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4 février 2014 2 04 /02 /février /2014 21:30
Turkish PM Seeks More Control Over Military Procurement

 

Feb. 4, 2014 - by BURAK EGE BEKDIL – Defense News

 

ANKARA — Though embattled by recent corruption scandals, the Turkish government continues to reshape the civilian-military balance in procurement decisions, proposing to extend the terms of commanders it deems “government-friendly.”

 

A draft bill proposed to Parliament Jan. 21 empowers Prime Minister Recep Tayyip Erdogan to extend the terms of top brass. It states that the terms of the commanders of the Land Forces, Navy and Air Force may be extended “upon recommendation by the chief of General Staff and endorsement by the prime minister.”

 

If passed, the bill could keep the incumbents in office until 2016-’17 (depending on the commander’s retirement age), including Army Gen. Necdet Ozel, chief of the General Staff.

 

Experts and industry sources agreed that an annual reshuffle in August underscored a visible shift in power from the generals to civilians in controlling defense procurement.

 

They said the new command structure featured generals who would fully respect the government’s authority in procurement and politics, agreeing to retreat to a minimal role in specifying requirements and choosing bidders.

 

The Supreme Military Council, which is led by Erdogan and decides on promotions and retirements of top military officers, announced in August the unexpected retirement of the country’s paramilitary gendarmarie force commander, Gen. Bekir Kalyoncu, who had been the leading candidate to take over Land Forces. Kalyoncu was viewed as a government critic.

 

Instead, Gen. Hulusi Akar was given the job and, according to custom, would be expected to replace Ozel as armed forces chief in 2015. But under the new law, he could remain longer.

 

In the same reshuffle, Vice Adm. Bulent Bostanoglu was appointed commander of the Navy, Lt. Gen. Akin Ozturk as head of the Air Force, and Gen. Servet Yoruk as commander of the gendarmarie.

 

“The government and military wings of the procurement mechanism have been working in perfect harmony and coordination,” a senior procurement official said Jan. 27. The official would not comment on the draft bill.

 

In the 1990s, the generals had the upper hand in procurement decisions. Since Erdogan rose to power in 2002 and subsequently won three landslide election victories, the military’s role in politics and procurement has diminished.

 

“The draft bill clearly indicates Erdogan’s intentions to maintain the favorable procurement [and political] equilibrium in which he feels safe and can run his one-man show,” one London-based Turkey specialist said.

 

A senior Turkish military officer declined to comment.

 

In October 2012, Erdogan’s government introduced new rules to regulate procurement and broaden the jurisdiction and administrative powers of the civilian procurement agency, the Undersecretariat for Defense Industries (SSM). Under the new rules, a program takes off when a military request for a weapon system has been approved by the SSM and the defense minister.

 

The SSM is solely responsible for determining the ideal modality for every procurement program. It also can buy from a single source when it deems necessary due to “national interest, confidentiality, monopoly of technological capabilities and meeting urgent requirements.”

 

Analysts said the new rules, coupled with the profile of the incumbent top brass, means the “one-man show in procurement in the powerful personality of the prime minister would be bolstered.”

 

“That’s precisely why Erdogan wants to have the current commanders in office longer than they could stay under the present regulations,” said one defense expert here.

 

Several programs and contracts spanning the next few years and amounting to billions of dollars await critical decisions.

 

Turkey will decide in about a year whether to stick by a September award of a $3.44 billion contract to China Precision Machinery Import-Export Corp. to build Turkey’s first long-range air and anti-missile defense architecture.

 

Turkey has come under increasing pressure from its NATO allies, especially the US, to change course. The Chinese contractor is on a US sanctions list as part of the Iran, Syria and North Korea Non-Proliferation Act. Turkey has said it would turn to European and US bidders if talks with the Chinese contender fail.

 

Under Erdogan, the procurement bureaucracy also will decide whether to sign an $800 million contract with Sedef, an Istanbul shipyard partnered with Spain’s Navantia to build Turkey’s first landing platform dock ship; select another shipyard to construct four Milgem corvettes; decide whether to sign a multibillion-dollar deal with Sikorsky to buy utility helicopters; pick up a serial production contractor for the locally developed Altay new-generation main battle tank; and decide on Turkey’s future in the US-led F-35 program.

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19 décembre 2013 4 19 /12 /décembre /2013 08:20
Navy releases funds for V-22 procurement

 

 

PATUXENT RIVER, Md., Dec. 18 (UPI)

 

Funding for a second-year procurement of Bell-Boeing V-22 Osprey aircraft for the U.S. Marine Corps and U.S. Air Force has been executed by the U.S. Navy.

 

The funding amount is $1.3 billion and covers three aircraft for the Air Force and 19 aircraft for the Marines.

 

"Since Initial Operating Capability in 2007, V-22s have been answering the nation's call traveling into harm's way," a Navy official said.

 

"From combat operations in Iraq and Afghanistan to the recent disaster relief and humanitarian assistance in the Philippines, the V-22 continues to prove itself as a game-changing aircraft. Ospreys enable our Marine Corps and Air Force Special Operations to execute missions not possible with conventional aircraft."

 

The V-22 is a multi-mission, tilt rotor aircraft with both a vertical takeoff and landing and short takeoff and landing capability. It has a maximum speed of 316 miles per hour at sea level and a range of 879 miles. A total of 233 V-22 Ospreys are in operation.

 

The second-year funding comes under a multiyear funding procurement contract for the purchase of a total of 100 V-22s over the next five years.

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12 décembre 2013 4 12 /12 /décembre /2013 08:50
UK MoD Drops Acquisition Outsourcing, Plans New Agency

Dec 11, 2013 defense-aerospace.com

(Source: Reuters; published Dec 10, 2013)

 

Britain Ditches Plan to Outsource Military Buying (edited excerpt)

 



Britain said on Tuesday it had abandoned plans to engage a private contractor to run a multi-billion dollar defence procurement programme plagued by spending overshoots, delays and technical problems.

Britain's Conservative-led government had earlier this year trumpeted a reform of the way it buys equipment for its armed forces to help rein in public spending.

The plan hit problems when one of two bidders for the contract pulled out on Nov. 19, leaving only a consortium led by U.S. engineering group Bechtel, and with PA Consulting and PricewaterhouseCoopers, in the competition.

"We do not have a competitive process. I have therefore concluded that the risks of proceeding with a single bidder are too great to be acceptable," Defence Secretary Philip Hammond said, confirming earlier reports of the cancellation.

