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MOD DII(F) The final countdown
The UK Ministry of Defence (MoD) is due to announce the preferred supplier for its Defence Information Infrastructure (Future) (DII(F)) programme within the next few weeks. Here, Georgina O’Toole takes a look at the background to this £4bn+ programme and analyses the strengths and weaknesses of the final two bidders...
Today the MoD has multiple bespoke IT systems in place that have been developed by individual units within the forces. Some networks serve as many as 15,000 personnel, while others are just local area networks (LANs) with a few users. Many of the information and communications technologies are incapable of interoperating making it hard for forces to communicate, for example between the headquarters and the battlefield. Perhaps unsurprising then that several years ago the MoD realised one of its fundamental requirements was for a single IT infrastructure, achieving coherence between the fixed and deployed environments.
Consequently the Defence Information Infrastructure programme, run by the MoD’s Corporate Business Applications (CBA) Integrated Project Team (IPT), was borne in October 2000. The programme sits at the heart of the Defence Change Programme (DCP) and is the foundation for Network Enabled Capability (NEC). The aim is to link more than 300,000 users at 2,000 locations across the UK and at deployed headquarters worldwide. Several future programmes have assumed use of DII(F) infrastructure including Combined Operational Command System (COCS), Defence Estates management information system (Project Alexander), and the Defence Medical Information Capability Programme (DMICP).
Defence Information Infrastructure (Future) or DII(F) is the third ‘pillar’ of the programme; the first two were DII (Current) and DII (Convergent). DII (Current) was established to maintain existing levels of service through current systems and services and minor enhancements required by the business. DII (Convergent) is the interim phase with the objective of ensuring all resources on Information Infrastructure work towards the future aims of DII. Finally DII (Future) is aimed at putting new commercial arrangements in place for the delivery of DII services across the MoD.
The Efficiency Review highlighted several benefits of DII including reduced downtime, increased reliability of systems, ‘process-related’ efficiencies, and having a single secure-network instead of seven different ones. Efficiency savings of £170m are expected over the life of the contract: £43m in the first year, £66m in the second year and £65m in the third year. The savings are classed as “non-cashable” meaning that rather than coming from a reduction in staff or assets, they will come from improved productivity.
The timetable
One of the biggest challenges for the MoD has been the identification of legacy systems in planning for connectivity between new and existing systems. Approximately 300 have now been identified and during 2004 an ‘assessment phase’ was undertaken to identify which systems and applications are still required, which should remain standalone for integration or security reasons (last resort) and how existing system capabilities can be replicated.
In parallel the MoD has been embroiled in the tender process to select a commercial partner (see below). When the winning consortium is selected (Q105), it will be selected based on its ability to deliver the complete ten-year requirement, but initially the MoD will only commit to Increment 1 of the DII(F) programme. Increment 1 will focus on the ‘maritime’ (leaving time for the Army’s Bowman* implementation to be completed). Increment 1 design, development and testing will be completed by Q107 with the rollout continuing through to 2010. The MoD will only commit to Increment 2 and 3 with its chosen partner once the first phase has proven successful. Increment 2 and 3 will focus on land and air.
*Bowman: Battlefield voice and data communications
The search for a commercial partner
The DII(F) Programme is one of the biggest contracts ever let to S/ITS suppliers representing an estimated £4bn revenue opportunity. The initial contenders, short-listed after an initial pre-qualification phase in 2003, read like a ‘Who’s Who’ of the IT industry:
Atlas (EDS (prime), Fujitsu, Cogent, General Dynamics, LogicaCMG)
IBM (IBM (prime), BAE Systems, Computacenter, Steria, ntl, Echelon)
Lockheed Martin (Lockheed Martin (prime), Deloitte, Hewlett Packard, Qinetiq, SAIC, Unisys)
Radii (CSC (prime), BT, Capgemini, Thales UK)
In Dec. 03 the IBM consortium was dropped from the shortlist leaving Atlas, Lockheed Martin and Radii in the ‘Negotiation and Due Diligence Phase’ beginning on 19th Jan 04. The MoD stated that the successful bids had been “stronger and of a standard”. However, in Mar. 04, Lockheed Martin dropped out of the race stating that it was unable to submit a bid that was both compliant with the MoD’s requirements and acceptable to its shareholders. So then it was down to two: Atlas and Radii.
