DSG: Providing Assembly, Maintenance, Repair, and Support Services for UK Armed Forces

1. February 2013

2. Presentation to the DSSM Course Shrivenham 17 April 2013

3. Agenda • Who are DSG? • What do we do, how do we do it and where do we operate? • DSG role in the post SDSR environment • The evolving Land environment • DSG Strategy – Capacity and Capability • Capability Growth Programme • Sale • Challenges & Issues • Summary

4. The Defence Support Group • DSG is a wholly owned UK Government Trading Fund owned by the Secretary of State for Defence • Strategic capability providing Assembly, Maintenance, Repair, Overhaul, Upgrade and Support Services to the Ministry of Defence • Annual turnover of around £180 million • Employing approximately 2,700 staff in the UK as well as supporting operations overseas • The 2010 Strategic Defence & Security Review (SDSR) announced the intent to sell DSG by 2014/15

5. Mission and Vision Mission To be a trusted partner in the delivery of assembly, maintenance, repair, overhaul, upgrade and support services for the UK Armed Forces Vision Excel in Supporting Defence

6. Strategic Aims and Objectives • To concentrate on core mission of support to the UK Armed Forces • To be agile and flexible in order to support and sustain the Armed Forces’ Operational Advantage and Freedom of Action • To be integrated, wherever cost effective and appropriate, into future MOD procurement and support solutions • To provide services directly to MOD or indirectly through industry in agreement with MOD, positioned as preferred partner or sub contractor where appropriate • To continue to provide a flexible response to meet evolving Urgent Operational Requirements • To pursue wider market activity where it is complementary to the core mission • To enhance capabilities in supporting the delivery of SDSR and Army 2020 including key MOD initiatives such as the Land Equipment Support Strategy, Whole Fleet Management and Total Support Force

7. Business Delivery Headquarters Andover Main Sites Ashchurch BASTION (Afghanistan) Bovington Catterick (including IBES) Colchester (including IBES) Donnington Land Supply Donnington Sealand Stafford Stirling Warminster Support Sites Bicester Bovington Detachment Kinnegar Longmoor (including IBES) Lulworth Sennybridge In Barracks Abingdon Equipment Aldershot Support (IBES) Brawdy Chivenor Edinburgh St Athan Tidworth Wattisham Woodbridge Woolwich Mobile Support Teams Supporting operations at home and abroad, offering customers comprehensive support wherever they may be.

8. DSG Executive Management Board • The Executive Management Board is responsible for leading, directing and managing the Trading Fund effectively • Ensuring delivery of the objectives and targets set for it by the Owner, and in particular the successful implementation of an approved Corporate Strategic Plan

9. Our Capabilities:Land Equipment, Services & Systems Support • Capabilities: • Assembly, Integration & Test • Maintenance, Repair Overhaul (MRO) & Upgrade • Mobile & In-Barracks Equipment Support • Deployed Operations Support • Fielding & Storage of Vehicles • Delivering Fleet Availability • Platforms range from armoured fighting vehicles, protected patrol vehicles and light, medium and heavy trucks through to light weapons • Facilities: • 160,000 m² of strategically located workshops • Covered and Controlled Humidity Environment Storage • Test Facilities including military automotive engines and transmissions, test tracks, roller brake testing and live firing • Large custom built electro magnetic compatibility chamber

10. Our Capabilities:Platforms & Equipment Types CHALLENGER II FV430/BULLDOG WARRIOR

11. Our Capabilities:Platforms & Equipment Types TITAN &TROJAN CRARRV CVR(T) SPARTAN CVR(T) SCIMITAR

12. Our Capabilities:Platforms & Equipment Types LIGHT GUN SA-80 DROPS LAND ROVER VARIANTS

13. Our Capabilities:Electronics and Components • Largest in-service electronics and components support facility in Europe • Comprehensive capabilities with support solutions including: • Electronics • Calibration • Electro Mechanical • Instrumentation • Specialist • Crypto • Mechanical • Optical Systems • Test Solutions • Consultancy/Support Services • Mobile Support Teams • Maintenance Approved Organisations Scheme (MAOS) • Facilities include: • Purpose built electronic workshops including Class 7 clean rooms • Comprehensive manual and automated test facilities • In-house Test Solution Design Team • Classified cryptographic facility with top secret classification

14. Our Capabilities:Land Supply • Asset Management, Procurement and Provisioning team committed to providing optimised supply chain solutions • Responsible for maintaining approximately 250,000 NATO Stock Numbers • Procurement transaction activities, exceeding £200 million on behalf of Defence Equipment & Support • Utilising innovative inventory management, contracting and supply chain optimisation methods to achieve Best Value for Defence • Delivering consistently high levels of part availability to satisfy front line command requirements • Expertise to assist in demand interpretation and supply chain material flow and stock level optimisation. • Leading supply chain management

15. Our Capabilities:Support to Deployed Operations • DSG awarded main contractor status to deliver PJHQ’s Full Regeneration Capability in Camp BASTION until 2014 • Equipment Sustainability System (ESS) programme removes the need for equipment rotation by conducting forward regeneration at the front line: • maximises equipment availability for operational commanders • minimises the time that vital equipment is away from critical operations • deliver better value for Defence • Readily available pool of skilled volunteers to sustain current and future operations • Delivering DSG capabilities at the front line - supporting all operational vehicle fleet plus surveillance and communications equipment

