Government publish Green Paper on National Security and Infrastructure Investment
On Tuesday, the Government published a Green Paper on the National Security and Infrastructure Investment Review, which will consider the national security implications of foreign mergers and acquisitions (M&A). This proposes lowering the turnover threshold for scrutiny of M&A from £70 million to £1 million in two specific sectors; the dual use and military use sector, and parts of the advanced technology sector. This would allow for greater Government examination of cases where this could impact on national security. Longer term reforms will then seek to ensure adequate scrutiny of whether significant investment in the UK’s most critical businesses raises any national security concerns, allowing intervention in circumstances where this might be the case.
The Government’s stated intention is not to impact upon access to new capital and the UK will remain open to foreign investment, the changes affecting only a small proportion of transactions. However, UK companies active in the defence sector are more likely than most to be affected and, the extent to which the Green Paper proposes to lower the turnover threshold, means that for the first time SMEs are liable to finding themselves subject to scrutiny in any such situation.
EEF and NDI are therefore collating views from members in order to form a collective response to the consolation. If you would to contribute to this, please forward your comments to Ollie Welch, Head of Defence, Aerospace and Security Policy at EEF. His email address is email@example.com. Views on the short-term proposals will need to be with us by Tuesday 7 November. If you would like to reply to the Government’s consultation direct, responses can be submitted via Citizen Space https://beisgovuk.citizenspace.com/ccp/nsiireview/ or sent to firstname.lastname@example.org. You have until Tuesday 14 November to respond to the short term proposals and until Tuesday 9 January on the long-term proposals.
BAE Systems Signs Type 31e Teaming Agreement with Cammell Laird
On Wednesday, BAE Systems and Cammell Laird announced a Teaming Agreement to bid for the manufacture of the Type 31e, the Royal Navy’s next-generation general purpose frigate. Under the agreement, Cammell Laird would Prime, build and assemble the vessels, with BAE Systems providing specialist skills in warship design, engineering and combat systems. The proposal is a response to the MOD’s National Shipbuilding Strategy, launched in September, and includes a strategy fo enhancing the ship’s export potential. The Teaming Agreement has also been constructed so as to ensure the delivery of the first three Type 26 frigates and five Offshore Patrol Vessels currently on contract to be built by BAE Systems in Glasgow.
Airbus and Bombardier strike deal of C Series jet
Airbus this week reached a no-cost deal with Bombardier that could save Bombardier jobs in Northern Ireland, threatened by the potential impact of penalty duties levied by the US due to alleged state subsidies in relation to Bombardier’s C Series passenger jets. The case was a victory for Boeing, which brought the complaint, which arose from the deal for Bombardier to deliver 125 jets to Delta Air Lines from 2018. Subject to Canadian Government approval, Airbus will acquire a 50.01 percent interest in C Series Aircraft Limited Partnership, which manufactures and sells the plane. Airbus will not pay anything for the stake, a recognition that the unit will see sales increase merely by virtue of being part of the Airbus group, some of which will now be built at their Alabama facility.
MOD announced winners of innovation challenge
It was announced at the weekend that the MOD’s Defence and Security Accelerator has awarded funding to four companies with high-tech concepts to assess potentially hazardous scenes. The awards, worth over £1.6m, came as part of the Autonomy in Hazardous Scene Assessment competition, aiming to bring designs into being, and eventually use, in a much shorter space of time than is usually possible. The first round of the competition saw 18 companies selected for funding. This, the second round, chooses four of those initial winning companies to further develop their concepts. Contracts have been awarded to Autonomous Devices Limited in Milton Keynes, Bath-based BMT Defence Services, Horiba Mira, based in Nuneaton and Loughborough University.
Asked what assessment the MOD has made of the effect on defence and aerospace manufacturing capability in the North West of the UK leaving the EU, the Department replied in general terms that it was working closely with the defence industry to understand the implications and opportunities presented by Brexit. MOD noted that the European defence sector is already closely integrated; leading companies have a presence right across Europe, and across the UK, including the North West. It noted that current major European collaborative capability projects, such as the Typhoon programme, are managed bilaterally or with groups of partners, rather than through the EU. MOD stated that it wanted to ensure, in partnership with the European Union, that our industries can continue working together to deliver the capabilities that the UK Armed Forces require.
Asked to forecast the value of MOD’s investment in P8 Maritime Patrol Aircraft and Apache helicopters, MOD responded that it is procuring nine P-8A Poseidon maritime patrol aircraft under a Foreign Military Sale (FMS) arrangement with the US Government with an estimated total cost of $3.2 billion, which includes the cost of the aircraft, initial support, training, sonobuoy and weapons provisioning, together with training devices. The MOD is also purchasing 50 Apache helicopters, also under a FMS arrangement with the US Government at an estimated cost of $2.3 billion. This figure includes an initial two-year support package, spares, training simulators and other supporting equipment for the helicopters.
Asked whether the Government will conduct a new Strategic Defence and Security Review when the UK leaves the EU, the department responded that, in the light of the rapidly changing international situation and the intensification of the threats identified in the 2015 Review, the Government is already conducting a National Security Capability Review. This will look at the specific capabilities available not just to across Government to ensure that as threats intensify the UK continues to have the right capabilities in the right places to meet them. The issue as to whether Brexit would necessitate a further review was not addressed.
MOD publish Defence in Numbers factsheet (Ministry of Defence)
Lockheed awarded $11.6 million to support F-35 trials from Queen Elizabeth class carriers (Defense News)