…/…

"It's another embarrassing U-turn for the government," Labour defence spokesman Vernon Coaker told parliament. "His flagship policy on defence procurement has come crashing down around him." (end of excerpt)


Click here for the full story, on the Reuters website.

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11 décembre 2013 3 11 /12 /décembre /2013 08:50
UK To Establish Government Organization To Handle Defense Procurement, Support

 

Dec. 10, 2013 – Defense News

 

LONDON — The British Ministry of Defence has scrapped controversial plans to hand management of its £14 billion (US $22.9 billion) a year defense procurement effort to the private sector, and instead is setting up what it calls a bespoke central government trading entity based on the present equipment and support organization to buy hardware and services.

 

Defence Secretary Philip Hammond told Parliament Dec. 10 that the government would set up the new organization starting in April with current Defence Equipment & Support (DS&E) boss Bernard Gray as the chief executive.

 

Hammond said the new organization would procure private sector expertise through a series of support contracts to deliver “key changes to systems and processes and to strengthen program management while organic capabilities are built.”

 

Questioned by ex-Defence Procurement Minister Peter Luff about the areas where external business partners might play a role in the revamped DE&S, Hammond said “what we envisage in the DE&S plus model is probably three separate contracts; one to provide us with program management support, a spine for the organization; one to provide us with HR support, an area of particular weakness in DE&S; and a task-and-finish project to install some additional financial control systems within the organization.”

 

An MoD spokesman said the new entity is an “arms length body working within specially agreed rules that are different to those used by the rest of the civil service.”

 

The new organization will be accountable to Parliament and have its own board and an independent chairman.

 

The Labour opposition party labeled Hammond’s statement an “embarrassing U-turn”.

 

The new organization is being exempted from normal Treasury rules so it can recruit and reward staff along more commercial lines than is currently allowed under civil service rules.

 

The MoD said it had only shelved its preferred proposals for a government-owned contractor-operated (GoCo) scheme, and that they could be revived following following the 2015 general election.

 

Despite recent improvements in performance, the British have been looking to radically change the way they procure and support the military here after years of lengthy delays and cost overruns to major equipment programs.

 

The procurement changes are part of wider transformation plans being pushed by the government, including handing over responsibility for budgets to the individual service chiefs.

 

The GoCo scheme, of which former businessman and journalist Gray was the architect, was the government’s preferred option to provide the skills and expertise missing at DS&E.

 

The decision to halt the GoCo work was taken after one of the two final bidders for the management contract withdrew in November, leaving only a Bechtel-led consortium called Materiel Acquisition Partners (MAP) in play alongside an in-house proposal known as DE&S Plus.

 

Hammond told Parliament that the withdrawal of the CHMHill2-led consortium meant the MoD did not have a competitive process and the “risks of proceeding with a single bidder are too great to be acceptable.

 

“I have, therefore, decided to build on the DE&S Plus proposition, transforming DE&S further within the public sector supported by the injection of additional private-sector resources ensuring that the organization becomes “match-fit” as the public sector comparator for a future market-testing of the GoCo proposition,” he said.

 

Hammond said Bechtel had already expressed an interest in bidding for the support contract work.

 

A spokesperson for Bechtel signaled the company’s ongoing interest in procurement transformation but said the MAP proposals for the GoCo would have saved the MoD billions of pounds to reinvest in new equipment .

 

“MAP submitted a comprehensive proposal to transform UK military procurement. We were confident this would have generated billions of pounds of savings for the Armed Forces to invest in new equipment. It is obviously disappointing that the other team’s withdrawal at this late stage has led to a collapse in the competition. However, we remain committed to exploring with MoD how best we can contribute to future reforms,” said the spokesperson.

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12 septembre 2013 4 12 /09 /septembre /2013 07:50
Foxhound Patrol Vehicle in Afghanistan - photo UK MoD

Foxhound Patrol Vehicle in Afghanistan - photo UK MoD

Sep. 11, 2013 By ANDREW CHUTER – Defense news

 

LONDON — Helicopter support contracts, a further order for Foxhound armored vehicles and the creation of an armor research center were unveiled by British defence procurement minister Philip Dunne on the second day of the DSEi defense show Sept 11.

 

Pick of the orders, at least in size, was a six year £367 million deal with Rolls Royce Turbomeca to support the RTM322 engine used to power the British Army’s Apache attack helicopter and the Merlin machines used by the Royal Navy and, the Royal Air Force.

 

Dunne told the DSEi audience that the Ministry of Defence expected to save more than £300 million compared with previous support arrangements.

 

Dunne also announced a further order for 24 Foxhound protected patrol vehicles from the Force Protection Europe arm of General Dynamics.

 

The £23 million deal brings total British military Foxhound orders to 400. To date, the company has delivered 350 of the 376 vehicles previously ordered.

 

The vehicle was deployed for the first time to Afghanistan in 2012 after a launch order from the British in 2010.

 

Armor was also the subject of Dunne’s third announcement: a plan to create a ceramic armor development center in Newport, South Wales, involving the MoD’s Defence Science and Technology Laboratory and Kennametal Manufacturing.

 

The joint funding of a £2 million specialized manufacturing center will enable the partners to develop full-size ceramic armor components for personnel and vehicle protection in sufficient quantity to enable full-scale impact tests.

 

The MoD said in a statement that improved development and production will help reduce the reliance on armor imports.

 

Dunne said the facility, trhe largest in Europe “will further advance the UK’s freedom of action in advanced ceramic armor.”

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30 août 2013 5 30 /08 /août /2013 07:35
Indian MoD, Contractor Faulted in Guided-missile Purchases

Aug. 29, 2013 - By VIVEK RAGHUVANSHI  - Defense News

 

NEW DELHI — India’s Defence Ministry has been severely criticized for buying 10,000 Konkurs-M anti-tank guided missiles (ATGMs) from Russia despite having a licensed production facility for the missiles at state-owned Bharat Dynamics Limited (BDL).

 

The latest report of the comptroller and auditor general of India (CAG), placed in the Indian Parliament recently, said, “Failure of BDL to supply the missiles intended by the Indian Army resulted in conclusion of a contract for import of 10,000 missiles at a cost of $188 million defeating the very objective of avoiding dependence on foreign supplier for the ammunition.”

