative manner. The potential                                                 and suppliers.
                                        a coherent and consistent picture
clash between the conventional          was gathered the evaluation was         • High level of consistency within
attitude towards commercial issues      conducted by peer review of each          evidence areas.
and partnering as well as assurance     team members evaluation of the          • Clear correlation across all three
for what was a novel approach were      evidence areas and this was in            partnering evidence areas.
addressed through the then              turn collated to provide an agreed      • Use of language – appropriate
Senior Commercial Officer (SCO)         evaluation for each area. An audit        to partnering when describing
being a member of the core              trail back to relevant examples           working together at all levels.
evaluation team.                        was maintained to illustrate
                                                                                • Extremely close correlation
                                        the findings and to ensure that
The SCO was very keen to ensure that                                              with continuous improvement
                                        the collation of evidence did not
all involved were clear regarding the                                             evaluation.
                                        inadvertently change the meanings
following:                              of any findings. When each              • The bidders approach to
                                        evidence area had been collated the       partnering was reflected in the
• The contract forms part of the        interdependencies were examined           approach to the commercial and
  project environment.                  to determine the final markings.          technical areas (and vice versa).
What lessons did we learn during the   Reviewing the process it was               • Establish trust – openness and
evaluation process and through the     realised that there were some key            honesty.
latest stages?                         foundations that needed to be in           • Disagree without being
                                       place before we could attempt to             disagreeable.
• We recognised the need to align      understand, evaluate and develop a
                                                                                  • Accept and offer feedback.
  in multiple areas. Partnering        successful partnering relationship.
  is not just about behaviours.                                                   • Agree – do not impose.
  Behaviours are simply one            To ensure that the evaluation              • A need to recognise conflict as
  of the areas to be addressed.        was approached with the correct              not necessarily a bad thing and
  If Partnering is limited to          attitude we found that the following         manage it.
  behaviours it will not be            areas enabled or supported the
  successful over the longer term.     establishment of an understanding          Note: The evaluation of partnering
• We recognised how cultures           of what partnering is, what its            as part of the tender process should
  and the project environment can      role is within successful project          be approached with care especially
                                       delivery, and how industry should be       in the area of relationships and
  drive behaviours.
                                       perceived;                                 behaviours. All evaluation criteria
• We understood that Partnering
                                                                                  must be carefully considered, made
  is a key enabler to project          • Need to recognise the role of            available to potential bidders with a
  success and must feature in all        Industry e.g. ‘profit’ is not a dirty     robust audit trail for the evaluation of
  that is done – not unlike Risk         word.                                    evidence. ■
  Management.
                                       • Need to recognise the drivers for
• Language is important - to             Industry ie they need to make a
  change things we have to change        return and have a board who they
  the way we talk about them.            answer to just like we do to the IAB!.
• Partnering does not excuse           • Ability to see things from ‘their’
  the need for a robust contract,        point of view.
  clear structures and a focus on      • Industry must be incentivised to
  successful delivery.                   deliver; a robust PPM is essential
• It takes courage - if we didn’t        to align goals.
  change our behaviours nothing        • There is a relationship between
  would change.                          risk and reward – but unlimited
• Requires commitment which              risk transfer to industry is not
  requires a leadership which            commercially sustainable i.e. it
  exhibits consistent behaviours.        does not represent value for money.



                                                                                                     Partnering Handbook | 43
                                                D-3.1 Background                approval for a funding
         MOD/DML                                The decision to locate all
                                                nuclear submarine refitting
                                                                                increase in October 2001. The
                                                                                difficulties that led to this
 Partnering for the                             work in Devonport was taken
                                                in 1993 and the Dockyard was
                                                                                are documented in NAO (Dec
                                                                                02) and PAC (Nov 03) reports.
Provision of Future                             sold to DML in 1997. As part
                                                of this sale, covered in the
                                                                                The project resubmission
                                                                                allowed re-negotiation of the
 Nuclear Facilities                             Sale Agreement (SA), MOD
                                                accepted a legal liability to
                                                                                contract and the project was
                                                                                re-scoped. This re-scoping
      in Devonport                              fund the construction of new
                                                and upgraded facilities for
                                                                                resulted in certain works for
                                                                                completion of the upgrade of
                                                the refitting and refuelling    the Submarine Refit Complex
                           Dr Janice Waters     of nuclear submarines. The      (SRC) being removed from
    Project Contract Manager – SSN Facilities   D154 Project was the intended   the scope of Phase 2 with
                                                means of discharging this       the intent that they would be
                                                obligation and following        completed under a later Phase
                                                project approval from the       3 of the Project.
