Defence review details revealed as UK and Germany deepen defence collaboration

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Further details emerge about Government’s defence review

 

More detail emerged this week about the Government’s mid-point re-evaluation of the 2015 National Security Strategy and Strategic Defence and Security Review, as revealed by the Cabinet Office last week. In an article published in Defense News on Wednesday, A government source revealed that the Cabinet Office-led study would run for 90 days and be published by year-end. Meanwhile, industry sources claimed that the MOD strand has been underway for around a month and is set to run for a total of 60 days, led by Will Jessett, the department’s director for strategic planning. One MOD source is quoted as claiming this work is not about the affordability of the equipment plan but rather about refreshing cross-government priorities. True or not, as the journalist points out, significant questions remain about the affordability of the programme.

 

UK and Germany to deepen defence cooperation

 

Defense News also reported on a future agreement between London and Berlin that will allow for future co-operation activities, which was remarked on in the MOD’s 2016 report and accounts published on 19th July. According to the report, this ‘Joint Vision Statement’ has been finalised ready for signature. September’s general election in Germany has put this on hold, but bilateral discussions continue, including the Ministerial Equipment and Capability Co-operation group, which most recently met on 13th June. No details of the agenda have been made available, though it is likely to have taken in both existing and potential future collaborative programmes. How this will sit alongside similar bilateral agreements between the UK and France, and France and Germany, remains to be seen. On this, the Financial Times ran a piece on Monday on the proposed Franco-German combat jet collaboration (as reported last week) that considered the consequences for UK industry not being party to this.

 

White House orders review of US defence industrial base

 

In a show of commitment to his ‘America First’ policy to reverse the offshoring of manufacturing jobs, President Trump signed an executive order on 21st July instructing a year-long review of the US defence industrial base and supply chains. The order mandates that federal agencies compile an assessment of what raw materials, manufacturing and components are vital for national security, where they are currently sourced and what contingencies might disrupt supply chains. In addition, the order calls for an outline of current US defence manufacturing capabilities, identifying areas with, or vulnerable to, gaps in domestic production. The results will be used to determine where this should be strengthened. Implications for UK suppliers into the US Department of Defense, either direct or through the supply chain, are not yet apparent. However, with much discussion this week about a post-Brexit UK/US free-trade agreement, such an order implies that defence will require special consideration, or exemption from any such deal. Whether the US approach to domestic supply chains will influence or be mirrored in the UK MOD’s own industrial policy refresh, due later this year, remains to be seen.

 

2016’s Top 100 Defence Companies revealed

 

Defense News unveiled its ‘Top 100 Defence Companies list’ for 2016 on 21st July, showing an overall annual increase in global revenue for the first time in five years. Total worldwide revenues for the Top 100 companies totalled $364.8Bn(USD), an increase of 3.6% over the 2015 figures, but still lower than in 2014. The top ten firms accounted for 54% of the total, with Lockheed Martin, Boeing and BAE Systems respectively retaining the top three ranking positions. In addition to BAE Systems, nine other companies headquartered in the UK featured on this list; Rolls-Royce (15), GKN Aerospace (25), Babcock International (29), Cobham (47), Serco (55), Meggitt (65), Ultra Electronics (75), Qinetiq (79), and Chemring (89). The full list can be found here.

 

 

Parliamentary Questions:

 

  • A raft of questions were answered this week on the cost and capability of the F-35 procurement, presumably asked in the wake of the critical The Times article of 17th July. MOD confirmed that the UK programme remains on track, and within time and cost approvals. The Department has taken delivery of 11 F-35B aircraft and expects to have 14 by the end of 2017. On unit cost, MOD said this is published when the US-led Joint Programme Office lets a contract, while the cost of aircraft to be procured in future contracts is still to be negotiated - estimates on this were withheld as disclosure would prejudice commercial interests. With regard to capability, there are 19 ‘deficiency reports’ that remain open out of 2,600 raised for all three variants of the F-35 to date. All have acceptable plans for resolution or mitigation to allow their closure prior to achieving initial operating capability.

 

  • On the same subject, Madeline Moon MP asked a number of specific questions on F-35 communications interoperability. The Department insisted F-35 would be fitted with all necessary communications to enable interoperability with other UK platforms and NATO-partner capabilities.  Across a carrier strike task group, there will be an array of sensors, data links and information services that will be used to communicate with and identify UK F-35, and HMS Queen Elizabeth will have a number of systems in place for secure communications. Further details were nevertheless withheld for reasons of operational security.

 

  • Asked which MOD equipment programmes are being procured under the US Foreign Military Sales (FMS) agreement, it was revealed that MOD has more than 300 FMS agreements relating to equipment and support, with a total value of just under $12Bn(USD). However, further details were withheld on commercial  confidentiality grounds.

 

  • Asked if MOD will publish the expected cost per ship of the Type 26 Global Combat Ship, the Minister replying referred to the 2nd July announcement that of a contract award valued at £3.7 billion to manufacture the first batch of three frigates. However, detailed pricing of the contract is a commercial matter between the MOD and BAE Systems and was withheld the cost per ship as its publication would prejudice commercial interests. The Minister also repeated the commitment to build a class of eight ships, expecting to contract for the remaining five in the early 2020s.

 

  • Asked what plans MOD has to replace the RAF Puma fleet; it was explained that under current plans the platform will remain in service until at least 2025. Work to investigate delivery of this capability beyond the mid-2020s is under way but it would be premature to provide a formal decision date.

 

 

Other news:

 

Wildcat helicopter work to stay in UK (Ministry of Defence)

 

Dreadnought missile fire control system contract awarded (UK Defence Journal)

 

Defence Secretary: "big decks and fast jets are back" (UK Defence Journal)

 

Defence External Innovation Advisory Panel meets for first time (Ministry of Defence)

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