 

A source in BDL said the Russians failed to transfer the technology to India, which kept BDL from absorbing the information on time and led to production delays. However, a Russian diplomat here said all promised technologies for the advanced Konkus-M missile have been transferred to BDL.

 

However, the CAG report said BDL was slow in enhancing the production base for the Konkurs-M missiles.

 

“The Hyderabad-based defense public sector unit BDL planned to increase its production capacity from 3,000 to 4,500 missiles per year by 2012, and up to 6,000 missiles by 2013. In reality, the capacity was augmented by only 500 missiles per annum until February 2013.

 

“The delay in supply created a capability gap in the Army to fight tanks fitted with [explosive reactive armor] panels, thereby impacting its operational preparedness,” the CAG report said.

 

“Production of missiles is a complex challenge for India, which includes transfer of technology, absorption, acceptance of the missiles by the services and finally serial manufacturing the same based on the demand by the armed forces,” said Rahul Bhonsle, retired Indian Army brigadier general and defense analyst. “The failure of the BDL, which has been touting Konkurs as one of its products for long, could be due to glitches in this entire cycle, thus its inability to deliver missiles to the Army has led to large deficiencies forcing the government to import the same.”

 

Another retired Indian Army officer said the delay by BDL led to a shortage of ATGMs, which finally led to purchases from Russia. “An inquiry should be held to find if the delays by BDL were intentional and meant to benefit the Russians,” he said.

 

On the delays in production, a BDL official who did not want to be identified said there were delays in transfer of technology, but added there was also a delay in giving orders to BDL from the service headquarters.

 

An Indian Army officer said the best option is to buy fully formed missiles from original equipment manufacturers, rather than from BDL, to meet operational requirements.

 

When asked about BDL’s performance, the Army official said BDL’s monopoly should be broken and the MoD should identify another agency, preferably in the private industry.

 

Former Indian Army Chief Gen. V.K. Singh had warned of the shortages of ammunition, including Konkurs-M missiles. The November purchase of the 10,000 Konkurs-M missiles was a desperate reaction to Singh’s warning, an Indian Army source said.

 

With the serious concerns raised by the CAG regarding BDL’s production capabilities, alternatives will have to be explored to meet the Army’s requirements. “India has to address the entire missile-production cycle in BDL on priority or look for alternate foreign sources until BDL provides assured delivery,” Bhonsle said. “The large requirement means that only the US or Russia will have production facilities to provide thousands of missiles that are required by the over 400 battalion foot and mechanized infantry and approximately 70 tank regiments.”

 

An MoD official said the Army’s initial requirement is about 24,000 ATGMs to arm its 356 infantry units, adding that this procurement will be completed by the end of the twelfth plan period in 2017.

 

India has also been negotiating with the United States for the purchase of Javelin ATGMs and with Israel for Spike ATGMs. MoD sources said the negotiations with the US have been stalled over technology transfer, while negotiations with Israel on the Spike are also on hold, but gave no reason.

 

The purchase of new generation of ATGMs worth $3 billion could be re-floated as a separate program by the end of the year, the source said.

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2 juillet 2013 2 02 /07 /juillet /2013 12:50
European Defence Agency Launches Defence Procurement Gateway
Brussels | Jun 28, 2013 European Defence Agency
 

The European Defence Agency today officially launched a new section on its website dedicated to defence related business opportunities and information. This new “Defence Procurement Gateway” will allow European governments, industry and academia to easily access information related to defence procurement at EU and national levels.

 

“The Defence Procurement Gateway is a user-friendly tool designed to increase awareness and visibility of defence business opportunities and information. This is not a complex new system. We simply feed available information from a number of open sources into one tool”, said Peter Scaruppe, Director Industry & Market at the European Defence Agency.

Aimed at enhancing transparency in the European Defence Equipment Market, the web-based tool offers unique access to a comprehensive set of European defence procurement information and business opportunities.

The gateway provides information on defence procurement opportunities published at EU level through Tenders Electronic Daily, the online version of the Supplement to the European Official Journal dedicated to European public procurement, as well as other defence contract opportunities published at national level or by European organisations and agencies such as the EDA. Specifically for governments the gateway contains such functions as the new EDA e-QUIP portal and CODABA.

In addition, it brings together in one single place all relevant EU Regulations (e.g. directives and specific guidance notes published by the European Commission), court and infringement cases, EDA Codes of Conduct, EDA Procurement Rules & Regulations, specific EDA portals (i.e. EDSIS, REACh, Security of Supply), national directories (including access to national procurement policy related websites), industry directories (containing also information on defence industry associations at EU and national level) as well as information on relevant training and conferences.

The Defence Procurement Gateway will additionally include an industry directory (“Yellow Pages” section) serving as a platform for European defence industry to market its knowledge and expertise in the defence domain. So far, about 80 companies have registered to be listed in this section. More registrations are expected after its launch.

The Defence Procurement Gateway is accessible through the EDA website (www.eda.europa.eu/procurement-gateway) with many of its features being publicly available. The tool will be constantly updated and monitored by the Agency. 

 

More information:

 

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27 juin 2013 4 27 /06 /juin /2013 18:16
EDA Procurement Gateway

27.06.2013European Defence Agency

 

EDA Procurement Gateway is to promote an open, transparent and competitive European Defence Equipment Market, a critical underpinning of a robust European Defence Technological and Industrial Base (EDTIB). This portal gathers defence procurement related information for stakeholders operating in the European Defence Equipment Market.

Oppertunities
 
Information
Procurement Yellow Pages

TED

Participating Member States

  • Austria
  • Belgium
  • Bulgaria
  • Cyprus
  • Czech
  • Germany
  • Estonia
  • Greece
  • Spain
  • Finland
  • France
  • Hungary
  • Ireland
  • Italy
  • Lithuania
  • Luxembourg
  • Latvia
  • Malta
  • Netherlands
  • Poland
  • Portugal
  • Romania
  • Sweden
  • Slovenia
  • Slovakia
  • UK

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24 juin 2013 1 24 /06 /juin /2013 13:50
Organisation des industries de défense en Europe source ead-minerve.fr

Organisation des industries de défense en Europe source ead-minerve.fr

21/06/2013 Par Pascal Pincemin, Guillaume Martinez* - LeFigaro.fr

 

TRIBUNE - Pascal Pincemin*, associé membre du comité exécutif, et Guillaume Martinez*, associé M & A transaction services chez Deloitte, estiment que l'Europe devra prendre des initiatives sur les procédures d'achats publics pour permettre l'émergence d'un marché européen de la défense.