                                                Treasury and Ministers, the
                                                contract was let to DML, the    The NAO Report documents
                                                Nuclear Site Licensee, in       that the Department, faced
                                                March 1997 at the same time     with significant cost
                                                as the sale of the Dockyard.    increases from DML and not
                                                This original contract is       being in a strong contractual
                                                now termed D154 Phase 2,        position, considered that they
                                                initial concept and design      had little option but to
                                                development work having         re-negotiate the contract. This
                                                progressed under a series of    negotiation concluded with
                                                interim contracts known as      the Department agreeing to
                                                D154 Phase 1.                   meet the great majority of the
                                                                                cost increases to protect the
                                                During 2001 it became clear     submarine refit programme.
                                                that the approved maximum       In light of this background,
                                                cost would be exceeded and      both parties were “scarred”
                                                a resubmission to Minister      and the relationship was
                                                (DP) received Treasury          very poor, with confrontation,
protectionism and mistrust being                             100.0%
                                                                                                                                               91.9%




                                         positive response
the norm.
                                                              80.0%                                                          68.9%
In developing the way forward                                 60.0%                                        54.0%
for D154 Phase 3, the provision                               40.0%                      26.5%
of Fleet Time Docking facilities
                                                              20.0%    12.9%
and DDLP facilities (collectively
called Future Nuclear Facilities),                               0%
the NAO recommendations were                                           Jul-04            Jan-05            Oct-05            Apr-06            Nov-06 -8.1%
                                         negative response    -20.0%
addressed. In relation to the project                                                                                                 -27.0%
                                                              -40.0%
and commercial framework these                                                                                      -38.1%
related to Partnering, greater MOD                            -60.0%
hands-on management, increased                                -80.0%                              -70.6%
                                                                                -74.2%
cost visibility and control and
                                                             -100.0%
improved management of risk.
                                         D-3.2 How was this achieved?                                       Suitable commercial framework
The Project LFE document confirms         The success of the partnering                                      Commercial framework: The
that “Partnering has been very           relationship in delivering the work                                commercial framework must
successful so far with the out-turn      packages has been pinpointed to four                               be supportive of the partnering
                                         key areas:                                                         principles and ethos. It must support
of D154 Phase 3 (consisting of three
                                                                                                            co-operative problem solving rather
major packages of work) being
                                         Stakeholder/management support                                     than the more normal blame and
equivalent to a 37% confidence level
                                         Agreement of partnering principles:                                claim culture. The Future Nuclear
and all packages being delivered
                                          At the beginning of the project a set of                          Facilities Partnering Agreement
within time and to the required
                                         principles were developed and agreed                               (FNF PA) includes the partnering
specifications. The MOD/DML                                                                                  principles in the preamble. This
                                         by CE DML, and MoD stakeholders.
relationship within the team has also                                                                       is unusual for MOD contracts but
                                         This was necessary to set the
shown as complete change with the                                                                           becoming standard practice in the
                                         framework for the commercial
cluster of “Health Check” metrics        negotiations, organisation of JPT                                  wider commercial world.
tracking “to what extent are the         management structure, joint project
principles of trust, openness, honesty   execution plans and development                                    Note: A robust contract with a
and commitment being followed”           of working practices. This set the                                 thorough definition of the respective
moving from a negative 74% score to      high level vision and was regularly                                roles and responsibilities of the
a positive 92% over a two and a half     used as guidance in the early                                      parties (and the remedies in
year period (see Figure 1)”.             developmental stages.                                              the event of failure to meet the



                                                                                                                                      Partnering Handbook | 45
responsibilities) is of course           DML is incentivised (by the fee        Project board: The board is made
essential. In this context partnering    payable against KPI performance) to    up of the four senior members of
terms of business covering Issue         work with MOD. Conversely, MOD must    the JPT (the MOD and DML Team
Management would be an example of        work with DML to ensure the KPIs are   Leaders and the senior MOD and
how a contract might be supportive.,     met and the project delivers.          DML Commercial Managers) along
                                                                                with their respective MOD and
Commercial incentivisation and Key       Effective management,                  DML line managers (the project
Performance Indicators (KPIs):           governance, processes and              sponsors). The aim of the board is to
Payment of fee against KPIs is           procedures                             monitor adherence to the partnering
used to incentivise the desired          Management practices and               principles and provide a forum
behaviours and performance. The          governance: Where joint MOD/           for identification and agreement
KPIs need to                             DML decisions are required the         of partnering and behavioural
be specifically tailored to the output   relevant desk-level personnel are      development plans. The Chairman
or outcome desired but as a general      empowered to make them. The            does not have a casting vote and the
rule performance (e.g. cost, time)       aim is for decisions to be made        equal power balance on the board
requires a KPI metric on output          quickly and responsively by those      means that consensus decisions
whilst a behaviour requires a KPI        personnel with hands-on knowledge.     must be reached.