Another twist came in May 2004 when both IBM and HP (previously a member of the Lockheed Martin consortium) joined the Atlas Consortium, upping the consortium’s members to seven. EDS, Atlas’ prime supplier (with Fujitsu), stated that it wanted IBM to join for its consulting skills and HP for its security expertise.
Having submitted Best and Final Offers (BAFO) in November 2004, the EDS-led and CSC-led consortia have had to demonstrate their solution to 25 users across the MoD and give a presentation on ‘strategic fit’. D-Day for the Atlas and Radii Consortia is imminent with the preferred supplier announcement expected in February or March 2005.
So, what does the MoD require from its partner?
At the most basic level, the winning consortia will need to be able to design, develop and manage a large scale technology implementation including:
Networks, servers, terminals, printers and associated operating software
Core services (for example, security authentications and DNS)
Productivity tools including office automation
Messaging systems to exchange e-mail with other users of the systems and groups outside the system
Web services
Directory Services
Access to Gateway Services
Ability to host corporate, business unit and local applications
However, neither consortium will have a problem providing the technology (they wouldn’t have got past the first hurdle without this ability, let alone into the shortlist), so the MoD will look at a much wider-reaching set of requirements. We have identified a number of characteristics that the winning consortium will need to display:
No single point of failure: This requirement is high on the MoD’s list of priorities and is intended to reduce the risk associated with the programme. From day one, the MoD has made clear that it must be possible for any task undertaken by a consortium member to be carried out by another consortium member and for transfer plans to be in place.
Large-scale programme management expertise: Both consortia would agree… it’s not the technology that’s challenging, it’s the scale of the programme. Both consortia will therefore have to display a strong track record of running programmes of a similar size in the public sector.
Experience of TUPE: The DII(F) contract will take the place of approximately a dozen existing contracts. As such, ‘Increment 1’ will require the transfer of 130 MoD staff to the new supplier, as well as the transfer of 700 third party staff. More will need to be transferred in Increments 2 and 3. Successful management of this transfer will be crucial to the success of the programme.
Adept at managing organisational change: The programme is not just about the technology, it’s about changing the way that the armed forces operate. Without the organisational as well as the technological change, DII(F) will not achieve its potential.
Flexibility and agility: The MoD is a 24x7 organisation that will require its information infrastructure to be available day and night.
Experience of working in the defence environment: The winning consortium will need to display an understanding that this is a very different environment, not just to the private sector, but also to the rest of the public sector.
Understanding of US defence infrastructure: Communications interoperability between the US and the UK defence infrastructure is a key component of the programme.
Capability in information intelligence: While the US opts for a ‘network-centric’ approach and the UK opts for a ‘network enabled’ approach, at the heart of both programmes is an increased understanding in the armed forces that information is a valuable asset that is incredibly valuable when managed and distributed effectively.
Solution designed to recognise legacy situation: Given the difficulty of knowing exactly what legacy systems exist across the MoD, any solution will need to take the existence of multiple legacy systems into account allowing for a smooth migration path.
Identification of quick wins: The winning supplier will need some quick wins if it is to make a good impression from day one. That will mean having a plan in place to identify today’s ‘pain points’ and ease that pain swiftly.
Spot the difference: Radii and Atlas
The most glaring difference between the short-listed consortia is the size of their core teams. The Radii consortium boasts a core team of three companies: CSC, BT and Thales UK. While the Atlas Consortium’s core team, following the late addition of HP and IBM, now consists of seven companies: EDS, Fujitsu Services, Cogent Defence & Security Networks (EADS), General Dynamics, LogicaCMG, HP and IBM. Both consortia claim their solution meets the MoD’s ‘no single point of failure’ criteria offering alternative suppliers for any part of the programme.
