16 Oct 2019

DIO: Commercial Transformation in Defence Infrastructure

The Defence Infrastructure Organisation (DIO) plays a vital role in supporting the UK’s Armed Forces by building, maintaining and servicing the infrastructure needed to support defence and is responsible for enabling defence people to live, work, train and deploy at home and overseas.

Last year saw the launch of the DIOMO Commercial Strategy, which outlined the steps to be taken to make it easier for the supply chain to engage with the organisation.

The strategy contains five guiding principles to support the delivery of DIO’s vision and outlines how the organisation will improve to better serve its customers and work with suppliers.

These principles – We will be easier to do business with; We will work faster and smarter for our customers; We will have a broader and more diverse supply base; We will engage meaningfully with our stakeholders; and We will focus on value, not price: or the ‘We wills’ – define the vision for the Commercial Strategy, and already significant progress has been made in their delivery.

Speaking earlier this year, DIO’s Commercial Director Jacqui Rock, delivered a progress update on DIO’s commercial transformation.

On the first – We will be easier to do business with – Ms Rock explained: “I met with our supplier base and asked how it feels to do business with defence and with DIO. By gaining this understanding, I was able to put a programme in place to make sure that we are consistent, proportionate and transparent with how that end-to-end process works.

“We want to be open and transparent in procurement. This is going to increase our choice of suppliers and I absolutely believe we can reduce the cost of business because of the bidding activity.”

It is envisaged that a new category-led strategic environment will also improve engagement with suppliers.

“All the strategic decisions across the MOD estate are done by categories – such as Hard FM, Soft FM, Construction, PFI and Utilities.

“I have introduced commercial category managers from the private sector to come in with that industry expertise to work in DIO and work with the Front Line Commands in order to deliver our estate.”

We will work faster and smarter for our customers centres on early engagement, not just with the Front Line Commands but also with suppliers. Ms Rock says it’s about looking strategically and collaboratively at longer-term plans and putting those business cases at the front of the process.

Greater strategic collaboration across government will also help to deliver a more considered approach to the publishing of the larger frameworks.

Ms Rock noted: “We are now able to work strategically with suppliers and ensure we are all connected. One of the important things about that is that, for the first time, we as a government can now be very aware of the impact we have on the market.

“There have been times when I’ve launched very large procurements at the same time as the Health or Justice departments – in the same industries and in the same arena. This collaborative approach means we now have a much more strategic outlook.”

The principle of We will have a broader and more diverse supply base is all about SME engagement and reaping the rewards that this brings.

Ms Rock commented: “It is one of my key objectives to increase the diversification in the supplier base. It’s about delivering a range of services and the different innovation that it brings to defence. With a more diverse supplier base we will increase the value to taxpayers and growth by generating true competition and opportunity that is unhindered by a supplier’s size and experience with DIO.”

DIO’s shift from a contracts administration business to a value added commercial function with Front Line Commands and suppliers is at the forefront of We will engage meaningfully with our stakeholders.

“It is our job as commercial experts to bring innovation and new ideas in partnership with our suppliers into our stakeholders. When it comes to procurement, I want to exploit technology to make that process as streamlined and as automated as possible. This would allow us to focus a lot more on adding strategic value up-front and carrying out effective contract management,” said Ms Rock.

In the past, procurement was focused on cost and driving down the price. We will focus on value, not price sets out to change this mentality.

Ms Rock explained: “I committed to change and to modernise the way DIO procures, and feedback would indicate that our suppliers are now starting to feel this difference.

“The way we manage the tender process is changing. There will be a lot more site visits, a significant number of workshops at framework level and lots of face-to-face senior executive meetings.

“The key message is we are changing how we procure and the award criteria to increase focus on collaboration and behaviours.”

DIO followed up its Commercial Strategy with the release of its Procurement Plan, outlining its strategy on construction and infrastructure. This marks the first time the organisation has outlined its priorities to existing and potential suppliers.

Ms Rock is also keen to highlight the opportunities available to suppliers through the Defence Estate Optimisation Programme. The 25-year strategy was published in 2016 to optimise the defence estate and meet future military requirements.

The defence estate currently accounts for approximately 1.8% of the UK’s land mass, with over 40% of the estate being over 50 years old. Managing an ageing estate of this size diminishes the MOD’s capability to support the future needs of the UK Armed Forces, or indeed to represent the best value for the taxpayer.

By creating a smaller and more focused estate, investment can be directed to enduring sites to meet military requirements and increase prosperity for the surrounding communities.

The £4 billion committed by the programme to developing the defence estate will create and sustain jobs in the construction industry, while the release of sites that the MOD no longer needs provides opportunities for a wide range of commercial uses, creating regeneration, business growth and local jobs.

The type of work undertaken by DIO is incredibly wide-ranging. Recently, a number of contracts have been awarded including housing renovation projects in Bassingbourn, Gillingham and Ickenham; the installation of fixed cranes on a jetty in Portsmouth Harbour; and the resurfacing of roads in Woolwich, Wyton and Chepstow.

Ms Rock, said: “The opportunities for suppliers to get involved on the Defence Estate Optimisation Programme are vast. It touches construction, disposals, new builds, family accommodations – it touches everything.”

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