16. DSG Transformation, Performance Improvement and Benefits Delivery • The DSG Achieving Rapid Transformation programme was established in April 2009 and quickly set about delivering efficiency improvements, cost reductions and streamlining corporate overheads • DSG has reduced operating costs by over £40M since 2008 • Implemented Operational Excellence, Enterprise Resource Planning (Baan software) and Sales & Operations Planning process pan-DSG • Improved output performance and savings for the customer • eg. Ashchurch key performance indicator improved from 70% to 98% under DSG operation, saving the customer circa £3M per year • eg.DSG Bastion providing circa £90M cost avoidance for MOD/HMT • Introduction of the DSG Capability Growth Programme which aims to shape DSG to meet future customer requirements and create an enduring DSG business

17. Working With

18. The post SDSR environment

19. Background to evolving Land Environment- 2008 to present day • Armoured Vehicle Support Initiative/Transformation (AVSI/AVST) • Urgent Operational Requirement (UOR) acquisition – not part of core therefore no long term support • SCOUT & Utility Vehicle delays • SDSR / 3 Month Exercise • DSG Sale • Army 2020 • Industry power shift – BAE SYSTEMS to new players • Delegation to Army Headquarters – new Army Operating Model • UOR into core – need long term support • Manpower Control Totals • DE&S Material Strategy • Less money, less people • 2012 Land Equipment Support Strategy LESS

20. AbTrain • Combined Turnover £390M • Combined Total Staff 7600 CAMRO Merger – The Creation of DSG 1 Apr 08 Savings to date Circa £40M Benefits £12.1M • Combined Turnover £280M • Combined Staff 4800 • Turnover £226M • Staff 3600 • Turnover £180M • Staff 2800 2002/03 2007/08 2008/09 2012/13 2001/02

21. Turnover Headcount Merger announced C2OP & LABU Closure Complete Land Supply Trading Fund Headcount vs Turnover Cumulative Savings (£M) 1.4 12.1 13.8 13.8 20.2 29.5 33.4

22. The Strategy The Strategy – Capacity and Capability Strand 1 – To align DSG capacity with customer demand Strand 2 – To develop enduring DSG capabilities to ensure viability

23. Viable & Enduring • Potential to be • - Fleet Management organisation • But environment changing • SDSR • Budget • Sale • Delivered • Output • Quality • Cost reductions • lost LABU but expanded capability } Customer Reqt Strategic Summary Then Now Future Capacity Capability

24. CGP Project 2 (Phase 2) FM Rollout Capability Growth Programme Wave 1 CGP Core Programme Team CGP Core Programme Team ( CGP Project 1Light Weapons Strategic Support Supplier CGP Project 2(Phase 1) Army FM Pilot CGP Project 3 TOTAL SUPPORT FORCE/Joint Endeavour for Maintenance + Repair Optimisation (JEMRO) CGP Project 4Project BARNDALE (Footprint) CGP Project 5Ashchurch Future Equipment Redeployment Hub Forward Op HERRICK Exchange Point

25. Building on our successes – evidence based growth Composite assembly Upgrade & AIT Spares support to PPV in theatre

26. Building on our successes – evidence based growth Deployed Support “Regeneration means doing more than Level 3 work - not quite base overhaul, but not far off.” “We have already exceeded the figures that we originally put in the business case in terms of savings achieved from the facility.“ Commodore Walker, UK Commander Joint Force Support, Afghanistan.

27. Building on our successes – evidence based growth Reinforcing Fleet “DSG has definitely kept its part of the bargain. They have been quick to make up deficiencies and have fixed every problem. They have been proactive and helpful and know their stuff.” SO2 G3 Eqpt ES Branch, HQ 3 Div “This is what good looks like.” Senior Army HQ Officer

28. Assembly Integration & Test Receipt/ Inspection Storage MRO & Upgrade Receipt Disposal Land District Load Storage Spares Provisioning/Procurement/ Inventory Management SparesProvisioning/Procurement/ Inventory Management Deployed Support Inspection/ Fielding Capability Growth 2013 and beyond OTEP, LTF(W), RF End to End support to the Land Fleet across the 4 fleet concept - Operational, Training, Basic Unit Holdings, Sustainment

29. DSG HERRICK Drawdown Capability Growth Programme New Commercial Arrangement ECBU Tornado OSD Challenges & Issues SALE Land Equipment Support Strategy SDSR/PR12 Platform Reductions? Whole Force Concept/ TSF Ashchurch departure Army HQ Land Fleet Requirement

30. Summary • Recognised role for DSG at the heart of support to UK Armed Forces and wider MOD • Achieving ‘best value for defence’ through focusing on and delivering, cost reduction, efficiency and productivity improvements • Evolving to meet changing support environment • Exploiting opportunities such as Army 2020, Land Equipment Support Strategy and Fleet Management • Full implications to DSG of 2010 Strategic Defence & Security Review still remain uncertain – but clear intent by MOD to sell assets by 2014/15 • Sale is subject to a value analysis by MOD, for now DSG remains a Trading Fund of the MOD and its relationship with MOD and Industry is business as usual