Radii - The Radii consortium, primed by CSC, chose to put forward a small consortium so as to ensure clarity of interface between the partners. Selecting a small core team has also allowed CSC to choose partners with whom it has extensive experience of working on major programmes. It is already one of BT’s three strategic partners and has worked with the company, for example, on the CSC-led Prism Alliance contract at the Royal Mail. It has also worked with Thales for some time; for example, it implemented a change management programme across Thales Defence Information Systems.
CSC also states that it optimised the size of its core team in order to embrace the use of SMEs. As a result we expect CSC to make heavy use of its Tier 1 subcontractors consisting of Capgemini, Microsoft, EMC, SCC, Cisco Systems, Steria and Qinetiq as well as an extended supply chain of SMEs. These companies will make up 25-30% of the resources involved in the programme with each subcontractor offering added value in specialist areas e.g. Qinetiq in security and EMC in hardware.
Atlas - The Atlas consortium, primed by EDS, believes that its seven-strong core team is in accordance with the MoD’s procurement criteria in that “no single Atlas member company will account for a majority of the workload”. The core team members all have significant experience of working in the UK defence sector and are all leaders in their respective fields (as EDS has highlighted). There also exists a vast array of programme and project management experience amongst the partners.
This consortium is far more ‘top heavy’ than the Radii consortium and we expect far less reliance on companies outside the core team i.e. with subcontractors.
Ovum view
We continue to wait with eager anticipation to hear the outcome of this high profile bid (due to be announced this quarter). A win by EDS would put out clear signals that the US giant remains the company to beat in the UK public sector. On the other hand, a win by the Radii Consortium would significantly increase CSC's profile within UK government following on from its NHS National Programme win a year ago. The significance of winning (or losing) this contract, for both players, should not be underestimated.
Which supplier is chosen will depend on the importance that the MoD has placed on each of its selection criteria and the detail of the different approaches to implementation put forward by the consortia. In terms of meeting the selection criteria, both consortia include players with significant defence experience in the US and the UK; both claim to have met the MoD’s ‘no single point of failure’ requirement; both have the technical capability; both have large-scale programme management experience. EDS and CSC will have pulled out all the stops to convince the MoD that their consortium best meets these requirements.
But, does the MoD want a consortium partner with a limited core team, drawing on specialist expertise from Tier 1 and 2 subcontractors as required? Or would the MoD rather back the consortium with a broader core team? There’s no denying that the Atlas consortium’s seven core members display an impressive array of project/programme management expertise and years of defence sector experience but will the difficulties of managing such a large team frighten the MoD? The Radii team can boast similar experience and expertise to the Atlas consortium particularly when combined with its Tier 1 sub-contractors, though there may be a question mark over the resource capacity of CSC and BT considering their involvement with the NHS’ National Programme for IT. All in all, we believe it will be the approach to managing both the proposed relationship models, rather than the consortium-subcontractor models themselves, that will be crucial in determining the success of the DII(F) programme.
The recent track records of the players will also undoubtedly have an influence on the MoD’s decision. CSC, though a major player in the US defence sector, has had little experience in the UK defence market. However, it is also very hard to find a CSC-related project ‘failure’ in the UK or the US. In addition its major partner BT has successfully led the UK MoD’s ten-year Defence Fixed Telecommunications System programme. On the other hand, EDS and Fujitsu are both strong suppliers to the MoD (having had involvement in DII(C), EDS has had problems with its multibillion-dollar outsourcing contract with the US Navy, which has been marred by delays and technical difficulties. Will EDS be able to convince the UK MoD that it has learnt lessons from this contract? Sometimes, it’s the experience that counts, whether good or bad.
