Against this context, DE&S set itself a series of strategic objectives in 2007-08. One of these related specifically to improving its commercial relationships. The department articulated three improvements which it considered to be necessary if that objective was to be achieved. These were:
• better recognition and alignment of risk and reward in agreements between the Department and industry;
• implementation of TLCM; and
• a move towards contracting for availability.
The need to undertake further work so that the approach to risk and reward could be optimised has been recognised by both the MoD and industry. Industry perceives high levels of risk in the MoD acquisition business, although its own project performance against firm or fixed price contracts is also a key determinant of profitability. Long timescales mean that a whole range of factors change during the lifetime of a programme or even a decision-making cycle, introducing risk including cancellation, requirements change, funding changes and delays. Partnering relationships, designed for mutual benefit, that recognise that risk is shared and reward performance against clear targets, were identified as being more attractive to industry.
Chapter 7 described in greater detail the anticipated benefits of TLCM, including better through life planning and more stable programmes. A consequence of these changes would be a more transparent programme around which Industry would be better able to make investment decisions.