DEFENCE R&D – DOES IT FIT IN A COMPETITIVE PROCUREMENT MARKET?
30 Mar 06. For years we have been writing about Defence Procurement Policy in the U.K. and how it differs from the U.S.
The excellent DR&A BRIEF: EUROPEAN DEFENCE 2006, Publication 16 Mar 06 (ISBN 1 900552 24 8) (See: BATTLESPACE BOOK CLUB, below) highlights a number of key issues in European Defence, R&D spend being one. This is a must read for any of our subscribers looking to develop business in Europe.
While some progress has been made in developing Force structures and capabilities, Europe is being urged to spend more on Defence and to spend more wisely. The Report is divided into seven Sections and covers key issues, including: institutional developments, relations with NATO, capability improvement initiatives, the European Defence market, Defence expenditure and research and development activities.
The difference between R&D in the U.K. and the U.S. is that the U.K. has always taken a scientific route to defence R&D, i.e. it looks at a problem and develops a solution which may or may not be used by the military. This is how the vast workforce at DERA was kept alive until the floatation under the guise of QinetiQ. How much of the vast sums spent at DERA/QinetiQ ever saw the light of day as product, only Sampson springs to mind for recent developments. Has the policy been just to keep money flowing into the business looking at problems whilst they are actually procured under the DPA machine at Abbey Wood under competitive terms? Are there any discussions between the Future Requirements posts in the MoD, QinetiQ and Abbey Wood? Obviously QinetiQ and any other company will have to amortise the R&D spend over the life of the product whilst France, Israel and the U.S. subsidise R&D and it can be written off.
The Editor is reminded of the launch of Defence Technology Enterprises in the 1980’s when he attended the Press Conference with two late, great defence journalists, Mark Hewish of IDR and Simon O’Dwyer-Russell of the Sunday telegraph. The esteemed Panel consisted of John Castle, CEO of DTE, The Minister, Norman Lamont, sporting the famous black eye and the CEO of Lazards. When Q&As began, it was quite obvious that they were all out of date and a period of ping-pong began passing the Questions backwards and forwards. The final question was asked by the Editor, “What will happen if DTE attempts to sell back to the MoD technology it has already been paid for?” A stunned silence fell on the room and it was announced that, “The Minister has an urgent appointment and has to leave!” End of Press Conference!
Sadly this attitude has persisted and it is common throughout U.K. industry and Universities. Getting one’s hands dirty in commerce is not the aim of R&D, that is for Industry!
In the U.S. a more pragmatic view is taken about Defence R&D. DARPA is heavily funded to start the process rolling and the policy of Cost Plus Procurement has returned, quite rightly, to many projects that require complex and high-tech solutions. Once the concept is formalized and a strategy developed a PSI-led team is assembled to bid the Program, or as is happening more and more either PV funded products are procured or industry is going direct to the Universities, many of whom have DoD funding. Thus a line of money is established between the Treasury and the DoD and all become involved. For years in the U.K. the Future requirements Officers in OR governed procurement processes at the expense of the poor relation officers outside the MoD. Thus when the equipment eventually got to market, no overseas army could afford it or it needed huge developments to make it work! Chieftain being one prime example!
The Levene reforms were meant to wipe out this huge spend and streamline the process. But figures from ‘SECTION 6: INVESTMENT AND MODERNISATION’ of the DPA document suggest that Defence R&D spend in the U.K. in particular is alive and well.