Recommendation 10

HM Government Accepted

The war in Ukraine has reasserted the importance of a robust defence industrial base that also contributes to our economic growth and prosperity. Since 2021, the MOD has applied the Cabinet Office Social Value Model to all its in-scope competitive procurements and in doing so contributes to delivery of the Government’s key policy objectives, including creation of new businesses, jobs and skills, and increased supply chain resilience and 6 Aviation Procurement: Winging It?: Government Response capacity. Recent estimates show that MOD expenditure with UK industry supports around 209,000 jobs nationwide, and the most recent Joint Economic Data Hub report also demonstrates the important contribution industry is making to the UK industrial base. The report shows that of the £15.5 billion spent in 2021 by surveyed companies on supply chain purchases, 76.9% of these were with UK registered suppliers, which shows the important investment industry is making in the UK. The Defence and Security Industrial Strategy (DSIS) recognised defence industries as strategic capabilities in their own right, and ensured that industrial implications were considered as early as possible in the procurement and contracting process. Furthermore, the recent DCP refresh emphasised the need for the MOD and industry to work even more closely together, forging a new alliance that underpins our credibility as a fighting force, demonstrates our dependability as an ally, and deters our adversaries. The MOD will also provide greater clarity on our future requirements, including where we require industrial capabilities to be sustained or developed in the UK. Alongside a hard-nosed and operationally-informed focus on industrial capability, whether that is the ability to design, manufacture, integrate systems, test and assure, or support and upgrade a capability through-life, this will give a clear signal to industry to invest in the UK. The MOD is also actively engaged in de-risking critical defence supply chain vulnerabilities collaboratively with industry. The global supply chain will still be crucial to the resilience of the UK’s defence industrial base and the effectiveness of our Armed Forces within an increasingly contested world, and we will work with our closest international partners to improve our collective resilience. As set out in the DSIS, we continue to identify critical pinch points in our supply chains to enable us to make informed decisions around how and if to intervene. This will be guided by, but not limited to, the priorities in the DCP refresh, our category management prioritisation, and the work we have already done via the Defence Suppliers’ Forum identifying critical components and raw materials that matter most to both the MOD and industry. Air Mobility