Industry and Regulators Committee
Corrected oral evidence: The relationship between the Government and the defence industry
Tuesday 7 July 2026
12.05 pm
Watch the meeting
Members present: Baroness Hayter of Kentish Town (The Chair); Lord Best; Lord Baroness Carberry of Muswell Hill; Baroness Drake; Baroness Harding of Winscombe; Lord Teverson; Lord Udny-Lister; Baroness Valentine.
Evidence Session No. 6 Heard in Public Questions 53 - 61
Witness
Simon Galt, Managing Director, Air, QinetiQ.
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Simon Galt.
Q53 The Chair: I welcome you to this meeting of the Industry and Regulators Committee as part of our inquiry looking at the relationship between the Government and the defence industry. This is being broadcast live. There will be a Hansard record afterwards. If we have misunderstood any of your words, you will have a chance to correct that. I first of all welcome you. Maybe you could introduce yourself.
Simon Galt: Good afternoon. I am the managing director of our air business at QinetiQ, which is the UK’s test and evaluation partner and a global defence company.
Q54 The Chair: Apologies, I did not introduce myself. I am Dianne Hayter. I will introduce my other colleagues as they pose questions. I will start with a general one. Last year’s strategic defence review called for a new partnership—and that is what we are looking at—between the Government, the MoD mostly, and the defence industry. What cultural and structural practical changes are needed to bring about that new relationship?
Simon Galt: As a long-term, 25-year partner to the Ministry of Defence, we believe passionately in the long-term partnered arrangements (LTPA), and that starts for us with early engagement. In that early engagement, the Ministry of Defence needs to be somewhat ambidextrous in how it deals with the supply chain. On the one hand, we need to develop sovereign capability, and that is very often long term with partners big and small alike. A level of longer-term investment in those relationships is required. It also needs to be able to rapidly procure capabilities, kit, equipment and facilities that are required and that will pop up on a far more ad hoc and routine basis. So it needs to be able to operate in both those worlds.
For us, that starts with having a real openness with key industry partners around the threat that is being faced, because if we better understand that threat we are better positioned to help and to come up with solutions before the question is asked of us: what can we do? A lot of time is spent iterating requirements, defining outcomes and inputs, whereas if we can understand the outcome we can proactively provide solutions. If we are going to operate in that way, it requires a level of trust, and we also recognise that that trust comes through delivery.
Ultimately, we need to be held to account as industry, be that big primes such as equipment manufacturers, companies like QinetiQ, which are more partnered with the Ministry of Defence than small companies. We have to perform. The more that we are held to account for our performance and the better that structure, the more it will force us to be better.
We have seen some really good progress in the last few years under what we in the centre call the partner executive programme where each of the big companies are provided an executive sponsor from within the Ministry of Defence, and that serves the function of being held to account at a corporate level. It also creates a level of advocacy for where we think we can add value to defence, and we see that as a really important part of a wider programme of engagement.
Engaging earlier in the priorities that defence has, the challenges that it sees from a threat perspective and an understanding of where we can best serve those interests will allow us to be more adaptive and more responsive, underpinned by really good-quality commercial arrangements on which we must be held to account for delivery.
Q55 Lord Best: We have heard about the difficulties of the industry in testing and evaluating new equipment and innovative people having to go to Texas and Utah to test things. This is your speciality. This is what you do. What would make your work more effective and more efficient, particularly in supporting SMEs in the testing and evaluation of innovations and new equipment?
Simon Galt: We recognise that there is a requirement for greater test and evaluation flexibility. That is key. On your point about Texas, there are places with bigger land masses than we have to conduct testing, depending on the criteria of the test. We have an enormous range in the Hebrides over water, but that does not have any topography. If you are keen to understand how your equipment operates under topography, that is not ideal. You also do not have downrange effects. I would advocate for understanding the effect of the test we are trying to have and then picking the best environment under which to do it.
Your point on access is key. If I look back over QinetiQ’s history, we started as an organisation where MoD programmes and defence programmes were long, highly complex and centred around very expensive pieces of equipment. Therefore, we need to transform, and we need to transform the way we do that. Under our long-term partnering agreement over its multiple iterations, we have invested many hundreds of millions of pounds trying to make that more relevant.
To SMEs, that still needs more. When we re-signed the LTPA last year, we made a commitment to something called the T&E innovation gateway. That is a mechanism whereby UK-based small and medium-sized enterprises can access the LTPA, the long-term partnering agreement, effectively the MoD’s T&E estate, at the same price as if it were the Ministry of Defence up to a threshold of subsidy. Why did we do that? It is because previously it was prohibitively expensive for SMEs to access those. We have brought the commercial barrier down and we are seeing some really good pull-through with that. We have had nearly 70 inquiries come through. We are in 30 active discussions about how we can support them, and we have delivered a number of projects on the back of that.
