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‘A DYNAMIC PROCUREMENT’

‘A DYNAMIC PROCUREMENT’ – BATTLESPACE INTERVIEWS MALCOLM PETO – MANAGING DIRECTOR OF PARADIGM SECURE COMMUNICATIONS – BATTLESPACE BUSINESSMAN OF THE YEAR 2006

In a shortlist of candidates drawn up to take over the mantle of BATTLESPACE Businessman of the Year from Ian Stopps of Lockheed Martin UK Ltd in 2005 and Mark Newman President and CEO of DRS in 2004, the winner required the credentials which demonstrate management skills to develop either a company or a product. Mark Newman showed how through management skills a small fledgling U.S. defense company, DRS, could be built up into the giant it is today whilst Ian Stopps demonstrated how, from a small subsidiary, established through the Lockheed – Martin Marietta merger, IBM Defence (UK) Ltd, which had the key integration role on the Merlin helicopter Programme, he has created Lockheed Martin UK Limited as a major supplier and in some case, Prime Contractor to the MoD.

To understand why Malcolm Peto has been chosen as this year’s winner, it is important that our readers understand the complexity of the proposal put together to create the Skynet 5 team and how huge amounts of money had to be obtained from City Institutions in a project type, PFI, which had never been achieved before. The Skynet 5 project has paved the way for what is now an established way of doing business with the MoD.

The huge potential size of these contracts was outlined by Andrew Chuter in a recent Defense News article in September. ‘The U.K. military’s decade-long affair with private finance initiatives (PFIs) will reach a likely high-water mark in the next few months as the Ministry of Defence prepares to either select contractors or finalize a deal on three contracts together worth more than £30bn($57bn). The magnitude of the deals under the PFI, which allows industry to provide services to the military, likely will throw the spotlight on a method of procurement that is coming under increasing criticism over the delivery and cost of services in other areas of government. Such sectors as health and education have been the focus of most of the criticism. So far, defense has escaped the growing suspicion that the PFI may not be all it was cracked up to be when it was introduced in the early 1990s.’

Paradigm Secure Communications Ltd, a subsidiary of EADS SPACE is the world’s first commercial provider of military satellite communications and the only provider of end-to-end, hardened and protected satellite services, using X-band and UHF frequencies compliant to NATO standards.

Malcolm Peto joined EADS as Managing Director (MD) Paradigm Secure Communications in May 2003, following 6 years in Marconi/BAE SYSTEMS.

“What brought you to become Managing Director of Paradigm Secure Communications?” the Editor asked.

“At the time of the original competitive bidding process, I was working for BAE SYSTEMS and thus represented the BAE SYSTEMS 25% shareholding in their EADS-Astrium Skynet 5 bid against the main BAE bid, the Rosetta Consortium which included BT, Lockheed Martin and, of course, BAE.” Peto said.

“In fact BAE believed that the Rosetta offering was stronger that the EADS-Astrium bid?”

“Yes, but the MoD eventually down-selected the EADS-ASTRIUM bid as it saw the benefits of the technical offering and overall value for money involved. In addition we also demonstrated solid City and shareholder support which was a key factor given that we had to raise almost £1bn in loans. As part of the down-select EADS Space requested that I move to Paradigm to head up the company.”

“How difficult was it to persuade the City to partake in such a novel financing initiative?”

“Both ourselves, the City and the MoD, were breaking new ground in terms of PFI financing, so we all had to learn from scratch. Citigroup acted as financial advisors and HSBC, BNP-Paribas and CIBC led a team of 33 banks. All of these requested an original set of Offer documents signed by me. It took some time and neg

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