Agile acquisition & rapid delivery in Defence – dealing with VUCA

The purpose of Defence is, of course, to react, adapt and overcome. That job is executed by the Armed Forces. And supported through a chain of decision and action from Commands and from Whitehall – plans, commitments, incentives placed into people and supply chains.

Thus, agile acquisition and rapid delivery – a theme of Defence Security & Equipment International (DSEI) 2023 – is a ‘system’ challenge. And it is a challenge made increasingly acute because the whole endeavour is buffeted by volatility, uncertainty, complexity and ambiguity (VUCA) acting on our ways and means of delivery.

In this series of articles, we explore the topic of agile acquisition and rapid delivery in the context of VUCA. This is to contribute to the industry debate and the themes of the latest Defence Command Paper issued in July: Defence’s response to a more contested and volatile world. ¹

Instability and unpredictability are the salient features of current geopolitics. These features emerge from increasingly pressured government budgets, post-COVID adjustment, inflationary uncertainty, the next evolution of disruptive technology, military and supply chain shifts resulting from various sources of geopolitical tension in recent years.

In response, we see:

• New defence programmes. In this year’s Government Major Projects Portfolio (GMPP) list, the number of defence programmes has increased from 36 projects in 2021 to 52 in 2023.2 They are now the most of any UK government department and double that in number of second placed (see Figure 1).
• Internationalised programmes. These mirror new geopolitical partnerships and the recognition that the cost of high-end defence acquisition needs to be shared. For example, AUKUS submarines, TEMPEST combat air, NSIGN global ships support – all seeking new thinking, across borders and globally.
• Variable performance. The number of defence programmes in “Red” or “Amber” status is substantive (see Figure 2). This is due to programmes drifting towards the limits of their cost and schedule approvals, but it is not wholly surprising given the context in which these programmes operate.

Context is everything. Dealing with VUCA and strategic risk.

Context is everything. It is easy to criticise Defence for the variability in programme performance seen in Figure 2. Under-performance is not acceptable when one considers what is at stake in terms of miliary capability output. However, that variability can be explained (and thus addressed) when we recognise two causal factors.

Firstly, there is VUCA. The macro-level picture mentioned (i.e. geopolitics, disruptive tech) translates directly into large-scale acquisition and delivery programmes operating under VUCA. That uncertainty is corrosive of action, particularly the actions and commitments needed to drive long-term innovation. It makes planning harder as there becomes a need to keep options open, and it causes sponsors to forestall on key decisions – which is, in turn, costly if there are large industrial bases to service. It also creates risks of obsolescence, as long development timelines run alongside shifts in market and military relevance.

Secondly, there is non-transferrable, strategic risk. The MOD is the ‘lender of last resort’ in the largest, most critical programmes. Key areas of Defence are non-tradeable nor substitutable. There are few secondary markets for the Customer. So, if programmes falter in delivery, the strategic risk is often with the taxpayer. This can be seen through the sheer number of single-source programmes in maritime, nuclear and air. ⁴ There are limited sourcing opportunities across the sector, and even the need for direct government intervention in the sub-tier industrial base to support or take on what are otherwise commercial entities.

Achieving agile acquisition and rapid delivery is a systemic challenge that needs system-wide thinking and orchestrated action.

Responding to the agility and delivery challenge.

How can major defence programmes acquire with agility and deliver rapidly, when they operate within an increasingly volatile, uncertainty, complex and ambiguous (VUCA) environment?

If we break-down “VUCA”, there are several responses we have seen and where we have supported implementation in major defence programmes ranging from Dreadnought, Tempest, Complex Weapons, Land Equipment and Defence Intelligence. These responses are summarised in Figure 3.

Figure 3 shows how major defence programmes need to consider VUCA in its component parts, as the responses can vary.

At Deloitte, we employ a “VUCA Diagnostic Tool”, used extensively both in Defence and other GMPPs. This identifies specific capabilities and initiatives for calibrating major programmes based on their VUCA profile, some tagged in Figure 3.

Moreover, if we consider those programmes as a ‘whole system’, they need orchestration based on three major moves. Major defence programme succeed when they:

1. Bring government and industry together in collaborative constructs that ‘partner for success’;
2. Build the capability to look forwards, to ‘scan for failure’ and actively manage the future; and
3. Nurture resilient teams that recognise human dynamics in harnessing digital means.

We will cover these issues in turn in a series of articles over the next weeks.

References

1. Defence Command Paper 2023: Defence’s response to a more contested and volatile world - GOV.UK (www.gov.uk)

2. IPA-Annual-report-2022-2023.pdf (publishing.service.gov.uk)

3. IPA-Annual-report-2022-2023.pdf (publishing.service.gov.uk)

4. There are 535 single-source contract to the UK MOD classed as Qualifying Defence Contracts or Sub-Contracts by the Single Source Regulation Office in 2023 at a total contract
price of £84Bn (SSRO, link)

5. For example, HMG’s acquisition of Sheffield Forgemasters International Ltd in 2021

6. What VUCA Really Means for You (hbr.org)