06 Oct 13. Privatised arms procurement plans in Labour’s sights. Plans to put private companies in charge of buying weapons for British armed forces will come under fresh attack this week as Labour mounts a campaign to change the proposals. Philip Hammond, defence secretary, wants to set up a new body which would be owned by the government but operated by a contractor, a so-called Goco, to run its £14bn defence procurement programme. But Labour will challenge key parts of the reforms on Tuesday when they are debated by a committee of MPs. Jim Murphy, Labour’s shadow defence secretary, will demand that companies should pay part of the cost if projects become more expensive than planned. He will also say ministers should insist that any company taking on procurement work must do so through a UK arm, with more British directors than foreigners.
“Foreign takeover of UK defence procurement could be a real risk to our national security,” Mr Murphy told the Financial Times. “We need to take enormous care about allowing certain companies from some countries taking a stake in any new privately operated defence procurement system.”
His comments echo concerns expressed by senior US military figures , who have warned that the plans could threaten defence co-operation between the two countries. They fear that under the plans foreign companies could get access to US military secrets. Labour says the leaking of any intellectual property should be made a criminal offence to reduce the danger of that happening.
Mr Murphy said: “If a Russian or Chinese company were to win or buy out the contract for our national defence equipment plan this would put real power is the hands of another nation.”
MPs on the defence reform bill committee will debate Labour’s amendments on Tuesday and there are signs that they could win cross-party support. (Source: FT.com)

04 Oct 13. Italy’s Finmeccanica agreed to sell power unit Ansaldo
Energia to Italy’s state-backed fund for 777m euros ($1.06bn), the
aerospace and defence group said on Friday. State-backed lender Cassa Depositi e Prestiti, through its Fondo Strategico Italiano fund, will buy 85 percent of Ansaldo Energia by the end of 2013 and the rest via a put and call option in 2017, for 777m euros. Under the deal, Finmeccanica will initially retain 15 percent of Ansaldo Energia and cash in 273m euros, while U.S. fund First Reserve will sell its entire 45 percent holding to FSI. The transaction also includes an earn-out worth up to 130m euros, maturing in 2014, 2015 and 2016, linked to economic results already laid out in the company’s business plan. (Source: Reuters)

04 Oct 13. Exelis CEO seeks middle ground in budget crunch. Retired Army Lt. Gen. David Melcher, now the CEO of mid-tier aerospace and military contractor Exelis Inc., said diversification is among the best strategies for riding out current U.S. budget and political uncertainty.
“Coherent and complementary portfolio positions have become increasingly important” as budget sequestration bites and an “industry realignment” continues, Melcher told the Atlantic Council, a Washington-based security think tank, on Oct. 2. Best known as a satellite and communications provider for applications like remote sensing and geospatial intelligence, Exelis is increasingly diversifying beyond electronic warfare into networking, aircraft components and structures. As a supplier to military and aerospace prime contractors, Melcher said the current “fluid environment” is forcing mid-tier vendors to view companies like Lockheed Martin and Boeing as “competimates.” Along with its continuing C4ISR focus, Exelis is increasingly emphasizing “critical networks” for the military, air traffic control and analytics. Melcher said the networking focus is driven by government spending trends that have shifted from “land centric” to “commons centric” investments. He defined “commons” as including air, sea, space and the cyber domain. As for military acquisition, th