FOREWORD - DEFENCE MANAGEMENT JOURNAL, December 2004

Lord Bach - Minister for Defence Procurement

The UK Armed Forces are admired across the world for their unrivalled capacity to rise to the challenges with which they are faced. Their very many successes are, of course, no accident; they reflect our Forces’ world class training, motivation and equipment. The UK defence industry plays a major part in providing this, not least by delivering battle-winning equipment at the cutting edge of technology. We in government have an obligation, therefore, to foster a thriving, competitive and innovative defence industry.

The Government’s Defence Industrial Policy (DIP) sought to identify the full spectrum of factors that must be considered when business cases for acquisition decisions are prepared. Although we at the MOD were always good at setting out the critical issues of cost, operational effectiveness and contribution to national security, we were less focused on drivers in the defence industry and wider economy. Chief amongst these are the capabilities within the UK industrial base that we might wish to retain, not just for defence reasons, but because of the benefits to research and development, technology and ompetitiveness in the international marketplace. Building on the success of the DIP, we are now developing a Defence Industrial Strategy. This will be aimed at explicitly identifying those competences that will enable UK industry to mould itself to meet our defence requirements well into the future, and to be an aggressive and competitive exporter.

You will not be surprised to read, then, that market access is a central plank of all our policies. We do not believe that protectionism is a viable way forward. The UK has taken a unique stance, therefore, in maintaining the most open defence market of the major industrialised countries, in which we welcome the engagement of overseas companies. This approach helps to maximise our Armed Forces’ capabilities and facilitates the transfer of technology across national boundaries. It also encourages inward investment whilst ensuring greater co-operation with our partners to deliver interoperable capabilities that are second to none. In this vein, we continue to press for more effective access to both European and US defence markets. Although progress is being made on both sides of the Atlantic, there is a marked contrast between the unparalleled level of operational co-operation enjoyed by UK and US Forces, and the rather mixed picture we see at the supporting level delivering equipment capability. Even on touchstone projects such as JSF, where we are working closely with the US, it is difficult to obtain transfers of information, although we have had some success.

Elsewhere, despite efforts by both governments and industry, the pace of change remains slow. For example, Congress deleted the provision of an exemption for unclassified information under the International Traffic in Arms Regulations for the UK in the recent Defense Authorizations Bill. That said, one area where we have had some success is the language in the Bill that emphasises the importance of expeditiously processing export licences. I was also heartened by the removal from the Bill of some of the protectionist provisions relating to offset. I can assure you, however, that we will not let these issues drop and, now that the US Presidential Elections are over, we will be vigorously returning to the charge.

As I have made clear, our actions on this side of the Atlantic are driven by the need to gain better access to foreign markets after many years of largely unreciprocated overseas access to the UK market. It is encouraging, therefore, that a number of initiatives that should contribute to that goal are now unfolding in Europe. The most prominent of these was the establishment of the European Defence Agency. We will work with the Agency and our European partners to shape an effective European Defence Equipment Market. The opportunity to compete on level terms in Europe, at all points in the supply chain, is of profound importance to both customers and suppliers. We must not lose sight of the fact that, if it is lost, it is ultimately our people at the sharp end who will suffer.