Conclusions for the New NATO Members from the UK Experience in Defence Research and Development

1. Conclusions for the New NATO Members from the UKExperience in Defence Research and Development Author: Ventzislav Atanassov, MSc in Ec., MCSc

2. Conclusions for the New NATO Members from the UKExperience in Defence Research and Development • Introduction • UK R&D Policy and Organizational Transformations During the Last Decade • Conclusions for the new NATO members • Closing remarks

3. Introduction • The new NATO members meet some challenges and difficulties on the way of transformation of their defense industrial base according to NATO standards • The UK with its strong defense industrial base, and tradition in research and development (R&D) policy could be good example how to succeed

4. UK R&D Policy and Organizational Transformations During the Last Decade • UK R&D Policy • DERA (Defence Evaluation and Research Agency) and its future • A critique of New DERA • International colaboration

5. UK R&D Policy • Defence research enables MoD to be “intelligent customer” and an informed decision maker. • In its 1998 Strategic Defence Review, the British Government confirmed its commitment to maintaining a “strong British defence industry” • Ability “to continue to procure the right equipment for UK Armed Forces at competitive prices” • For 1998-99, over 70% of MoDs procurement spending was with UK industry; 13 % was spent on co-operative programs; and the remaining 16% was spent on imported equipment.

6. UK R&D Policy • Policy aimed at a gradual reduction in the real level of defence R&D over the next decade • Industry expected to undertake more of the research as a result of exposing DERA to greater competition • With limited defence budgets, MoD cannot afford to be at the forefront of research in all defence technologies • Difficult choices for the R&D future • MoD has a list of key defence technologies (the list is classified)

7. UK R&D Policy • Technology strategy of MoD • Combined with civil national industry strategy for defence and aerospace • As result joint national strategy identifying areas of technological excellence “Towers of Excellence” (around 100) • MoD expects the Towers of Excellence model to enable it to make defence technology choices by being selective in a rational way

8. UK R&D Policy • The Towers of Excellence model aims to develop world class defence technology capabilities in selected areas • Faced with budgets pressures, MoD policy has been to continue to search for value for money from its defence R&D expenditure • Smart Procurement Initiative (now known as Smart Acquisition) introduced a new acquisition procedure • Efforts to promote the transfer of technology from defence research (DERA) to both defence and civil industries

9. DERA and its future • UK defence R&D is undertaken either “intramurally” in MoD’s research establishments or extramurally mostly in private industry • Y2000: DERA has an annual turnover of some 1 billion Pounds sterling and employs over 11500 staff in the UK • Y2001: Two new units were formed, namely, the Defence Science and Technology Laboratory (DSTL) (elements with government business) and “New DERA” (the Core Competence model, I.e. private owned company)

10. DERA and its future • New DERA – part of Government’s Public Private Partnership Policy (PPP) • the main aims of this PPP: • improved opportunities for exploiting technology “locked up” in DERA • improving access to technologies from the civil sector for military application • introducing private capital to meet DERA’s investment needs • exposing the Agency to private sector disciplines • providing increased freedoms for DERA

11. A Critique of New DERA • The Parliamentary Defence Committee - a major critic of plans to privatize DERA. • It is concerned about ambiguity over New DERAs involvement in defence manufacturing • Which of New DERAs assets are regarded by MoD as of “strategic importance” • Continued uncertainty about the extent of controls on foreign and individual shareholdings in New DERA

12. International Colaboration • Collaboration requires the UK to choose between Europe and the USA • European collaboration allows the UK to be a major partner in high technology defence projects with corresponding implications for UK defense R&D expenditure (ex. “Eurofighter”) • Collaboration with the USA might be based on the Joint Strike Fighter (JSF) model where the UK is a full collaborative partner contributing 10% of total development costs

13. Conclusions for the new NATO members • Proper defined in the guidance documents R&D policy • R&D policy must be supported by respective organizational structures • There must be and continuation of this policy from one government to another • Ability to expose these R&D structures to influence of market economy and competition

14. Conclusions for the new NATO members • UK principles of Smart Procurement Initiative • R&D policy must be supported by the framework of R&D regulations and standards • Clearly defined Towers of Excellence for the national defence industrial base

15. Conclusions for the new NATO members • For the smaller countries the impact should be placed on the international collaboration in R&D • The percentage of defence R&D budget as a part of the whole defence budget should be big enough • Discussion arise about the share of procurement spending with national defence industry, the share spent on co-operative programs and the share of imported equipment

16. Conclusions for the new NATO members • To introduce principles of Public Private Partnership (PPP) • Privatization of parts of defence R&D, but not cut and destroying these parts

17. Closing remarks • There is a lot that the new NATO members could learn by the experience of the UK in defence R&D • Transformation of defence R&D is the process which is actual for all NATO members and it is good to exchange experience and ideas