Select Committee on Defence Appendices to the Minutes of Evidence

Memorandum submitted by the Defence Manufacturers Association on OCCAR (10 September 1999)

  Thank you for your request to comment on the Proposal to establish OCCAR on a treaty basis. As a general comment successful collaboration based on a single European Organisation for member countries should, in theory, produce savings in time, costs and, hopefully, research as it should produce a single project focus for each programme. In the past the majority of collaboration has been shown to do none of these things. It seems that this was recognised by the Government, who in their "Smart Procurement" initiative have said very little about collaboration because of the poor performance of some of the UK collaborative programmes eg Horizon and Long Range Trigat. These resulted in cancellation or cost over run or late delivery, or never progressed beyond a research and development phase.

  Nevertheless, from an Industrial point of view collaboration has proved very useful for the companies taking part by giving them the opportunity to display their abilities, increase employment and best of all force them to research, work and plan with overseas companies, so expanding their marketing opportunities. OCCAR, if developed properly does offer the potential for improvement in the management of collaborative projects. We would also note that with the increasing globalisation of the Industry and mergers of large companies (eg BAe/Marconi) it is now possible, from an industrial point of view, to manage even the largest and most complex programme nationally. Inter Government project collaboration is therefore only necessary now if it will prove to be more cost effective, to achieve defence equipment commonality or for political reasons.

  Turning to those specific areas you asked for comments on:

    1.  Current Functioning of OCCAR. It is far to early to comment on the success of current programmes in OCCAR. Apart from the TIGER Helicopter they are all old service support programmes that have been moved from a Franco-German Organisation based in Paris called Bureau Project Franco Allamand (BPFA). The only modern programme is that of the TIGER which again had a well established Franco German organisation. We believe that TIGER was transferred to OCCAR for political reasons. One of the concerns of industry is that the same personnel who ran the inefficient collaborative programmes have been transferred to the OCCAR organisation. Any new recruits have broadly come from the "International" civil servants who speak French, German and English and have also been linked to collaborative programmes for some time and may therefore have the "old" culture of unaccountability. They are unlikely to be well versed in current UK Procurement Best Practice or have the confidence of the UK Defence Business Community. To change their attitudes will be difficult. Further, on average the cost of employing such personnel in 30 to 40 per cent higher than employing staff in the UK. Therefore, in our view, unless some major effort is made to the contrary OCCAR is likely to be expensively staffed, from some participating countries, by those who have failed in other collaborative projects and recruited for their linguistic ability rather than their procurement skills. Thus the prognosis for OCCAR is uncertain.

    2.  Consultation. We are kept informed of the various drafts of the Treaty.

    3.  Convention Provisions. The provisions are those one would expect in such a treaty. The following areas could cause difficulties.

    (a)  Chapter IV Article 15. Paragraph 2 will ensure that programmes will only proceed at the political and industrial pace of the slowest or least willing or interested country.

    (b)  Chapter V Article 21. This article does not state that the Director is ultimately responsible for the delivery of the programmes within OCCAR. Rather he is responsible for the operation of the Executive Administration. In our view he must be accountable for the programmes in all respects.

    (c)  Article 24 and 25. The whole area of the handling of competition within OCCAR is of concern. The main worry is that of subsidies for national industries by governments to minimise unemployment. Within this Article there is no mention, implied or specifically, of "a level playing field". Whilst we would agree that "work share" is considered impractical and competition is emphasised; a level playing field is vital for competitions if they are going to be fair, efficient and effective.

  4.  Accountability. It will almost be an impossibility to ensure accountability of OCCAR Staff to the United Kingdom Government. They will be protected by Annex 1 of the Convention, as well as being protected by their own country. Initially at least, putting a project into OCCAR will be an act of faith.

  5.  Broadening of OCCAR. In theory a broadening of OCCAR membership will enlarge its market. However, it will also increase the numbers of countries involved and this, as all collaboration has shown in the past, will impact on time, cost and complexity of manufacture.

  6.  WEU and OCCAR. When reviewing the numerous current organisations dealing with defence industry and research within Europe it is quite clear that, together with the range of NATO Organisations, there should be a rationalisation to simplify the present situation. OCCAR could be the basis of such a reform and might offer a fresh start provided the other organisations and committees are terminated. There is however the danger that there would be a migration of "International" civil servants from the defunct organisations to OCCAR, so making the vital necessary cultural change for collaborative programmes work more difficult.

  In summary, it is too early to say how effective OCCAR will be, however, almost any improvement will be better than the current collaborative arrangements that generally are unsatisfactory. The areas of concern are the continuation of the current culture of expensive staff who have come from failing or old established programmes, the lack of accountability of the Director and his staff and their immunity: we do however welcome competition but only with a level playing field. There is also a need to rationalise European Defence Procurement Structures and committees, together with a need to harmonise them with similar NATO Organisations.

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