Select Committee on Defence Appendices to the Minutes of Evidence

Memorandum submitted by Perkins Engines Company Limited on OCCAR (30 September 1999)


  Thank you for your letter dated 20 July 1999 addressed to Mr Tony Gilroy, which has been passed to me. As Director of Defence Operations, I am responsible for the sale of Perkins engines to military vehicle manufacturers involved in collaborative programmes both in Europe and elsewhere, and I am grateful for the opportunity to comment on the proposal that OCCAR be established on a treaty basis.

  It is our understanding that OCCAR has been functioning, in as much as it is managing some projects. However, we believe that until OCCAR gains a legal status, and is able to place and manage contracts using its own staff, it will not be able to function successfully. Perkins is involved in the Multi Role Armoured Vehicle (MRAV/GTK/VBCI) programme. Although it was the intention that contracts for this programme would be placed by OCCAR, the lack of legal status means that contract placement, and, it seems, programme management, have remained the responsibility of the German Ministry of Defence procurement agency (BWB). We feel that this situation could be prejudicial to our chances of success.

  Although we were aware of the intention to make the Convention in September 1998, I do not have any record of any consultation with industry which involved Perkins. Had we commented then, our view on the Convention's potential help or hindrance to European collaboration, and on OCCAR's accountability, would have been the same as they are today. We believe that the provisions of the Convention will, if followed by the eventual signatories to the treaty, greatly help the development of European collaboration in defence procurement, and we are very much in favour of OCCAR and its proposed functions. That said, we are conscious of the fact that whilst the UK government tends to act merely as a facilitator towards defence industry rationalisation, other governments have, in the past, tended to play a more active role. The achievement of an "overall multi-programme/multi-year balance" will, in our view, require the UK government to keep a close eye on its fellow signatories, to ensure that assignment of armament programmes to OCCAR offers "level playing field" opportunities to industry in all member states.

  Turning to the issue of accountablity, we are concerned that the proposed structure and legal basis of OCCAR, as a "stand alone" organisation, could leave industrial participants in assigned programmes more exposed to risk than they might be in national programmes managed by their own governments. Whilst it is accepted that comprehensive customer funding, from development through to production, is a thing of the past, and that industry expects to share risk in partnership with government, there would be, we believe, some unease at the prospect of sharing this risk with OCCAR without certain guarantees. The position of industrial participants in the event of cancellation of OCCAR assigned programmes needs, in our opinion, further clarification.

  There would seem to be no reason why the membership of OCCAR should not be broadened, although there are obvious advantages, in terms of decision-making, in limiting its size. As regards the "overall multi-programme/multi-year balance", it is our view that a larger OCCAR would find such a concept more difficult to execute to the satisfaction of its various defence industries.

  The creation of a European Armaments Agency is a worthwhile goal, but the achievement of such a goal could, in our opinion, be hampered by the perceived clash of roles between OCCAR and the larger Western European Armaments Group in the matter of defence requirement harmonisation. The amalgamation of the EU and WEU, and the former's inheritance of the latter's defence responsibilities could, if not handled carefully, cloud the waters still further. OCCAR's main role should be, in our opinion, to provide a forum for the harmonisation of defence requirements and the implementation of collaborative programmes. This should not preclude the involvement of customers or industries from countries outside OCCAR, and, provided that it is clear that it does not, there would not seem to be a need for any other European harmonisation groups. National and political pressures will make this difficult to achieve, but unless it is, the opportunity to create a meaningful European Armaments Agency will be missed.

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