DIGEST

sale of DSG
Update on the
sale of DSG
In this edition of Digest, Kate Carr
from MOD’s DSG Sale team gives
us an update on the sale.
Since my last article, work on the
project has been overshadowed by the
sudden and unexpected death of Ian
French. Ian worked in the Business,
Strategy and Governance team since its
inception and before that he managed
Head Office’s relationship with the DSG
Trading Fund almost since formation.
It’s apparent that Ian was highly
regarded by all who came across him.
He not only brought an immense
amount of knowledge, integrity and
common sense to the job; much more
importantly than that, those of us who
knew him, across MOD Head Office,
Defence Equipment and Support
(DE&S) and DSG were glad to work
with him and came to count him not
just a colleague but a friend. He is sadly
missed by all of us and our thoughts are
with his family at this time.
Despite this tragic news, work
continues on the sale project. In my
previous article I mentioned we began a
more formal market engagement
exercise to build on the one held last
year. Around 20 companies asked to
participate and Lazard, our lead advisers,
met with all of these companies. They
covered all sectors of the market,
meaning we were able to explore the
sale with equipment manufacturers,
service providers, and even finance
firms. It was a two way process. Lazard
set out our assumptions of how the sale
might be structured and managed to get
a sense of how the market might react.
It was also an opportunity for industry
to tell us what they thought and we
received some useful information from
them. We will now reflect on that and
consider whether to revisit one or two
of our assumptions in order to make
sure we get the most out of the
process, both in terms of value for DSG
and certainty for the Army in the
continued delivery of DSG services.
Put together, we are now gathering the
views on how DSG should be
presented to the market and using it to
shape our final thinking on how to
shape the DSG sale transaction. One
thing these meetings have reinforced is
that our thinking that the Electronic
Components Business Unit should
remain out of scope of the sale looks
right, although any final decision still
needs to be tested in a business case
and is subject to MOD investment
committee and Ministerial approval.
Overall, the market engagement process
was very successful and the outcome is
proving useful in determining how we
proceed with the sale.
Over the next few months we will
formalise the business case and
investment appraisal that will go to
Ministers in the autumn. The DSG sale
is designated a “Category A” project,
which is reserved for the highest value
or business critical projects. The
evidence required in these types of
business case is very high, and we will
draw on all of the work carried out so
far and some of which has been
covered in these pages. The business
case is rigorously and independently
“
Overall, the
market
engagement
process was very
successful and the
outcome is proving
useful in
determining how
we proceed with
the sale.
”
tested, and will focus not just on the
potential value of DSG but also the
future cost the front line might have to
pay for DSG services, our strategies for
dealing with Intellectual Property, terms
and conditions of employment, and
pensions, and whether the Armed
Forces will have the continuity of
service which is so important to them.
The evidence will have to amount to a
case that satisfies ourselves, MOD’s
most senior officials and Ministers that
a sale is viable. If it does we will move
towards actually starting the sale
process towards the end of the year.
Although not long, it still leaves an awful
lot of work to be done by the teams
across DE&S, Army and Head Office.
Our engagement with DSG Trade
Unions also continues, of course, and as
I write our next meeting is planned in a
few days time.
CONTACTS IN THE DSG SALE TEAM:
Mark Crabtree: mark.crabtree390@mod.uk
Kate Carr: kate.carr442@mod.uk
6
DIGEST October/November 2013 www.dsg.mod.uk