Operational Framework

Operational Framework

Corporate Governance - Operational Framework

The Board has put in place a detailed governance framework, the Operational Framework. It sets out how we do business across BAE Systems and encapsulates our values, policies and processes, together with clear levels of delegated responsibility aimed at ensuring that all of our employees and businesses act in a clear, accountable and consistent manner.

How we work
The processes and policies in the Operational Framework set out the principles of good governance which, together with our culture, guide our work and behaviour in support of the strategy set in our Group strategic framework. Here we set out the values that we ask all our employees to demonstrate in their day-to-day work, wherever they are in the world. We also confirm our commitment to Total Performance which defines how we achieve success based on Customer Focus, Programme Execution, Financial Performance and Responsible Behaviour.

Organisation
From the Board downwards, we set out how we are organised and the responsibilities of the Board, the Chairman, the Chief Executive, the Executive Committee, our Functional Councils (such as Engineering, Human Resources and Procurement) and the senior executives charged with running our businesses.

Governance
The UK Corporate Governance Code’s (the Code) principles are embedded in the Operational Framework and its policies and processes underpin all the disclosures made by the Board pursuant to Code provisions.
How we conduct our business is fundamental to the success of BAE Systems. The Operational Framework sets out our approach and the standards to which we adhere. It includes the following:

Code of Conduct
Sets the standards to which we all work.
Responsible Trading Principles
We do not compromise on the way
we do business and here we mandate a principles-based approach to our business activity.
Internal controls
These are the controls that apply to all our businesses and provide assurance regarding:
 - the reliability and integrity of information;
 - compliance with policies, processes, laws, regulations and contracts;
 - the safeguarding of assets and protection against fraud; and
 - the economical and efficient use of resources.

Operational Assurance Statement (OAS)
This key governance process requires that a return is completed every six months by each operational and functional business head, reporting their formal view against such matters as compliance with law and regulation, ethical business conduct, financial controls, risk management, compliance with business planning processes, health and safety, conflicts of interest, delegated authorities, appointment of advisers and product safety.

Risk framework
This is how we identify, analyse, evaluate and mitigate risk.
Workplace and operational environment
This covers how we expect our people
to be managed and the obligations placed on us all concerning avoiding conflicts of interest, anti-bribery, and managing the security of our people, information and other assets.
Delegated authorities
As part of a robust system of internal
controls, the Board has delegated certain authorities to executive management. Delegation is subject to financial limits and other restrictions, above which matters must be referred to the Board.

Core business processes
These core business processes are mandated by the Operational Framework and designed to ensure consistent planning, reporting and review of business performance across all businesses:

IBP
(Integrated Business Planning)

Approved by the Board annually, creates a consistent approach to strategic planning, aligning resources with the delivery of forecast financial performance and strategic objectives.

LCM
(Lifecycle Management Policy)

How we plan and manage the execution of all projects above a certain minimum level, providing decision gate reviews at key stages from initial opportunity to final closure.

M&A
(Mergers & Acquisitions Policy)

A structured approach to
mergers, acquisitions and
disposals.

TPL
(Total Performance Leadership)

A set of people-related
activities that help to identify, select, manage and reward leaders, and facilitates succession planning.