metric on input. For behavioural         Project progress and performance
change to be stimulated the              is reported in a monthly progress      Working practices and behaviours
KPIs must be targeted at the key         report, the input to which is agreed   Working practices, culture,
behavioural “sticking points” and        by MOD and DML at the working          behaviours and behavioural change:
these obviously differ from project      level and then any problems or         The time it takes to change culture
to project and are dependent upon        emerging issues and their solutions    and behaviours is not insignificant. It
the cultures and relationship            are resolved at a monthly progress     took about two years before the FNF
pertaining at the time.                  meeting, chaired by the DML team       JPT got to the tipping point. During
                                         manager and the MOD project            the period of change strong leadership
Joint schedule of services:              contract manager. Only major           is required and concerted effort by
Responsibilities of both parties         issues or those beyond the scope       managers to keep team members
are enshrined in the Partnering          of the FNF JPT are raised to a         focussed on the goals. Each group
Agreement Schedule of Services.          monthly review meeting, jointly        of people will have key members
Both parties therefore have a            chaired by CE DML and Naval Base       who consciously or unconsciously
commercial obligation to perform         Commander. This structure supports     influence group thought. By
the services and KPIs are only           the identification and agreement of     identifying, targeting and influencing
achievable if these are discharged       solutions by those people who need     the way these people think the wider
fully and correctly. This means that     to implement them.                     group culture can be changed.
Influence is possible by recognising      cynicism in both the wider MOD            and improve the relationship.
an individual’s drivers and making        and DML was used to foster a
clear their alignment with the            team determination to do things           D-3.3 Conclusion
project aims.                             differently. By fostering this team       Success of the Future Nuclear
                                          ethos, we have found that people          Facilities Partnering relationship was
Recognition of each parties needs         strive to reach or exceed targets         down to activities in four key areas:
and drivers: Both corporately and         irrespective of the fee or commercial
at the individual level, shared goals     incentivisation associated with them.
                                                                                    • stakeholder/management support
were very important. They brought
the corporate parties and individuals     Realistic targets and joint agreement     • suitable commercial framework
together with shared objectives.          of the challenges: An essential part of   • effective management, governance,
However, in the case of MOD and           enthusing a team is to have the targets     processes and procedures
DML there were also some significant       and stretch targets identified and         • working practices and behaviours
differences, such as for DML to make a    agreed by the people who are actually
profit and MOD to spend the minimum        going to deliver them. This has worked
                                                                                    Each one is crucial to the
amount of money. We found it very         well, especially for one specific
                                                                                    implementation and operation of
helpful for the parties to be open        package (the Boronation Facility)
                                                                                    effective and sustainable Partnering.
about the differences as well as our      where stretch targets were identified
similarities. In some cases “agreeing     by the team and then, crucially,
                                                                                 ‘’There is no overarching “magic bullet”
to differ” diffused tension. In a         identified as extremely difficult by
                                                                                 solution to successful establishment of
similar vein, recognition of individual   senior stakeholders. This recognition
                                                                                 the key pillars. Success comes rather
and corporate negative experiences        allowed the team to focus on success
                                                                                 from the detailed implementation
did a lot to aid understanding and        rather than feel set up to fail.
breed a shared sense of why change                                               of the partnering principles at every
needed to happen.                         Independent partnering advisor and level, at every opportunity and by
                                          metrics: Monitoring and measuring all team members. Each small re-
Non-commercial incentivisation:           trends is essential in understanding enforcement of the partnering ethos
As a general rule people enjoy            the development of the partnering      and good working practice stimulates
doing a good job and want                 relationship and where                 change in the right direction and
to contribute to a successful             improvements or interventions need each change, however small, breeds
outcome. The team, at all levels,         to be made. We used independently further change. This continues
were encouraged to show their             gathered metrics but also an           until the momentum is such that a
professionalism and as a “badge           independently chaired “focus group” tipping point is reached. The change
of honour” to prove the detractors        approach. This allowed to project      and support to good practice then
wrong. Previous bad press and             board to target activity to best alter becomes self-sustaining.’’ ■



                                                                                                       Partnering Handbook | 47
                 The driving force for the Defence Information
      Defence    Infrastructure (Future) DII(F) project is the need to
                 establish a single information infrastructure for MOD
  Information    that will enable a significant part of the Defence
                 Change Programme to be delivered. In doing this the
Infrastructure   programme aims to:

      (Future)   • Enable a defence user to
                   access their IS services at
                                                      Following a competitive
                                                      process and approval of the
                   any location both within           main gate business case, a
                   defence and remotely               private sector consortium,
                 • Enable two or more users           Atlas, was appointed as
                   to exchange information,           delivery partner in March
                   comprehend and manipulate it.      2005. Content for this case
                 • Enable any user to access          study has been drawn from the
                   any application functionality      OGC Gateway 4 Review, dated
                   they require.                      January 2006.
