UK: Babcock to Exceed USD 109 Million in Savings Thanks to WSMI Agreement with MoD

Babcock has achieved a score of 90% in the two year review of the four year Warship Support Modernisation Initiative (WSMI) partnering agreement between Babcock and the Ministry of Defence (MoD) at Devonport. The review findings demonstrate Babcock’s ability to work successfully with the MoD not only in being on track to deliver the £67 million (approx USD 109.3 Million) savings committed to but also, importantly, while continuing to achieve a strong performance across a wide range of initiatives and key service areas at the same time.

Under the latest WSMI agreement, signed in 2009, Babcock provides engineering support to the fleet, both ships and submarines; waterfront support services; logistics services; transport and estate facilities management at HM Naval Base, Devonport.

The two year review was based on ten agreed criteria, against which Babcock was scored as either ‘under-performing’, ‘normal performance’ or ‘out-performing’, with associated scores of zero, two or four points respectively. Babcock achieved a total score of 36 points (‘out-performing’ on almost all fronts), equating to 90%. The ten criteria were used to monitor performance across a broad range of areas, five of which could be clearly measured with numerical data, while others were more subjective. Babcock’s progress in fulfilling the criteria has been monitored via six-monthly meetings between Babcock and the MoD, where joint evaluations have taken place to determine progress being made.

Performance against savings targets was one of the key criteria, and has been strong. Enduring savings of over £30 million have been achieved, putting Babcock on target to exceed the £67 million savings sold-forward under the WSMI agreement.

Also among the ten criteria was co-ordination with wider maritime initiatives under the Maritime Change Programme, with a view to ensuring full engagement and interaction with emerging initiatives such as Class Output Management, and Flotilla Output Management. A notable achievement under this heading has been the introduction into the WSMI agreement of an element of the Fleet time maintenance fee being placed at risk against the availability targets for Trafalgar class submarines, in a ‘Contracting for Availability’ approach. This, alongside the Continuous Engineering Support (CES) arrangement for the long-term support of Landing Craft also incorporated into the WSMI agreement a few months previously, demonstrates the provision of flexible support to the transformation agenda under the WSMI agreement.

Another of the criteria covered make or buy decisions, seeking greater visibility of Babcock’s supply chain activities, in recognition of the need to demonstrate robust processes for make or buy decisions, and effective tier 2 supplier management. This has been successfully delivered, with a major review by Babcock of its make or buy decisions leading to planned changes in the provision of services for estates and logistics.

The remaining criteria included: Key Performance Indicator (KPI) performance (looking to see strong performance across all areas of activity, including relationship development, despite significant cost savings being made); Key supplier performance review (looking for continuing improvement in Babcock’s annual performance review scores); Move to co-locate in a new Naval Base headquarters (a key element in furthering the partnering approach); Company asset investment plans (looking for greater visibility); Energy management targets (looking for a reduction in energy usage to aid cost reduction and support government environmental targets); Development of key processes and business cases (looking to drive progress on a range of initiatives); and Introduction of a New Works KPI for programme performance (looking to bolster new works activities).

Commenting on the demonstrable success achieved at this ‘half way point’ in the latest WSMI agreement, Babcock Managing Director Devonport, Phil Jones, said: “We are delighted to be classed as ‘out-performing’ against the wide ranging review criteria. In particular we are proud to be able to demonstrate our ability to deliver the substantial required savings – a challenge in itself – while still maintaining a strong performance across all areas of the WSMI agreement. This puts us on a strong footing for working with the MoD to develop the WSMI successor contract to take effect from 2013.“


Source: babcock, August 2, 2011;