Industry Could Benefit from Cross-Border Defense Programs

Article excerpt

A prescient Rand Corp. study some years ago warned of obstacles to joint cross-border procurement as numerous and complex, the product of parochial industry interests, domestic legacy systems and national doctrines.

Collaborative programs required agreement on requirements, costs and schedule, leaving little control to individual countries facing projects often fraught with risk and uncertainty. No wonder collaborative defense acquisition had remained fairly meager.

The year was 1978.

The historic parallels between 1978 and today should not be overlooked. The global economy was recovering from an energy price shock and economic problems, the legacy of Vietnam and defense-spending fatigue were settling in worldwide, just as the geopolitical certainties of the early Cold War were crumbling and Iran was on the verge of imploding. Recent years have witnessed joint defense procurement initiatives, extending beyond NATO to include countries such as India. However, growth in collaborative defense projects has remained modest, hampered by the same decades-old challenges.

Where cross-border collaboration exists, it tends to be exceptional rather than typical of a general trend, largely relegated to bilateral or consortia-based efforts rather than broad alliance or regional programs. The primary motivation for such agreements has almost always been cost efficiency, with an important nod to interoperability in the NATO context. And while their legacy has been mixed, the current defense spending contraction will likely breathe new life into this model ensuring it remains a niche opportunity for U.S. and European defense firms.

Nordic countries have pioneered some of these approaches, despite overlapping memberships in the EU and NATO. For some 15 years before it was subsumed into a broader regional defense program, their joint procurement arm NORDAC conceptualized and managed a host of development and procurement programs on a country a-la-carte approach. Such collaborative acquisition efforts can be a lifesaver for imperiled programs. Two members of NORDAC, Norway and Sweden, recently inked a $200 million deal to procure the BAE-supplied 155/52 light mobile artillery system, a program that had been conceptualized by Sweden's FMV defense procurement agency, but then languished because of budget constraints until Norway joined the fray.

Alarmed by the simultaneous downturn in U.S. and European defense budgets, NATO has recently announced a number of initiatives under the "Smart Defense" moniker that could result in the joint procurement of maritime patrol aircraft, naval and air surveillance radars and counter-improvised explosive device technology.

In the shadows of the Joint Strike Fighter, perhaps the most notable collaborative defense project to date, NATO's air power center of excellence has begun to ponder the option of a regional fighter partnership, as many of its smaller members look to recapitalize or replace aging equipment with affordable and proven, but also state-of-the-art light multi-role aircraft. NATO, the world's most successful collaborative defense initiative, is a modest player in the development and procurement space in its own right.

Under the umbrella of the Alliance Ground Surveillance program roughly half of the alliance members, mostly smaller nations joined by Italy and the United States, have contributed resources for the acquisition and sustainment of five Global Hawk unmanned air vehicles from Northrop Grumman, an effort that will total nearly $4 billion over the next two decades. Yet this project was too long in coming and had to navigate many torturous twists and turns.

Industry opportunities shrink beyond the Western alliance. A number of countries in Asia have pursued and funded joint programs, almost exclusively bilateral in nature. In South Korea, a joint public-private sector initiative by Lockheed Martin, KAI and the Korean government has resulted in the TA-50 advanced supersonic trainer, destined for both local and international markets, including the now delayed U. …