It is then about how much time is available in these facilities and on these ranges. Normally, if you are doing a big, complex, air-to-air or air-to-ground activity, you only want one of those going on at a time due to the amount of space it takes in the danger area. Can we make smaller parts of our estate available to people very quickly for very short timeframes? We have managed to do that. We responded within 48 hours to a company operating in Ukraine. It said it found an issue with its equipment and wanted to test it in an anechoic test chamber. We turned that around in 48 hours. We need to make that routine, and we have the mechanisms to do that. We deliver that under our DroneWorks facilities, which is about repurposing some of that and reimagining how it can be used at a more iterative pace. I would advocate thinking about the outcome of the test that we are trying to do, where that can be best done, and then we can work in partnership through these new arrangements that we have in place to make sure they are available.
Q56 Baroness Harding of Winscombe: How do procurement processes and contracts need to change to adapt at pace to new technologies and requirements? I am particularly interested in faster-changing new technologies such as drones and anti-drone capabilities. What progress are the Government making in changing the way they procure and contract for that bottom segment of higher-risk, faster-changing technologies?
Simon Galt: We are not an OEM (original equipment manufacturer), so I can only provide you with what we have observed. We have seen some really interesting progress particularly through UK Defence Innovation (UKDI), which was focused on a response to and supporting Taskforce Kindred out of Ukraine. Recently, it has undertaken some very innovative procurement processes to procure very long-range one-way effectors. That was done through a really disruptive method that we observed, which was to do a rapid down-selection, make time the critical factor of the procurement process—can you be ready in time to the supply chain?—providing a level of seed corn investment to a number of suppliers, and then what it calls a 3-2-1 process. Three will be taken through a first phase to design, then you would have a fly-off between two technologies, and then a selection of one.
We thought that was very interesting for a number of reasons. First, time is the cardinal point. “If you cannot be ready by this point, that is not valuable to us”. That is a significant change for defence. The second is recognising that by investing in a number of companies, even if they do not make it to the end, that is a good investment for defence because it can take that investment and deploy it on the next competition it runs. The third is a visible demonstration of success. It is good from an external perspective, showing our adversaries that we can respond at a pace of relevance as well as showing to the Ministry of Defence that it is buying a product capable of delivering the effect it was designed to do. We are seeing a series of those happening through UKDI. Where teams are tasked with thinking differently and giving slightly broader permissions to act differently, we see some of the benefits of that. We have the role of then being able to create those test and evaluation facilities to ensure that those processes can be conducted safely and effectively.
Baroness Harding of Winscombe: What are the barriers to that rolling out faster across the whole of defence spending?
Simon Galt: That is a fair challenge. My observation would be that that is about culture and risk taking. On the one hand, you are investing in companies that you know are not going to make it. Is that acceptable? Is it acceptable to defence that we sink cost into these processes? I would advocate that it is, and that is about the taking of proportionate risk and empowering the commercial bodies within defence with an element of latitude to pick a process, pick a club out of the golf bag to address the issue that is happening. They will be different. This one was about pace. If you are buying the next generation of combat aircraft, pace may not be your No. 1 priority; it might be about the quality of the outcome; or you might need a more partnered arrangement for a long-term pipeline. It is giving authority to commercial entities to pick the approach that they think will have the best outcome.
Q57 Baroness Drake: You were sitting here previously, so you will have heard my supply chain question when I put it to Mr Maund in two parts—the problem and the resolution. The problem we have heard is that the visibility of supply chains and inputs can be an issue, particularly in understanding key risks and critical inputs from those supply chains, and how the responsibility of this visibility and having control of it is passed up and down the supply chain.
Secondly, could you give us your views on the problem? How should the MoD and defence contractors respond to that problem to achieve secure and reliable supply chains? Do you have any knowledge of any progress through the Defence Supply Chain Capability Programme? We have already heard today an example of third-party risk in supply chains and cybersecurity, which shocked us. Could you articulate your views on the problem and the resolution to that problem?
Simon Galt: I will give you my views. We as a services company generally do not have hugely deep supply chains. Again, I will probably just give you my perspectives. Ultimately, visibility starts with: “Why? Why do we want this information, and what are we going to do with it when we have it?” We have seen a lot of attempts for greater visibility. If we get that visibility, what are we going to do differently as a result? If industry can understand what the intention is, we can respond accordingly.