 

Le livre blanc de la défense 2013 a poursuivi un objectif: mettre en cohérence les objectifs stratégiques, les capacités opérationnelles et les contraintes budgétaires de la France.

 

Si les propositions concernant les forces armées sont désormais clarifiées et consistent pour l'essentiel en un transfert à budget constant (au niveau du budget 2013: 31 milliards d'euros soit 1,76% du PIB) d'effectifs et de moyens vers trois axes prioritaires - les deux premiers déjà identifiées en 2008 - que sont la cyberdéfense, le renseignement et les forces spéciales, qu'en est-il de l'industrie de défense française? Quels enjeux, quelles conséquences, quelles difficultés de mise en œuvre pour un secteur qui regroupe plus de 4000 entreprises en France?

 

À court terme: augmenter les ventes!

 

Alors que les situations de crise se multiplient et que l'éventail de menaces s'élargit, les industries européennes sont prises en tenaille entre la baisse tendancielle des budgets et des commandes d'État, et l'agressivité commerciale des firmes américaines et des acteurs issus des pays émergents. Pour autant, le contexte d'un marché européen atone contraint les acteurs du secteur de la défense à considérer les exportations comme un élément central de leurs modèles commerciaux. La priorité immédiate des industriels est simple: vendre… vendre sur les marchés en croissance, en Asie, au Moyen-Orient et en Amérique latine.

 

Continuer à renforcer la performance opérationnelle pour maintenir ses capacités d'innovation

 

Les industriels n'ont d'autres choix que de proposer de nouveaux produits répondant aux besoins des différentes armées (interarmées et intégrables) et exportables. Ils doivent aussi réduire les coûts de développement et de production, notamment en simplifiant les spécifications, allongeant les séries et développant les accords de coopération aux niveaux français et européen. Ils doivent également faire évoluer leurs offres vers plus de services intégrés, comme le maintien en condition opérationnelle, et se tourner vers les marchés les plus porteurs, que sont notamment la protection des voies maritimes, les systèmes intégrés de commandement et de contrôle, et la cybersécurité, autant d'axes prioritaires mis en avant dans le livre blanc 2013.

 

La capacité de projection des entreprises hors du marché d'attache se heurte néanmoins à deux difficultés que sont la fragmentation de l'industrie française, et les demandes des pays émergents de transfert de technologies. Sur ce dernier point, l'absence de nouveaux programmes de développement domestiques signifie moins d'argent engagé en recherche et développement, et donc un risque de perte progressive de l'avance technologique qui permet justement de composer avec les exigences de compensation.

 

Quelles incidences sur le marché européen?

 

On pourrait croire que la diminution des ressources au niveau des États aurait favorisé des rapprochements et la recherche de plus de partage entre industriels et entre pays. Il n'en est rien pour le moment.

 

Pour autant, l'Europe devra prendre des initiatives sur les procédures d'achats publics pour permettre l'émergence d'un marché européen de la défense et éviter entre autres que les concurrents américains, protégés par le «buy american act» sur leur territoire, se trouvent en situation d'égalité avec les industriels européens en Europe.

 

La consolidation des principaux acteurs de l'industrie européenne aura-t-elle lieu? Aux États-Unis, la consolidation des maîtres d'œuvre s'est effectuée au pas de charge dans les années 1990, avec l'encouragement et le soutien du gouvernement américain. Ce sont ainsi plus de cinquante groupes qui ont fusionné pour aboutir à cinq maîtres d'œuvre: Boeing, Lockheed Martin, Northrop Grumman, General Dynamics et Raytheon. L'Europe, dont les budgets réunis sont nettement inférieurs, compte toujours un certain nombre de grands maîtres d'œuvre. L'État français qui est présent, directement ou indirectement, au capital de la majorité des grands acteurs français de défense doit en effet composer avec trois objectifs contradictoires: développer la concurrence pour obtenir les meilleurs prix, construire des champions industriels nationaux et garder le contrôle de son industrie pour sécuriser l'approvisionnement en équipements critiques.

 

La consolidation des acteurs européens reste une question ouverte. Aux États-Unis, les fusions entre les grands maîtres d'œuvre se sont accompagnées de sorties d'activités massives, lesquelles ont généré, avec l'aide de fonds d'investissement, l'émergence de nouveaux fournisseurs (L-3, Transdigm) centrés sur les technologies clés indispensables aux 5 grands maîtres d'œuvre. Avec le recul, cette dynamique a été fondamentalement vertueuse pour les sociétés ainsi regroupées: elles se sont retrouvées en première ligne face à des clients multiples plutôt que cantonnées à des rôles de sous-traitant captif.

 

Dans ce contexte, il est important de rappeler que l'appui du monde financier est nécessaire pour accompagner ce type de consolidation sectorielle. Certains fonds spécialisés existent déjà en France (Aerofund en est un exemple), d'autres sont attendus.

 

* Pascal Pincemin, associé membre du comité exécutif chez Deloitte, est responsable mondial programmes clients industries stratégiques; Guillaume Martinez, associé M & A transaction services chez Deloitte, est spécialiste aérospace & défense

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12 juin 2013 3 12 /06 /juin /2013 18:50
Achats : Londres envisage de privatiser sa « DGA »

12/06 Nicolas Madelaine, Correspondant à Londres Les Echos

 

Une entreprise privée pourrait se substituer à la DGA britannique. L'initiative soulève de nombreuses questions.

 

Parmi tous les services publics que le gouvernement de David Cameron veut privatiser, comme le Royal Mail, il en est un qui détonne. Il s'agit de Defence, Equipment & Support (DE & S), l'entité du ministère de la Défense responsable des achats d'équipements militaires, à peu près l'équivalent de la Direction générale de l'armement (DGA) française. En début de semaine, Philip Hammond, le secrétaire à la Défense, a mis le projet sur les rails : il a présenté au Parlement un texte de loi visant à transformer DE & S à une « Goco » (« government owned », « contractor-operated »). Autrement dit, une entité propriété du gouvernement mais gérée par un sous-traitant.

 

Pour Guy Anderson, analyste senior chez IHS Jane's Defence Industry, « s'il est fréquent que des entreprises gèrent de la logistique ou de la maintenance, placer les achats militaires dans les mains du privé est sans précédent. » L'initiative est d'autant moins banale que le Royaume-Uni est l'une des premières puissances militaires au monde : le pays achète pour 14 milliards de livres d'équipements par an. DE & S emploie 16.500 fonctionnaires et militaires sur environ 80.000 salariés du ministère.

