Memorandum submitted by Sir Colin Chandler,
Vickers plc on OCCAR (5 August 1999)
I am grateful indeed for the opportunity to
comment on the proposal to establish OCCAR on a treaty basis by
Convention. The points we would wish to make initially reflect,
and at the end, follow the order of the points of your letter
of 20 July.
We have never been sure of the purpose of OCCAR.
Is it to be a precursor of a European DPA into which our own DPA
will be subsumed at some point along the road of wider Europeanisation?
If that is the case then what will be the relationship between
OCCAR and our own DPA in the interim and what role will OCCAR
play in, for instance, advising what are presently sovereign processes
on the procurement route for any particular project? Will all
projects that have a possible European dimension include OCCAR
links and, if that is so, how will these be accomplished within
the Smart Procurement model of Integrated Project Teams (I am
particularly concerned here that the idea of IPTs was to bind
project stake holders into a common purpose but this would become
very difficult if the IPT had top-heavy contributions from national
and European procurement executives). Or is OCCAR to be a supranational
executive for the project management of projects to which several
EU states are contributing—if so how will our own DPA be
involved and to whom will industry be accountable?
These are fundamental questions arising only
from the more pragmatic considerations that industry is forced
to face and resolve but some of the broader political architecture
is also obscure. HM Government has always exercised the right,
and indeed the obligation, to consider internal politico-economic
factors when making defence investments—a right which has
been exercised judiciously enough for the UK defence industry
to be the second largest in the world. We are not clear from the
preamble to the Convention how HM Government will maintain these
obligations when, under Article 5, it has renounced ". .
. the analytical calculation of juste retour on a programme-by-programme
basis, and replace(d) it by the pursuit of an overall multi-programme/multi-year
balance." It is equally interesting to find the Convention
turning its face from the market as a force to rationalise European
Defence industry by envisaging OCCAR as the means to "genuine
industrial and technological complementarity in the relevant fields
. . ."
Article 6 pre-conditions what has hitherto been
a purely competitive business by locking future programmes into
developments undertaken by OCCAR. This is likely to present considerable
difficulties; how would HM government or, specifically, the MoD
resolve the failure of a European programme like SP70 under Article
6—what room would it have for independent action if development
under OCCAR so removed the project from its national operational
requirement that to proceed would be a criminal waste of money?
There is a real risk that, regardless of the continuing relevance
or suitability or cost of a project, the desire for a European
solution will prolong its life. I must emphasise here that industry
is constantly told that the "procurement tail should not
wag the operational dog" and OCCAR most certainly should
not be seen as the means by which European operational requirements
can be harmonised. That, though, is exactly the problem. If OCCAR
(the "procurement tail") is not to bring about a common
operational purpose, what organisation will?
Although I do not claim a close reading of the
entire Convention, I can find no explicit mention of the transfer
or ownership of Intellectual Property in OCCAR business nor can
I find adequate provision for the distribution of sales outside
OCCAR for equipments developed and manufactured under its aegis.
Industries which will be invited to contribute their own IPR to
an OCCAR project in development would need to be satisfied by
the contractual links between development and production and the
mechanisms to be used for external sales. The consideration of
IPR and sales is vital to the successful engagement of industry
which must be convinced that the management overheads of OCCAR
are not amortised in such a way that the unit price of equipment
going into production becomes internationally non-competitive.
To return to your detailed points:
— We were not consulted before the
Convention was made.
— See previous comment—the overall
purpose of OCCAR is not clarified and the points about IPR and
sales remain unresolved.
— Accountability is lost if the scrutiny
moves away from the PAC and HCDC; there could be endless obfuscations
of responsibility.
— The broader OCCAR becomes the less
focussed and accountable it will become. It is an inevitable commonplace
of commercial experience that the probability of resolving a problem
decreases in proportion to the numbers of people offering solutions.
— The final point is moot. Creating
the bureaucratic mechanism to deliver European collaboration in
defence is not a problem and never has been. Although a Convention
has not been used before, inter-governmental MOUs have established
collaborative project officer and these have functioned effectively
where the political will has united behind the project throughout
the period of development (Tornado and EFA are examples). OCCAR
will not save a project if the political will fails nor can it
act in place of a WEU to encourage operational organisation and
practice which is an absolute sine qua non to successful
equipment collaboration.
I would summarise by wondering what, exactly,
it is that OCCAR is intended to do that hasn't been done before.
It cannot hope to create a commercial environment which will condition
sovereign industries into more "european" combinations—at
least until most of the contributing nations (except the United
Kingdom) have either denationalised their own defence industries
or stopped the national subventions which keep many of them going.
At the same time, it could not improve on the arrangements which
have existed for some time to deliver collaborative projects—nor
could it "save" a project if the political consensus
for it began to break down. It could, though, deliver a large
management overhead, loss of focus and breakdown in accountability.
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