                 • Provide every user of DII with
                                                      At the time of the review,
                   a quality of service appropriate
                                                      the quality and strength of
                   to their operational or
                                                      the partnering relationship
                   business requirements.
                                                      was judged to be high, and
                 • Throughout the migration           approaching maturity. This
                   from current systems to            was especially evident at
                   DII(F) to deliver users a          the senior level. That is not
                   quality of service no less         to say that there were not
                   than that at the time of
                                                      outstanding issues still to
                   transfer to the IPT.
                                                      be addressed, there were,
                 • Deliver DII through an             however a decision was made
                   implementation plan that           by each partner to accept
                   responds to defence priorities.    a delay in respect of the
                 • Reduce information                 resolution of outstanding
                   infrastructure cost/seat by at     commercial matters in order
                   least 10% by April 2006.           to focus on delivery.
What was done?                             This has enabled the build and            highly likely to occur at individual site
In reaching their conclusions on           implementation phase to get up            level and which cannot be planned out
the quality of the relationship the        to speed quickly and has enabled          of the process.’’
OGC Review team identified the             major issues to be handled in a
following as being “the very best of       constructive and collaborative way.       ‘’The two parties, as one would
innovative                               • Uniquely in our experience of public      expect in a Partnering project of this
good practice’’:                           sector projects, a joint business         kind, have established a joint risk
                                           plan for MOD and Atlas has been           register. This has been done against
• There are around 1200                    prepared, to a high standard              a background of considerable
  obligations for the MOD in the           and has been distributed widely           activity and pressure on the
  DII(F) contract. The IPT has             across both organisations. The            delivery of the project. Further, the
  produced a Business Guide to             plan sets out the organisations’          two organisations have different
  the contract and a register of           joint objectives and a joint              approaches to risk categorisation,
  all of the obligations. The IPT          vision for DII(F). We see this as         scoring and management. The risk
                                           strongly motivational and an              register runs to almost 900 pages
  has also identified owners for
                                           excellent way of ensuring that            and contains almost 800 risks,
  each obligation to ensure that
                                           all concerned with DII(F) have            reflecting the complexity of a
  they can be monitored and help
                                           a clear understanding of what              project which involves roll out to a
  to ensure that they are met in a
                                           is expected to be achieved and            very wide range of stakeholders on
  timely and effective way.
                                           delivered by DII(F).                      more than 600 sites.
• The Partnering arrangements
  are effective and reach all levels                                                 The difference in approach to
  with a clear and positive steer        In addition, the following observations
                                                                                     risk management and the sheer
  coming from the very top of both       were made:
                                                                                     number of risks has meant that a
  organisations. Following the formal                                                considerable amount of work has
  contract award, both MOD and Atlas     ‘’The level of commitment,
                                                                                     been, and still needs to be, done to
  placed significant emphasis on the      understanding and support for
                                         the project is demonstrated at the          analyse, rationalise and reorganise
  development of their relationship                                                  the risk register. In order to provide
  through team building workshops        most senior levels in MOD, to the
                                         considerable benefit of the project.’’       confidence to the various boards in
  and activities. They have focussed                                                 the governance structure that the
  on working collaboratively on the                                                  key risks are being identified and
                                         ‘’We are satisfied that the project
  delivery of the programme and                                                      managed, a schedule risk analysis
                                         governance and management are
  have even been prepared to set                                                     and a cost risk analysis have been
                                         sufficiently strong and robust to identify
  aside some of the commercial                                                       applied to the risk register. We were
                                         quickly and deal with efficiently and
  matters that have arisen since                                                     satisfied that the main risks were
                                         constructively the issues and problems,
  contract award for later resolution.   which by the nature of this project, are    being managed’’ ■


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Partnering Handbook | 51