 

De nombreux risques

 

Cette perspective, déjà évoquée sous le précédent gouvernement travailliste qui avait choisi d'enterrer une étude sur le sujet, est tout à fait sérieuse. La décision doit être prise au troisième trimestre de l'année prochaine, même si les risques sont nombreux. D'abord, il n'est pas évident qu'une gestion privée garantisse les centaines de millions d'économies recherchées. Pour Guy Anderson, ces économies viendront surtout de la poursuite de la rationalisation du ministère. Ensuite, comme le souligne John Louth, du RUSI, les programmes militaires représentent des engagements déjà pris sur plusieurs années. « Il n'est donc pas évident qu'un contractant privé puisse atteindre des objectifs lui garantissant que ce marché lui soit profitable. » « L'allié américain a manifesté son inquiétude car il peut y avoir des risques de fuite d'informations sensibles », note aussi Guy Anderson.

 

Autre grand sujet, il faudra éviter tout conflit d'intérêt. Beaucoup de sociétés militaires susceptibles de gérer les achats militaires - comme le Britannique Babcock, candidat logique aux côtés de KBR et de Serco - sont des fournisseurs de l'armée. Aux Etats-Unis, ce genre d'initiatives a poussé des fournisseurs du Pentagone à se séparer de certaines de leurs divisions. Le dernier risque est l'ajout d'une autre grande restructuration du ministère au moment où il fait déjà face à de nombreux défis : réduction d'effectifs, retrait d'Afghanistan…

 

Cela dit, l'idée n'a pas soulevé de levée de boucliers. Le gouvernement se targue d'avoir comblé le trou de 40 milliards de livres dont il a hérité du Labour en 2010 sur les programmes en cours. Le gouvernement veut aller plus loin. Le feu vert définitif ne sera donné que si le projet a toutes les chances d'apporter satisfaction. Un exercice de simulation vient de démarrer : des entreprises susceptibles d'emporter ce marché ont été invitées à prouver qu'elles peuvent faire mieux que la DE & S.

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11 juin 2013 2 11 /06 /juin /2013 16:50
The Royal Navy's Queen Elizabeth Class carriers are among the equipment that has been bought and maintained under the current single source procurement system (library image) [Picture: Copyright Aircraft Carrier Alliance]

The Royal Navy's Queen Elizabeth Class carriers are among the equipment that has been bought and maintained under the current single source procurement system (library image) [Picture: Copyright Aircraft Carrier Alliance]

 

10 June 2013 Ministry of Defence and Defence Equipment and Support

 

New proposals could save taxpayers hundreds of millions of pounds by changing the rules which govern how MOD contracts are awarded.

 

The proposals to reform single source procurement regulations, set out by Defence Secretary Philip Hammond today, form part of the government’s Better Defence Acquisition White Paper, which has been published by MOD.

It outlines plans to establish a new, independent body which would oversee contracts that have to be awarded without competition, either because of specialist Armed Forces requirements or national security reasons.

Almost half of the money spent on defence equipment every year is awarded through single source procurement under a system that has been largely unchanged since 1968. Astute and Successor submarines, Type 45 destroyers and the Queen Elizabeth Class carriers, and Typhoon fast jet engines are just some of the equipment that is bought and maintained this way.

The current rules have made it difficult for the taxpayer to get value for money because of a lack of transparency and competition in single source contracts. This has, on occasion, led to unreasonable profits for suppliers at the expense of the taxpayer. In 2011, MOD asked Lord Currie to carry out a review into the system, which resulted in a new framework being recommended.

Defence Secretary Philip Hammond (library image)
Defence Secretary Philip Hammond (library image) [Picture: Harland Quarrington, Crown copyright]

Following extensive consultation with industry, MOD has decided to take forward Lord Currie’s recommendations and create a Single Source Regulations Office that would independently oversee a system to provide a fair profit for companies alongside incentives to bear down on costs. It is estimated the new framework could save MOD up to £200 million a year.

The white paper published today also contains more details of MOD’s plans to reform its procurement organisation, Defence Equipment and Support (DE&S). MOD is currently assessing whether a government-owned, contractor-operated (GOCO) body or a reformed public entity, known as DE&S+, is the better option. The Defence Secretary has today outlined the main legislative changes needed to establish a GOCO organisation, should the decision be to follow this route.

Mr Hammond said:

For decades, MOD has been at a disadvantage in commercial negotiations and reforming single source procurement will radically change how MOD conducts a high proportion of its business. The new independent body will deliver a more effective and efficient way of providing the specialist capabilities our Armed Forces need to keep the United Kingdom secure, and at the right price.

This white paper represents another significant step in tackling the problems underlying defence procurement. I remain committed to driving structural and cultural change at DE&S to ensure that projects are delivered on time and on budget.

Chief of Defence Materiel Bernard Gray (library image)
Chief of Defence Materiel Bernard Gray (library image) [Picture: Crown copyright]

Head of Defence Equipment and Support, Chief of Defence Materiel Bernard Gray, said:

Starting the legislative process now means we will be able to implement the chosen model as quickly as possible once a decision has been made about the future of DE&S.

Hard work now will allow us to get on with reforming our business and driving the real benefit into the Equipment and Support programme.

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11 juin 2013 2 11 /06 /juin /2013 11:09
Register for European Defence Directory (Yellow Pages)
Brussels | Jun 11, 2013 European Defence Agency
 

On 28 June the European Defence Agency (EDA) is opening a new section on its website dedicated to procurement for the defence community. 

 
This new section will serve as a one-shop gateway for users looking for procurement related information (at EU, EDA and national level) and business opportunities. Besides access to a wide variety of information, industry will be able to register in the brand-new and unique European Defence Directory, a yellow page-like section of the gateway. 

 

To appear in the directory, European industry is invited to send the completed “Yellow page registration request form” to yellowpage.gateway(a)eda.europa.eu.

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31 mai 2013 5 31 /05 /mai /2013 16:20
Defence Department To Roll Out A New Streamlined System To Deal With Procurement Problems

May 30, 2013. David Pugliese - Defence Watch

 

Lee Berthiaume writes this article:

 

OTTAWA — National Defence is preparing to roll out a new “streamlined” system that it hopes will deal with many of the problems surrounding past efforts to purchase military equipment.

