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21 Feb 05. MARTIN AGÜERA, MUNICH, of Defense News reported that in April NATO plans to award a contract to study how best to reduce the technological and financial risks involved with developing its AGS system. The study, to be completed by November at the latest, should pave the way for the program’s design and development (D&D) phase, the AGS Support Staff Team says.

The multibillion-euro AGS system is NATO’s “highest priority new project” for its transformation, Danish Air Force Maj. Gen. Lars Fynbo, AGS team leader, said in a February AGS Support Staff newsletter. Defense News has seen the five-page newsletter. An AGS program official said the risk-reduction study, endorsed during a meeting in Brussels last week, will be conducted by the TIPS consortium, which includes EADS units in Brussels and Friedrichshafen, Germany; Galileo Avionica, Rome; General Dynamics Canada, Ottawa; Northrop Grumman’s unit in Melbourne, Fla.; Indra, Madrid; and Thales Systèmes Aéroportés, Elancourt, France.

The value of the study contract was not disclosed. NATO, which will own and operate the aircraft-based surveillance system, was to have awarded the €350m ($456m) design and development contract by spring, but that was pushed back so risk-reduction work could be done. NATO wants initial operational capability of AGS by 2010. The planned cost for the system, said a second AGS program official, is expected to total around €3.95bn and will be shared by the 25 participating nations. Britain is the only NATO nation not participating in AGS.

The newsletter noted that four milestones must be achieved by November:
• Completing the risk-reduction effort.
• Preparing the D&D request for proposals and contract.
• Writing the program memoranda of understanding between industry and participating nations.
• Establishing an industry management structure for the program.

A September TIPS industry information brochure listed the consortium AGS program schedule as follows:
• D&D work from late this year to 2008.
• Engineering, manufacturing and development phase from 2008 to 2011.
• Procurement from 2009 to 2011.

A Procurement Strategy Workshop Jan. 11-14 resolved major logistical issues, the first program official said. NATO’s Conference of the National Armaments Directors then approved the procurement strategy. NATO is now working on critical documents that must be finalized for the program to move into the D&D phase. The first AGS official said NATO is still concerned about the lack of a legal entity to manage the program and a management structure within industry that would enable it to quickly respond to alliance requests. These elements need to be in place for the risk-reduction study to be successfully completed by the October-November time frame, he said, because short reaction times to requests are critical in this phase. He noted, however, that TIPS has been very cooperative to date. An EADS Defense and Security Systems spokesperson here added that industry was positively engaged in all activities concerning AGS, but a legal entity will not be formed until a D&D contract has been awarded.

“That was clear to all participants,” the spokesperson said. “As soon as we have the D&D contract, a joint venture with a legal form will be created.” In the meantime, said the EADS spokesperson, TIPS is preparing the documents along with NATO for the D&D phase.

“Following extensive discussions, the workshop came to a unanimous conclusion that a risk-reduction study, prior to the D&D contract award, and in parallel to the D&D contract preparation, was an excellent solution for answering nations’ concerns,” said Fynbo. “We also anticipate that the study can be the catalyst for resolving program and export-control issues.” According to the AGS Support Staff newsletter, AGS will “provide Ground Moving Target Indicator and Synthetic Aperture Radar information in an all-weather, day

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