Due Diligence

Who should read this page?

This page is primarily provided for Commercial Officers, but is also relevant to all those involved in procurement across the Ministry of Defence (MOD).

What does this page provide?

This page briefly explains what commercial Due Diligence is, shows you where you can find policy and guidance on the subject and outlines the general principles underpinning Due Diligence.

It also explains what is mandated, identifies who you can go to for advice and, sets out any relevant training and provides a list of further reading.

What is Due Diligence?

Due Diligence is an evidence based review undertaken by the Commercial Assurance and Due Diligence (CADD) Team which aims to examine the commercial maturity of major projects before contract award, and to provide the Investments Approval Board (IAB) with independent assurance that the contractual documents are consistent with the project’s main investment decision.

The main output from the Due Diligence review is a report which is issued to the project team, Commercial line management including DG Defence Commercial, Director Scrutiny and the IAB.

The objectives of the commercial Due Diligence process are to:

provide assurance that the proposed commercial arrangements will meet the approved operational requirement (Note: it will not challenge the investment decision);
promote better outcomes for Defence contracting by reducing the errors and omissions in contracts before they are signed;
complement and provide evidence to the OGC, Major Projects Review Group and internal assurance and scrutiny processes.

Where can I find policy and guidance on Due Diligence?

DIN 2008DIN04-121 – Commercial Due Diligence introduces the requirement for the due diligence process.
The CADD Due Diligence Policy and Guidance page within the Defence Intranet contains links to the following documents:
- Smart Approvals Guidance: Due Diligence Policy and Guidance – An Overview, which provides a concise introduction to the due diligence process.
- Smart Approvals Guidance Due Diligence: CADD Due Diligence Standing Instructions, which sets out the process in greater detail.
- Frequently Asked Questions.

Legal Framework

There are no specific legal requirements underpinning this process.

What is the general principle when dealing with Due Diligence?

The Due Diligence review process is undertaken before contract signature for Category A and B projects as an aid to support verification of the contract terms. It is complementary to but separate from the scrutiny and approval process in that it does not assure approval of the investment decision but rather it seeks to verify that the final commercial terms deliver the identified approval parameters as expressed in submissions to the Investment Approvals Board.

What is mandated when dealing with Due Diligence?

The requirement to undertake a Due Diligence review is mandatory for all Category A and B projects. Acquisition teams must therefore follow the procedures in the policy and guidance documents detailed above.

Who do I go to for advice?

Contact	Phone / Email	Area
DGDC CAG Commercial Assurance and Due Diligence	DGDCCAG-StaffOfficer@mod.uk	For advice on this page and the Due Diligence process.

What training is available on Due Diligence?

There is no specific commercial training on Due Diligence. However, the need for changes to the Commercial Practitioner Workshop (1 and 2) and Commercial Awareness and Practitioners Programme online training package is currently being explored, with a view to developing an appropriate module by early 2010.

What further reading might help?

The commercial Due Diligence policy and guidance should be read in conjunction with other IAB Smart Approvals guidance on the scrutiny of Category A and B projects including:

Defence Intranet content:

SMART Approvals Guidance

AOF content:

Acquisition Business - Approvals and Scrutiny

Change History

1 October 2009: This Topic added to the Toolkit for the first time to provide access to Due Diligence guidance hosted on the Defence Intranet.