 

Whether the changes will make any difference, however, remains the question after the military procurement was largely taken out of National Defence’s hands because of the way it handled the F-35 stealth fighter project.

 

Industry representatives and military officials have long complained about what they say is the inordinate amount of time it takes for the government to buy new vehicles, weapons or other equipment for Canada’s men and women in uniform.

 

This has become particularly troublesome in the past few years, with some warning that the entire system has become paralyzed, resulting in increased costs to taxpayers and Canadian military personnel using equipment long past its expiry date.

 

This includes plans to buy new armoured vehicles for the army as well as to replace the navy’s resupply ships, the air force’s maritime helicopters and its search-and-rescue aircraft.

 

Associate Defence Minister Kerry-Lynne Findlay acknowledged those problems during a speech at a major arms-trade show in Ottawa on Wednesday.

 

“Going forward we do need to do a better job of ensuring the procurement system benefits Canadian taxpayers,” she said. “We need to ensure the impact of their hard-earned dollars isn’t eroded by inflation due to excessive delays.  We need to ensure our military capabilities remain robust and effective so we can continue to count on them when they are needed most.”

 

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25 avril 2013 4 25 /04 /avril /2013 16:50
UK Sets Framework To Outsource Procurement and Support

 

Apr. 25, 2013 - By ANDREW CHUTER  - Defense News

 

LONDON — The British government plans to hand over the first phase of a scheme to outsource the management of its £14 billion-a-year (U.S. $21.4 billion) defense procurement and support operation by the end of 2014, and is using a just-announced 12-month assessment phase to run a parallel competition to find a consortium to run the government-owned, contractor-operated (GOCO) scheme.

 

Defence Secretary Philip Hammond said in a written statement to Parliament on Thursday that the government will make a final decision about whether to go ahead with the GOCO outsourcing plan next year after it had run an assessment phase to compare the benefits with a restructured Defence Equipment & Support operation known as DE&S +.

 

A Ministry of Defence spokesman said if the scheme is approved, a contractor would be appointed in the summer of 2014 and take over the first phase of the GOCO by the winter.

 

The second phase of the management outsourcing would kick in two years later, he said.

 

The spokesman said no decision had been taken on which part of the DE&S operation would be taken over first by the contractor.

 

Sources here, though, said the air sector is being targeted as the most likely part of the procurement and support organization to first move under GOCO control.

 

Hammond said the assessment phase and a competition to appoint a contractor would take place in tandem.

 

“In parallel, a commercial competition will be launched that will enable us to determine with potential private partners how a GOCO would work in practice, and what costs and benefits would be. By the end of the Assessment Phase we would expect to have proposals in a form capable of being contracted if we decide to proceed with the GOCO model,” he said.

 

Hammond made it clear that a two-phase implementation of the GOCO scheme was the MoD’s preferred method to try and erase the cost and time overruns that have dogged British defense procurement for years.

 

Paul Everitt, the chief executive of ADS Group, the British defense trade lobby group, acknowledged industry needed to deliver needed military capability at a price the country can afford, but warned there were outstanding issues that suppliers still wanted to see resolved.

 

“Whatever option is put into place following this final assessment phase, it is important that the structure is fully debated with all stakeholders and legitimate issues are appropriately addressed,” said Everitt.

 

One executive here said industry remains skeptical the scheme will work and has been quietly lobbying against a GOCO.

 

Executives continue to raise concerns over a raft of issues around intellectual property ownership and exactly who will bear the risk on defense programs.

 

Others said they were concerned that a GOCO on this scale in a sector of this complexity had not been tried previously.

 

In a report last year, the Royal United Services Institute think tank here came out strongly against the GOCO option.

 

“History is littered with outsourcing deals either or both parties eventually find constraining and/or in practice, more expensive,” said RUSI.

 

U.S.-based contractor Jacobs Engineering has been appointed as the MoD’s delivery partner to assist the ministry in developing the business model for the handover of procurement activities to a contractor.

 

Jacobs is best known in the defense sector here for its role in the Lockheed Martin-led GOCO that runs the Atomic Weapons Establishment.

 

Hammond said the MoD expects to publish a white paper “later in the spring” setting out the nature of the procurement problem, options for potential solutions, and the reasons why the focus has been on the GOCO solution.

 

The MoD spokesman said that assuming the GOCO gets the all-clear, the plan is to lay legislation before Parliament in the next few weeks to allow the change to proceed with a contractor or consortium in place to start operations by December 2014.

 

Industry sources here termed the government timetable for implementation of the scheme as “racy.”

 

Bechtel, CH2 Hill and Fluor from the U.S., along with Serco and Atkins in the U.K., are expected to be among a handful of consortia forming to address the controversial requirement to hand over running of DE&S.

 

Bernard Gray, the chief of defense materiel and the architect of the GOCO scheme, reckons DE&S doesn’t have sufficient skills to negotiate and manage often highly complex deals whereas a contractor would be better able to squeeze a realistic and affordable agreement from suppliers.

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20 avril 2013 6 20 /04 /avril /2013 12:35
India MoD source brahmand.com

India MoD source brahmand.com

 

April 20, 2013 by Shiv Aroor - Livefist

 

Full text of press release: With the twin objective of infusing greater efficiency in the procurement process and strengthening the defence manufacturing base in the country, the Defence Acquisition Council, the apex decision making body of the MoD, took a series of decisions today, including amendments to Defence Procurement Procedure (DPP).

 

Defence Minister AK Antony, who chaired the Council meeting, said the only way forward for the country is rapid indigenization of defence products, with both the public and the private sectors playing  pivotal roles in this endeavour. Antony said the government will make all efforts to create genuine level playing field for Indian manufacturing industries vis-à-vis Global Players.

 

Following are the highlights of the amendments to the DPP-2011:

 

1.  Prioritisation of Various Categories for Capital Acquisitions under Defence Procurement Procedure: Preference for indigenous procurement in the Defence Production Policy 2011 has now been made a part of DPP through an amendment that provides for a preferred order of categorisation, with global cases being a choice of last resort. The order of preference, in decreasing order, shall be: (1) “Buy (Indian)”; (2) “Buy & Make (Indian)”; (3) “Make”; (4) “Buy & Make with ToT”; and (5) “Buy (Global)”. Any proposal to select a particular category must now state reasons for excluding the higher preferred category/ categories.

