The UK Ministry of Defence (MOD) spent £19.9 billion with UK industry in 2013 making it the number one customer for the nation’s manufacturing and engineering businesses.
Over the next 10 years, the MOD is forecast to spend around £160bn on equipment required to meet the objectives of its Armed Forces.
Manufacturing and engineering businesses that aren’t already supplying the MOD, either directly or through the supply chain, might be wondering how they can get some of that business.
The Defence Supplier’s Service is the MOD’s focal point for the provision of advice and guidance to companies interested in becoming UK defence suppliers. The MOD also has a Defence Contracts Online (DCO) portal which gives businesses free and instant access to all of its contract opportunities, of values over £10,000, in one place. It allows registered suppliers to search for opportunities 24/7 and receive a daily email alert notifying them of opportunities matching their company’s business activity.
Of course, it’s one thing to identify these opportunities and another entirely to go out and secure the contract. Businesses that win government contracts have to be able to demonstrate not only that they have the expertise and capacity to service the contract, but also that they are financially robust and take a strong approach to managing and reducing risk.
Here are some of my thoughts on the key issues for manufacturers bidding for MOD work, and other government contracts, to be aware of:
Supporting and managing the supply chain
An effective and stable supply chain is essential when it comes to the delivery of defence contracts, so quite understandably the MOD will be keen for any weak links in that chain to be rooted out.
Whether it be freak weather affecting the delivery of goods from a certain part of the world, or a major supplier becoming insolvent, or contractual obligations with other tier suppliers it is essential that businesses bidding for defence contracts have the necessary legal protections in place to shield them from problems lower down their own supply chain.
Contracts and operating procedures should be clearly written in a way that maximises the prospect of your business retaining title to goods in the supply chain. You should also have alternative suppliers in place who can source products quickly if a supplier does drop out of the chain for any reason.
Having the right finance in place
As a manufacturing business, there are times when your customers require you to upscale or downscale production to meet fluctuations in demand. This can put a huge strain on a business’ working capital and, in some cases, cause financial instability or business failure for those without the right funding support.
Businesses supplying to the MOD have to be well-funded, well-resourced and able to call on additional finance when needed, without overstretching their borrowing. A strong relationship with your funder, or a range of funders, is required, so regular dialogue with your professional advisers and have contingencies in place to be able to respond to the needs of the contract.
Putting health and safety first
Businesses with a proactive approach to risk management will be less exposed to the financial, as well as physical, risks attached to operating in a sector that makes things. Manufacturers with a patchy safety record will stand almost no chance of working with government departments like the MOD as the tendering process will weed out those businesses that are deemed a financial, operational and reputational risk.
Taking steps to identify and mitigate all health and safety risks and other associated regulatory issues at the earliest stage, both in your own business and your supply chain, is an essential component of getting your business fit and ready to work with government.
Focus on quality
Companies supplying to the MOD must be able to demonstrate that their systems and procedures are aligned with those of the customer. It is therefore a prerequisite for companies supplying to the MOD to be able to demonstrate they have the necessary certifications, standards and accreditations, such as ISO or AS.
Again, this involves managing the supply chain to ensure the overall quality of goods and equipment being manufactured is commensurate with those standards. Having the right contracts in place so all suppliers know what’s expected of them is a must in ensuring quality.
Staying on the right side of the law
There’s a raft of other legislation that is particularly relevant for manufacturers and their suppliers, such as the Bribery Act. For example, companies can be prosecuted under the Act even if the offence is committed abroad. It is also an offence for a company to fail to prevent bribery by those acting on its behalf, so the activity of suppliers would also fall under this.
When it comes to supplying to the MOD and other government departments, companies are often required to go over and above the minimum standards required by law.
So, whether it’s energy use, waste management, product safety certification, confidentiality, employment regulations and so on, manufacturing and engineering businesses need to ensure they have the right policies in place and robust legal documentation to protect their business.
For more information on this, or any other legal matter affecting the Manufacturing and Engineering sector, contact Simon England on 01772 258321. Simon is part of the team at Harrison Drury solicitors in Preston. We also have lawyers based in Garstang, Lancaster and Kendal.