Weekly Defence Insights by Ollie Welch NDI

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UK triggers Article 50 with warning on security cooperation

 

On Wednesday the Government formally notified the European Council of the UK’s intention to leave the EU, triggering the two-year negotiation period before exit. Responding on behalf of the UK manufacturing sector, Terry Scuoler, CEO of EEF, said that “the Government must ensure Britain’s manufacturers are not disadvantaged in any way as we prepare to leave”. EEF and NDI welcome the Government’s call for a deep and special partnership with the EU and supports a deal that leads to a new relationship with effortless trade, underpinned by a regulatory environment that is co-operative and comprehensive. A deal that leads to more bureaucracy and more cost for companies would be a very poor deal for Britain, while leaving the EU without a deal cannot be an option. As was widely reported, in her letter to the EU Council president, the Prime Minister appeared to link security cooperation to the successful conclusion to negotiations, including the securing of a new trade deal. The Government was subsequently forced to deny that the UK was seeking to establish any such dependency.

 

Today, ahead of a meeting with his US counterpart, Defence Secretary Michael Fallon set out his Atlanticist view of the role the UK will play in global security following Brexit, stating that “our defence relationship with the US is unprecedented in its depth and scope. As we leave the EU, our bilateral relationships matter more than ever, so we’ll be enhancing our cooperation and investing more in our joint F-35 fast jet programme.”

 

MOD facing £10 billion funding shortfall

 

The Times (paywall) is reporting this morning that MOD is facing a £10 billion shortfall in funding due to escalating equipment costs. The challenges include the escalating cost of the Dreadnaught submarine programme, with The Times reporting a projected cost £6 billion higher than the Government’s official estimate, the likely need for an extra £6 billion over ten years for “support” items to keep ships, tanks and jets running, an exposure of up to £3 billion over ten years in foreign exchange after a post-Brexit drop in the value of the pound and the ongoing need for MOD to meet its own efficiency saving target of £9.8 billion by 2026. These risks were outlined by the National Audit Office in their response to the MOD’s 2016 Defence Equipment Plan, published in February. However, Times sources indicate that these risks are manifesting much sooner than anticipated.

 

UK and France agree joint concept phase for weapons development

 

The MOD this week signed an agreement with the Délégué Général pour l’Armement (DGA) to begin a three-year concept phase with MBDA for the development of a Future Cruise/Anti-Ship Weapon programme, with the UK and France contributing an initial €50 million. This initial stage is intended to define the missile designs and reduce risks to inform decisions about the next stage of the programme. Both sides have talked up the efficiency savings to be found from collaboration. Alongside sharing costs, there will be shared access to each other’s national technology expertise, trials and test facilities.

 

Parliamentary Questions of interest:

 

  • Asked – in the context of the Carrier Strike programme - if MOD will prioritise UK suppliers during contracting negotiations on complex support arrangements for Carrier-Enabled Power Projection capability MOD inevitably replied that its default approach to meeting defence requirements remains open competition (which, it was stated, drives efficiency into the UK defence industry). UK suppliers nevertheless are making an important contribution to Carrier Strike, the Department highlighting the F-35 programme benefiting UK industry by around 15% (by value) per aircraft.

 

  • Asked what steps the MOD is taking to address the long-standing skills gaps in contract management teams, MOD replied that it is ensuring that personnel operating in the defence acquisition system have the necessary skills and competences, including those in commercial roles. While not providing comprehensive detail on this assertion, the Minister replying highlighted the Commercial Professionalism Programme aimed to increase the professional skills of the commercial function.

 

  • Asked what estimate had been made of the cost of the Type 45 power improvement programme, MOD said that a solution was being procured through competition. The aim is to have completed the competitive process and be in a position to award the contract in early 2018. The programme cost and the timetable for completing the work will be determined at the main investment decision point.

 

  • Asked what the timetable is for the installation of a tactical data link on the Wildcat helicopter, MOD replied that a feasibility study has recently been concluded. However, the project remains in its early stages of assessment and no timetable has yet been set.

 

Other news:

 

NDI host webinar with British Embassy in Washington DC on the US Defence Market – View the broadcast here (EEF)

 

BEIS launches Scale-Up Taskforce to identify barriers to small business growth (Department for Business, Energy and Industrial Strategy)

 

BAE win $42m contract modernise US Navy cruiser USS Vicksburg (BAE Systems)

 

New British Carriers Couldn't counter new Russian Missile (The Independent)

 

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