For me, this would start with holding to account. If the MoD has entered into a contract with an industry provider to deliver something, whether that has a hugely complex supply chain or a very simple one, if it needs to overcome supply chain issues, obsolescence risk and various other supply chain risks, holding it to account for doing that would be the primary outcome.
Moving more broadly, when you have that visibility, we are advocating to open up defence to disruptive, perhaps non-traditional defence suppliers to become part of our supply chains. As we do that, we move away from traditional suppliers—for good and for bad, we know how they perform and what they deliver to us—to a far more networked set of suppliers. That is about risk and reward. We want the rewards of bringing innovation and new supply chain disruption. The risk is that we are introducing new participants into that market, and we have to accept that the benefits outweigh those risks.
As for the supply chain programme that you referenced, I have not been hugely close to it. I was at an air capability symposium where it gave its initial findings. They were, “This is the potential risk that we hold”, which is useful to understand. We have visibility. We understand where we have single points of failure in the defence supply chain. We understand where we have huge dependence on overseas suppliers and what have you. Then the question is: so what; what are we going to do? To be honest, I have not seen that. That is not a criticism of the programme. I just have not observed what the response to that risk will be and how we go on and manage and mitigate it further.
Q58 Lord Teverson: One thing that has become quite obvious, partly because of the Ukraine war, is that with more conventional warfare you can run out of your munitions within days and your stockpiles disappear very quickly. Does the UK industry have the ability to supply sufficient capacity, whether it is drones or more conventional munitions, over a sustained period in the event of that level of war? How do you get around that to make sure that capacity is available for the future? Is it the type of contract or do you have to pay people to keep production lines open? I was interested to read that Storm Shadow, a 1990s cruise missile, has to be reproduced now between France and England before a new version can be brought in. How do we get round that issue?
Simon Galt: I would not want to speak for others that manufacture their supply chains. From our perspective, there is an industrial base that has been waiting for and seeking the clarity that the Defence Investment Plan (DIP) has now provided. People’s ability to invest at their own risk based on a projected pipeline has increased. Whether that is sufficient, I am really not qualified to say. I would offer a slightly different mindset to the challenge.
In our role, when we work with the Air and Space Warfare Centre, when we were gifting munitions to Ukraine as part of the conflict, there was a view that on the label some of the munitions that we were providing were life expired. Either they had been stored for too long or they had too many carriage hours on them. We undertook a very short study that indicated that we could change our risk tolerance, not to an extreme extent but by having a little bit of the right advice, looking at a problem slightly differently, giving what we call the dutyholder, the person who is in charge of that weapon, the opportunity to say, “I accept the risk of storing this for longer”, or, “Flying for longer with it on the wing is not an intolerable risk”. Using the skills we have in the UK to look at these problems to not only shore up the supply chains we have but to relook at the equipment we already have and make best use of that is also an option. I know that did not quite answer your question, but I feel slightly ill-equipped.
Lord Teverson: No, that is a very useful contribution. Thank you.
Q59 Baroness Valentine: This question is about devolved authorities. The Government have begun to work with devolved Administrations, mayoral and local authorities through Defence Growth Deals. Given that much of your work is tied to specific locations such as testing ranges, what impact do you have on local industries and areas? How do you work with those authorities in relation to your activities? As a supplementary, what do these deals need to provide in order to be a success?
Simon Galt: Thank you. At QinetiQ, almost 50% of our employees live and work in rural and semi-rural areas, so this is a really important part to us. If I talk about my portfolio, we operate two air ranges: one in west Wales and one in the Hebrides. Local relationships are incredibly important to us.
From an employee perspective, we are often the biggest employer in that area and we have multi-generations of families working within our workforce. It is about understanding what we need to provide such as flexible working arrangements. For people who are crofters, we offer flexible contracts during the summer so that they can work at QinetiQ and then go and do other activities outside; that changes in the winter, as you can imagine.
Secondly, it is having good relationships with local schools, colleges and universities, because we thrive on the capability of our people. STEM subjects (Science, Technology, Engineering, and Mathematics) are really important. It is creating connections between the work we do and those local colleges and schools to encourage people into STEM and to find a career at QinetiQ that is valuable to them.
Finally, into the supply chain, we try to be a responsible employer utilising local supply chains where we can. That will be for routine and support services as well as more technical skill sets to make sure that the high-quality technical work that we do also flows into that arena. Under our engineering delivery partnership, we have 200 SMEs that work for us that we fully commit to. We have supplier-friendly terms. We have what we call a provider network advisory group that helps us understand the impact of how we operate as a large organisation.
