This guide will consider specific DEFCONS that prospecting suppliers need to be aware of during the procurement process, in the context of a promising and lucrative future for the defence market.
In context: the defence market is growing
There could not be a more promising time for defence suppliers to expand their business in the UK and internationally in this hugely lucrative market, with the help of DCI. As we approach 2020 and enter a new decade, the overall picture of the global defence market is that it has been growing consistently and shows no sign of slowing down. As security threats have intensified, governments around the world have increased their defence spend in response to the rapidly changing landscape, drawing upon advancements in technology and artificial intelligence to combat emerging threats from terrorism and cyber security to maintain public safety.
In the global defence market, defence expenditure is expected to grow between 3 and 4 per cent in 2020 to reach an estimated US $1.9 trillion as governments work to modernise and recapitalise their militaries. In the UK, the Ministry of Defence (MOD) spent almost £21 billion with industry in 2017-2018, accounting for over 40% of all UK central government procurement spend. The MOD alone has the fifth largest defence budget in the world which it spends with over 16,000 suppliers. DCI is here to help both new and existing defence suppliers to improve their market knowledge and increase their success in this market.
DEFCONS – what are they?
DEFCONS are relevant ‘defence conditions’ outlined by the UK MOD. They set out the standard specifications and conditions of a contract which are typically required when a supplier is invited to tender.
The DEFCONS were crafted by the MOD alongside several trade associations. Although there are more than 100 DEFCONS, each contract includes only those that are relevant to your defence contract. We have summarised the top four which defence suppliers are most likely to come in contact with.
DEFCON 534 – Prompt payment
This DEFCON is included in all contracts issued by the MOD. It requires the contractor to make provision in subcontracts for payment within a specified period not exceeding 30 days. This ensures that all suppliers and their wider supply chain are paid on time, and thereby supports all organisations who will work on the contract, no matter what their size or involvement. Prompt payment is a key issue for SMEs particularly, who depend on cash flow for their ability to trade. Failure of companies to comply with this DEFCON may result in them being prevented from winning further government contracts.
DEFCON 538 – Severability
Also included within all MOD defence contracts, the Severability condition ensures that where any condition of a contract is held to be invalid, illegal or unenforceable, it can be removed or replaced without invalidating the contract. This condition supports both buyers and suppliers, because it ensures specifications are correct and up to date without causing delays to the contract.
DEFCON 658 – Cyber
This DEFCON addresses the level of cyber security protection contractors are required to have to win defence contracts with the MOD. Every contract issued by the MOD has this DEFCON included within it. There are five different levels of risk, depending on the nature of the contract. If no degree of cyber security is needed, the contract will simply state that ‘No Action is Required’. The lowest level of mandatory cyber security needed is Cyber Essentials accreditation, which is an accreditation founded by the National Cyber Security Centre (NCSC). Cyber Essentials protects businesses against 80% of the most common cyber breaches by implementing security controls, and the certification process is very simple.
DEFCON 691 – the use of timber and wood-containing products
This specific DEFCON requires the contractor to obtain and retain evidence that the timber or wood they are using is sustainable when they are working for the MOD.
DEFCON 624 ensures that contractors do not use any asbestos unless they have been given permission in writing by the MOD. Both DEFCONS are part of a wider category of DEFCONS that require contractors and all parties involved with defence projects to have a conscious awareness of the safety and environmental impact of tools, materials and the nature of work specified in the contract.
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Knowledge of these DEFCONS will not only enhance your market knowledge of the MOD, but will also suggest how you can structure your tender bid to be successful.
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