Recommendation 13

HM Government Accepted in Part

Defence is investing £1.5 billion over ten years in the acquisition and development of new technologies in: SDA; Intelligence, Surveillance and Reconnaissance (ISR); Command and Control (C2); and Space Control (£1.4 billion from the 2020 Spending Review allocation and £120 million of innovation funding). This is in addition to around £5 billion over a ten-year period to enhance our satellite communication capabilities (SKYNET). We will work closely with commercial providers to achieve our goals. This investment will play a part in stimulating innovation, commercialisation, and growth across the wider sector, from which UK industry is already benefitting, both directly and indirectly. Procurement of the DSP will also adhere to the principles set out in the Defence and Security Industrial Strategy (DSIS), including identifying and rapidly exploiting new and emergent technologies to develop and sustain a thriving industrial base. The MOD and BEIS are working on a Space Sector Policy that will build on DSIS principles and set out how we intend to encourage growth and enhance resilience across the sector. This work forms part of the implementation of the 2021 National Space Strategy. As part of this, BEIS will set out how the government will build on the UK’s regulatory leadership to further support the growth of the sector. This reflects the commitments set out earlier this year in the Government’s first ever Plan for Space Sustainability to review our orbital regulatory framework to assess if there is even more that can be done to build an attractive business environment. We are continuing to develop ways of attracting new and non-traditional suppliers into the defence supply-chain. Defence published the Small Medium-sized Enterprise (SME) Action Plan in January 2022, which outlines how we will remove barriers to entry for smaller suppliers, including specific commitments about improving access to opportunities and supporting innovation through supply-chain development programmes. These commitments will help to shape our future procurement under the DSP, as will the implementation of the Cabinet Office Social Value Model in our competitive procurements and consideration of the levelling up agenda. Defence is also working with the National Security Strategic Investment Fund and space-focussed Venture Capital companies to access start-ups and explore opportunities to accelerate innovative technologies, promote SME growth, prosperity and the UK’s technical competency. We recognise that by far the single largest Defence space programme is SKYNET and are committed to achieving the best outcomes for both Defence and the UK in its procurement. We recognise the opportunity to re-invest in UK talent and supply chains both to safeguard its longer-term capabilities and provide coherence and direction in which technologies UK industry should focus on developing and, where possible, establish global leadership. The MOD will use the opportunity presented by the SKYNET Enduring Capability procurement to set the conditions for a sustainable and competitive onshore industry. The programme has set a clear requirement for “Technological Capital” to be based in the UK and for critical technologies to be sourced from UK supply chains. This will help to ensure that the UK maintains the ability to design and manufacture world-class military communications satellites in the UK and contributes to our Operational Independence. as part of the programme’s social value, both of which are likely to drive geographically diverse investments. Our approach is also not just focused on assembling satellites in the UK, but on developing and maintaining the skills required to design, manufacture and operate the high-end technology delivered through the programme, providing the UK with a both military and industrial advantage over competitors. In most cases, this investment will need to be sustained by future cross-government business and exports, but the MOD’s role as anchor client will underpin the investment required to develop capabilities which can provide advantage in other commercial and military markets. Update on SKYNET programme • The SKYNET Programme’s objective is to continue to maintain existing satellite and other communications services and provide a new space-based communications capability from 2026 out to 2041 and beyond. It consists of 3 main delivery workstreams: Service Delivery Wrap, SKYNET 6A, and SKYNET 6 Enduring Capability. • Service Delivery Wrap (SDW) replaces the SKYNET 5 Private Finance Initiative (PFI) service delivery arrangements to provide contractor-supported space operations and resolve obsolescence in the ground and end user segments of the system. This approach will enable the MOD to rebuild a cadre of suitably qualified and experienced personnel to re-establish its capability as an “intelligent” owner/ operator. The SDW contract has been competed, with four strong bids to provide services from no later than an