In terms of the defence growth partnerships, we signed up as part of the Welsh partnership that was approved just a few months ago. Clearly, we need to see how that washes through in how the funding gets allocated and it gets supported through programmes of record. Whether it is in Wales, Scotland or rural England, those devolved Administrations and local supply chains are hugely important, and we invest quite a lot of time and effort in ensuring that we support the communities within which we work.
Q60 Lord Udny-Lister: My question is on regulation. We have been told that the regulatory framework struggles to keep up with developments. Is that true? What should the regulators do to make themselves more available to the industry and to be able to work on new revised regulations?
Simon Galt: I run an air business. Regulation is really important to us. Regulation used well and implemented thoughtfully can be an accelerator so that we can do things quickly and safely. If we do them unsafely, that will grind everything to a halt again. Regulation in and of itself is not an inhibitor.
We have been engaged through the DIJC, the Defence Industrial Joint Council, to look at regulation and how the implementation of regulation is having an impact. First, having this debate between defence and industry is great. From our perspective, we need to enable pace while maintaining an appropriate level of assurance. A number of areas we see probably provide a higher burden that is worth exploring. For things like environmental regulation, while not burdensome in and of itself, the pace of approval for even routine activity can be outwith the pace that defence is trying to operate at. We often see overlapping civil and military requirements. We are a civil organisation working for the military. So you have two regulatory regimes working together, and if they do not dovetail well that can cause delay and duplication of approval, effort and things like that.
We also see gaps in regulation that can sometimes lead to the inappropriate utilisation of frameworks. As an example, the testing of uncrewed vehicles is regulated by what we call the Workboat Code because there was no other code for it. That is used, in a way, to fill a gap in regulation while defence works out what it needs. All of that requires a risk tolerance and risk acceptance that defence needs to have a broader discussion about. At the moment, we have a tendency to default to conservative risk acceptance. Whether the regulation is correct or otherwise, how you accept risk, how you tolerate it and how you mitigate it is the next level of discussions.
Our views would be: how could we explore a fast-track approval for more sponsorship where there is an imperative to do something quickly? How can we explore the opportunity to get that fast-tracked through a system? Secondly, we would like to see the creation of regulated sandbox environments whereby companies such as ours are given greater permission to operate within an area, which comes with responsibility, but provided we can assure regulators that we will not excur that area, we would like to see a greater number of permissions to work within it. There are things like blanket approvals for routine activity, which goes back to trust. If you are given blanket approval to do routine things and you step outside that, you would expect that to be taken away. If you are a responsible contractor acting responsibly and demonstrably, the ability to do that routine activity more quickly will be a welcome change as well.
Q61 Baroness Carberry of Muswell Hill: I have a last quick question. You will have heard in the last session the responses to the question about where the relationship between industry and the Government might work better. I will ask you the same question from the perspective of your company.
Simon Galt: We operate in a number of countries around the world: the US, Australia and Germany, notably, as well as Canada and the UK. We have a very different relationship in the UK given that we are an organisation that was spun out of the Ministry of Defence 25 years ago. The symbiotic nature between QinetiQ and the Ministry of Defence, we believe, is unique, and it is a position that we hugely appreciate and recognise is a very privileged position for us to hold.
From our perspective, a lot of things work really well in that. We have a number of long-term arrangements that are incredibly well managed by the Ministry of Defence over their lifetime. A number of interventions have been put into those to hold us to account, and it has required us to invest £200 million a year to ensure that capabilities are kept relevant, that our services are kept up to date, and that we hold the unique skills and capabilities on behalf of the Ministry of Defence for the long term. There is a lot of richness in the way that the MoD can deal with its long-term partners.
Outside the UK, we hold a different position. We are more on the supply side of industry, where we are more often in the competed space on pop-up opportunities. We experience the same opportunities and challenges that a lot of the OEMs would typically provide about when the next competition is running and when the service provision starts. From a QinetiQ perspective, we have a really healthy relationship with the UK Ministry of Defence. We are held to account for our performance. We invest heavily as a result of the investment you also make in us. There is a lot of richness that can be read across from the way you work with us into other similar organisations.
Baroness Carberry of Muswell Hill: Thank you.
The Chair: Thank you very much. Thank you for your time today. Partly because you were here for the earlier session as well, you will be very aware of the sort of questions that we have and the degree of interest that we have. After this, if you would like to answer some of the questions that we may have even stimulated in your mind, we would very much welcome that because of the breadth of your experience. Thank you for coming today. That ends today’s public session.