 

2.  Release of Public Version of Long Term Integrated Perspective Plan (LTIPP): The DAC has approved the release of a public version of its 15-year perspective document (LTIPP), outlining the “Technology Perspective and Capability Roadmap” (TPCR) against LTIPP 2012-2027. The TPCR will provide useful guidance to the Indian Defence Industry for boosting its infrastructural capabilities and directing its R&D and technology investments.

 

3.  Maintenance ToT (MToT) no longer through Nomination: MToT has been hitherto reserved largely for OFB and DPSUs through the nomination process. A DPP amendment has been approved that does away with nomination by Department of Defence Production and facilitates selection of MToT partners by Indian bidders. This measure is expected to have a positive impact on private sector participation in maintenance, repairs and overhaul work.

 

4.  Advance Consultations for “Make” Procedure: The DAC has approved an amendment mandating consultations to begin sufficiently in advance of actual procurement by Service Head Quarters (SHQs), so that capital acquisition plans can be translated into national defence R&D and production plans. In addition, a high-level Committee has also been constituted for simplification of “Make” procedures, with a view to unleash the full potential of this important category.

 

5.  Simplification of  “Buy & Make (Indian)” Procedure: The DAC has approved an amendment further simplifying this complex category. Its procedures have been brought on par with other categorisations, resulting in faster processing of cases under this category.

 

6.  Clear Definition of Indigenous Content: Increased indigenisation is important for our Armed Forces, in order that they have access to reliable supply chains in times of urgent need. Indigenous content has now been defined in an unambiguous manner, providing requisite clarity and a common understanding.

 

7.  Ensuring faster progress in “Make” and “Buy & Make (Indian)” cases: The Ministry has a limited number of acquisition cases under “Make” and “Buy & Make (Indian)” categories, with an estimated value of Rs. 1,20,000 crore. Instructions have been issued for speedier conclusion of these cases.

 

8.  Defence Items List: Indian defence industry was opened up in May 2001 for 100% private sector participation subject to licensing. The Defence Items List has been finalised by the Ministry and sent to DIPP for notification, which will bring required clarity in the licensing process.

 

9.  Licensing for Dual Use Items: The Ministry has categorically clarified to DIPP that dual-use items will not require licensing, thereby bringing added clarity to the licensing process.

 

10. Consultations on Security Guidelines for Indian Defence Industry: Draft Security Guidelines that will apply to all licensed defence industries have been circulated for consultations with various stakeholders. It is expected that a complete security framework for Indian private industries participating in defence cases will be in place in the near future.

 

11. Resolution of Tax-related Issues: Resolution of deemed exports status for certain defence projects and rationalisation of tax and duty structures impinging on the Indian defence industry has been taken up by the MoD with the Ministry of Finance.

 

12. Funds for MSMEs in the Defence Sector: The Defence Production Policy 2011 requires the setting-up of a fund to provide necessary resources for development of defence equipment. In order to ensure regular supply of funds to MSMEs involved in manufacturing of defence products, SIDBI has decided to earmark an amount of Rs. 500 crore for providing loans, and further, a fund of Rs. 50 crore for equity support out of “India Opportunities Fund” managed by its subsidiary, namely, SIDBI Venture Capital Ltd.

 

13. Efficiency and Transparency in Defence Procurement: A stipulation to freeze the SQRs before the “Acceptance of Necessity” (AoN) stage has been accorded, and the validity of AoN has also been reduced from two years to one year. These measures are expected to expedite the acquisition process and increase transparency.

 

14. Enhanced Delegation of Financial Powers: The financial powers of Service Chiefs/ DG Coast Guard have been enhanced from Rs. 50 crore to Rs. 150 crore for capital acquisition cases.

 

15. Powers to DAC: Approval for all deviations from the Defence Procurement Procedure will henceforth be sought from the Defence Acquisition Council instead of the Defence Minister.

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2 avril 2013 2 02 /04 /avril /2013 16:35

http://www.defense.gouv.fr/var/dicod/storage/images/base-de-medias/images/terre/repertoire-images/materiels-majeurs/artillerie/caesar/photo-1-validation-du-caesar-en-afghanistan/331672-1-fre-FR/photo-1-validation-du-caesar-en-afghanistan.jpg

A group of commercial banks has drawn up a loan to fund Indonesia’s purchase of

truck-mounted artillery from French land systems maker Nexter, sources close to the deal said.

Shown is Nexter's Caesar self-propelled guns. (photo EMA)

 

Mar. 31, 2013 - By PIERRE TRAN  - Defense News

 

PARIS — A group of commercial banks has drawn up a loan to fund Indonesia’s purchase of truck-mounted artillery from French land systems maker Nexter, sources close to the deal said.

 

The agreement is the latest in Jakarta’s push to “catch up” on defense procurement after what one analyst called “a long period of atrophy.” And by financing the deal through a bank loan rather than paying cash, Indonesia is part of a growing number of emerging defense markets looking to stretch their buying power as they seek to beef up militaries.

 

“Indonesia is a key target for everyone,” Grant Rogan, chief executive of Blenheim Capital, a specialist in defense offset deals, said March 26. “Our client base, which includes 25 large aerospace and defense companies, all, without exception, view Indonesia as a prime target.”

 

Jakarta’s short-term high-interest loan will pay for 34 Caesar 155mm 52-caliber guns, the sources said.

 

Indonesia required a buyer’s credit for 85 percent of the 108 million euro ($140 million) contract, with funding to be delivered to the Indonesian Finance Ministry in April, an executive said.

 

Indonesia’s request for bank financing is just one of a number of weapons deals for the Asian country, a European banker said.

 

The Asian market for bank loans “is concentrated in Indonesia,” as other countries such as India, Malaysia and Thailand pay cash, the banker said. Jakarta is in the midst of a procurement drive after staying out of the arms market for years, due to a lack of money and Western sanctions over human rights abuse. Now, the government is trying to “catch up,” said Richard Bitzinger, senior fellow at the S. Rajaratnam School of International Studies, Singapore.

 

“Indonesia is in the midst of trying to upgrade its military after a long period of atrophy,” Bitzinger said. Jakarta buys weapons from a variety of suppliers, as it seeks to avoid being too dependent on a major foreign arms producer and to find the best value for money, he said.

 

Despite the rule of paying cash, a market for bank funding is rising, Rogan said. “Many countries are requesting financing.”

 

Blenheim has added a specialization in financing that complies with Islamic Sharia law, reflecting the rising demand.

