More Effective Contracting

This page is an extract from the full topic guidance on More Effective Contracting [62KB PDF]. It details any Constraints associated with More Effective Contracting, provides a summary of the Authoritative Guidance and lists any essential reading, further reading or associated documents.

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Constraints

None.

Authoritative Guidance Summary

More Effective Contracting (MEC) is an acquisition initiative that seeks to promote the application of good practice using proven project management tools to both de-risk programmes and prevent either MOD or suppliers becoming over committed. It has particular relevance where there is technology risk. It also looks to adopt a more consistent approach to contracting across the Department with a sharper focus on bringing equipment / services into service with greater speed and agility. Key to the success of the initiative is the development of relationships with our partners in Industry formed on mutual trust and openness.

The main features are:

Separate contracts for each acquisition stage to reduce the risk of over commitment;
Progress from stage to stage subject to achieving maturity levels (Technology Readiness Levels (TRLs));
Explicit Go / No Go criteria between stages;
Earned Value Management (EVM) and anchor milestones to measure project performance objectively;
Target Cost Incentive Fee (TCIF) as the preferred pricing method for Assessment and Development contracts;
Incentives that recognise and reward consistently high performance;
Vehicle for improved working relationships, greater openness and effective communication both ways.

Whilst it is recognised that ‘one size will not fit all’ MEC should be considered for all types of acquisition involving technology risks (including system integration aspects and capability upgrades to existing platforms) irrespective of where the requirement sits in the CADMID / CADMIT cycle. Technology risk does not solely exist where new technologies are present, e.g. integration of existing technology onto platforms and the use of Commercial Off the Shelf elements in new applications.

What to consider for the contract:

Establish explicit expectations with the supplier;
Include a mechanism that deals with review, and possible exit, in the event of changed requirements or poor project progress;
Ensure that EVM and anchor milestones are applied coherently to inform project performance and, where appropriate, payment;
Secure Intellectual Property Rights (IPR) that provide MOD with the scope to change direction or to choose alternative approaches without compromising long term value for money;
Selecting the optimum pricing approach if TCIF is not appropriate;
Securing priced options for subsequent stages (where maturity levels allow this) and to vary contract quantities in the future;
Require suppliers to say how they will apply MEC down the supply chain and to provide MOD with adequate visibility of the sub contract procurement plans and assumptions

More Effective Contracting

Constraints

Authoritative Guidance Summary

Associated Docs

Further Reading

Change History