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15 Feb 07. The House of Commons’ Defence Committee has recently published its report into the Defence Industrial Strategy (DIS). It notes that good overall progress was made in 2006 on implementing the aims of the strategy.

Summary of the main themes and conclusions in the Defence Committee report:

Comprehensive spending review – Realising the full benefits of the DIS will require additional funding. The outcome of the comprehensive spending review will determine whether the benefits and improvements offered by the DIS are fully realised. The committee stressed that it would be a missed opportunity if adequate funding were not provided. MOD estimates the costs of implementing the DIS in 2006/07 and 2007/08 will total £50m. However, these costs only cover MOD internal costs.

Joint Strike Fighter – At the end of 2006, MOD obtained assurances from the US that the UK would obtain all the information it required to operate the JSF independently. Lord Drayson assured the committee that the assurances obtained covered the technology and information required, not just by the UK Government, but also by UK industry. The committee did not have access to the terms of the Memorandum of Understanding and has expressed a desire to probe how robust the terms will be in practice. The committee will seek an early opportunity to take oral evidence on this.

Technology transfer – The committee recommended that the Government should attach the highest priority to advancing the initiative that is underway to create an overarching agreement with the US on the issue of technology transfer. This is needed to ensure that separate negotiations do not have to take place for each future equipment programme.

Skills and employment – The Defence Committee considered it vital that MOD and the defence industry continued to recruit high quality staff, particularly engineers, scientists and technicians. One of the approaches is to raise the profile of the defence and of the rewarding and interesting careers available in MOD and the defence industry.

Future Carrier Programme – The restructuring of the marine sector has not occurred and this has delayed the Main Gate decision on the Future Carrier programme. The Defence Committee is concerned that this may result in later delivery of the future carrier and could lead to a capability gap.

Research and Technology – Sustained investment in research and technology is important to the future of the defence industry. The Defence Committee was disappointed that the Defence Technology Strategy did not set out how much MOD would be investing of its budget in defence research. MOD is currently discussing with industry the issue of rewards and incentives for industry taking more risk in investing in research.

Supply Chains and SC21 – Small and medium sized enterprises are often the source of highly innovative ideas and products. The committee recommend that MOD continue to work with defence trade associations, DTI, regional development agencies, and the devolved administration in order to understand and work more closely with the supply chain.

Long-term partnering – The Defence Committee endorsed the SBAC recommendation and urged MOD to develop a document that sets out what partnering relationships should look like, and the principles underpinning long-term partnering agreements. In addition, it has recommended that incentives be built into long-term partnering arrangements which drive real efficiency and achieve best value for money. The committee thought it was important that small and medium-size enterprises were provided with an opportunity to compete for work that underpins long-term arrangements.

Restructuring of the industry – The Defence Committee stressed that the progress made in reshaping the marine sector, both surface ships and submarines, had been disappointing. This needed to be pushed forward quickly to avoid delays to when the new carriers and associated aircr

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