 

Rogan was speaking from the Langkawi International Maritime and Aerospace Exhibition, Malaysia.

 

Banks Pursue Deals

 

The pricing of loans is a sensitive issue, and the sensitivity is heightened by the unusual nature of the Indonesian artillery deal.

 

A source close to the deal said there are not many banks in this group of lenders, which is expected to be composed mainly of French lenders. The term of the loan is expected to be for a relatively short period, under five years.

 

The margin on the proposed bank loan is estimated to be below 200 basis points, the source said. Banks set the interest on loans using basis points — 1/100th of a percentage point — which are keyed to official interest rates such as the London Interbank Offered Rate.

 

A financial specialist said the estimated margin on the Caesar deal is relatively expensive, in view of the short loan period and the fact that the deal is backed by a sovereign guarantee from Indonesia.

 

The margin and loan period indicate France and the bank lenders are essentially taking a short-term view of Indonesia as a financial risk, with a loan covering production and delivery of the guns, and perhaps after-sales warranty, the specialist said.

 

A lower margin, on the other hand, would indicate a long-term view of Indonesia’s attractiveness as a client.

 

Indonesia, which sees itself as a regional power and is undergoing a procurement drive to reflect that role, moved last year to holding tenders for bank lending instead of private trade deals, attracting the attention of international and local banks.

 

Since then, about a dozen big banks expressed interest in arranging loan finance for eight or nine arms contracts Indonesia signed with Brazil, China, France, Russia, Spain and the United States.

 

The loans range from large orders to small deals of around $10 million.

 

For instance, Jakarta relaunched a bank tender this year to raise money to buy the Brazilian Avibras Astros B multiple rocket launcher system.

 

The Astros is capable of firing cluster submunitions. Western banks likely stayed away because the Oslo convention bans these weapons, forcing Indonesia to reset the tender a couple of months ago.

 

Indonesia reportedly used that type of munition in East Timor when the local population called for self rule in a 1999 referendum.

 

Indonesia also has a tender out for bank loans for 25 Bell 412 utility helicopters for the Army. Jakarta is also spending $750 million to upgrade secondhand F-16 C/D fighters provided free by the U.S. government. That upgrade will be a cash deal through the Foreign Military Sales regime.

 

The Down Side for Lenders

 

A bank loan for weapons poses problems for commercial lenders, the defense specialist said.

 

Lending on civil programs such as a nuclear power plant or a highway is relatively simple because they can generate revenue, part of which can be placed in escrow holding accounts to act as security.

 

But weapons have no power to raise revenue, and what is worse, might be destroyed. If a country loses use of its arms, it might stop repaying the loan. “What security is that?” the specialist said. Banks are also concerned about how the public views lending on arms deals. One large British bank refuses to lend on arms, two sources said.

 

Given the size of the Indonesian economy, the 108 million euro purchase price for the Caesar guns “is peanuts,” the specialist said.

 

A striking aspect of the Indonesian artillery loan is what is seen as the relatively long time between the signing last summer and the financing in April.

 

That long lead time may signal a slowing of arms deals, perhaps delaying some until 2014. Or perhaps it reflects a lower economic growth rate, or simply a bottleneck in the finance and defense ministries as staff struggle to cope with the volume of orders.

 

A loan for 85 percent of purchase amount is the maximum allowed under trade rules of the Organization for Economic Cooperation and Development, with the 15 percent paid in cash, an export credit executive based in New York said.

 

Trying To Catch Up

 

Indonesia has a robust defense and aerospace industry in place, and the government wants to co-produce and co-assemble to build the domestic base, Rogan said.

 

Malaysia is the leader in that drive to build the defense industrial base, and wants to take a regional approach with Indonesia. The two countries would avoid product competition, and instead, buy from each other.

 

That approach drew foreigners’ skepticism three years ago, yet Malaysia is buying six-wheeled vehicles from Indonesia, and Indonesia is buying vessels from Malaysia, Rogan said.

 

Indonesia is rated the 16th largest economy, with an estimated growth rate of 6 percent in 2012, slowing from 6.5 percent in the previous year, the CIA World Factbook said.

 

The Indonesian government needs to improve poor infrastructure, which impedes growth, while also dealing with labor unrest over pay and cutting a fuel subsidy amid high oil prices, the country report said. Corruption, poverty and unemployment are also big problems, the report said.

 

Indonesia is expected to become the sixth or seventh largest economy.

 

Observers see the recent purchases as an “unblocking” of Indonesian procurement after a fallow period of three or four years. The big orders before the quiet spell were mainly Russian deals, financed by Russian banks.

 

Russian banks have lent money for Indonesia’s purchase of Sukhoi Su-27 and Su-30 fighters, the European banker said. Russian loans have helped Venezuela buy around $4 billion of weapons. The VTB bank is active in Vietnam, and the Russian lender is understood to have funded military purchases.

 

U.K. Prime Minister David Cameron visited Indonesia in 2012, looking to drum up defense deals after the previous Labour administration halted arms sales on allegations BAE Systems Hawk jets were used to bomb civilians in East Timor in 1999.

 

BAE and AgustaWestland executives went with Cameron on the visit.

 

Indonesia is now seen as an attractive market after a Western moratorium because of its human rights record and brutal put-down of movements for self-determination in Aceh, Papua and East Timor.

 

Jakarta also has close ties with South Korea, and some of the recent deals are financed on a government-to-government basis, the banker said.

 

These are understood to include Jakarta’s 2012 $1 billion purchase of three attack submarines — the first built in South Korea with Indonesian engineers on site, part of the second built in Indonesia, and the third built by state company PAL in Surabaya.

 

Jakarta has also bought 17 of the KT-1B basic trainers.

 

Jakarta and Seoul share similar ambitions.

 

“I think the Indonesians like working with the Koreans as they are in roughly the same situation: rising, aspiring regional powers with ambitions to play larger roles in their respective regions, and to also create sophisticated arms industries by which to do so,” Bitzinger said.

 

“The problem is, the Koreans have a level of technological sophistication and organizational production capability that the Indonesians still lack. So any partnerships with the Koreans still leave the Indonesians in a decidedly junior role,” he said.

 

Indonesia has also bought Damen missile corvettes from the Netherlands, financed by Dutch banks. Some Dutch banks have a policy of no support for military sales but they are quietly funding the deals anyway.

 

_________

 

Andrew Chuter in London and Wendell Minnick in Taipei contributed to this report.

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