Memorandum submitted by Racal Electronics
plc on OCCAR
1. THE FUNCTIONING
OF OCCAR TO
DATE
COBRA (Counter Battery Radar) is the main project
through which Racal has direct involvement in OCCAR. The experience
to date, on which to make a meaningful judgement of the success,
or otherwise, of OCCAR is somewhat limited, due to the relatively
recent transfer of the COBRA project to OCCAR—only some
eight months ago. Despite transfer to OCCAR, the formal contractual
relationship remains between EuroArt (the joint venture company,
in which Racal is a shareholder) as the prime contractor for COBRA
and BWB (the German Procurement Agency).
To date the transfer from the tri-national Project
Office to a single Project Director in OCCAR has had little impact
on the way the project is run. Decisions are still dependent on
a consensus amongst the three participating nations and no real
decisions are taken without their consent.
During the period since the transfer of COBRA
to OCCAR, the most noticeable change has been the growth in the
size of national contingents being sent to the regular project
meetings. This may, of course, be purely coincidental.
2. CONSULTATION
PRIOR TO
THE CONVENTION
We are now aware of any consultation prior to
the Convention being made. The COBRA project was already well
advanced by that time and was transferred to OCCAR some time after
the launch of the Convention.
3. OMISSION OR
INCLUSION OF
PROVISIONS TO
HELP, OR
HINDER, EUROPEAN
COLLABORATION
We fully recognise the potential benefits of
OCCAR from a Government procurement perspective. Taking a narrow
view of OCCAR as being only a management body for collaborative
programmes then there is little scope for hindrance and, perhaps,
some potential for help.
If, however, OCCAR procedures for project approval,
contracting and funding become onerous then these could jeopardise
the formation of European teamings. Indeed, it is possible to
envisage the situation in which the designation of a new programme
within OCCAR could be a serious hindrance to the formation of
a European team. On the other hand it could, perhaps, be argued
that had the Common New Generation Frigate project been designated
as an OCCAR programme, at its inception, considerable time and
effort might have been saved, producing a different end result.
In the long run the real test will be the willingness
of the participating nations to genuinely empower OCCAR to manage
collaborative programmes and their ability to reconcile national
procurement policies with the move towards true competitive tendering
independent of the national financial contribution to the project.
At present, the extent to which the UK Smart
Procurement Initiative can be reconciled with the interests of
other Member States in supporting their national industries must
be questioned.
Whilst OCCAR may succeed in its aim of furthering
European collaboration it will be important to ensure that programmes
with this designation are not disadvantaged when seeking to sell
to non-OCCAR states. Such a penalty could easily outweight any
of the perceived benefits of participation in designated projects.
Aside from the Convention, European collaboration
is increasing as a result of the consolidation of the European,
and world, defence industry. Mergers/acquisitions, teamings and
joint ventures are becoming commonplace in order to provide complementary
skills, reduce escalating research and development costs and,
in many cases, give access to wider geographic markets. In this
context, OCCAR may have a part to play in influencing the constituent
make-up of such industrial ventures, however wider commercial
issues are likely to figure more prominently. In the medium to
long run it may well be that the rationalisation of the defence
industry makes OCCAR redundant, as the only competent contractors
with sufficient resources to develop the major projects become
trans or multi-national enterprises.
4. PROVISION
OF GUARANTEES
AND ACCOUNTABILITY
IN THE
PROPOSED STRUCTURE
AND LEGAL
BASIS
In general, it may be expected that OCCAR will
remain toothless until it has formal legal status. As it is to
be accountable to the Member States the roles Board of Supervisors
and the Executive Administration appear to provide the required
safeguards and degree of accountability.
5. SHOULD OCCAR
MEMBERSHIP BE
BROADENED?
Whilst membership is restricted to the present
four members this, in effect, precludes multi-national programmes
in which other nations are involved. The fact that, we believe,
there have been expressions of interests for some such projects
to be designated as OCCAR programmes could be taken as a demonstration
of the apparent attractiveness of the Convention to other non-Member
States. In broadening the membership it will be important to ensure
that this does not result in ever more delay and attempted preservation
of national interest. One might question the extent to which national
interest has been a motivating factor in the expressions of interest
already received.
6. IS OCCAR A
SENSIBLE APPROACH
TO RATIONALISING
EUROPEAN PROCUREMENT
COLLABORATION?
Many of the WEU collaborative armament programme
issues addressed through WEAG were small projects, firmly rooted
in the principle of work share equals cost share. There do not
appear to be any obvious benefits of incorporating this type of
small project into OCCAR and such a move would probably result
in widening membership to the whole of the WEAG—14 in total.
At this stage, until OCCAR has a formal legal
status and had the time in which to demonstrate its effectiveness,
it would be premature to view it as the panacea for all collaborative
projects. There is considerable sense in vesting control of major
programmes in OCCAR in order to assess its ability to deliver
the benefits of improved efficiency and cost reduction as set
out in the Convention. The transfer of a multitude of smaller
projects to OCCAR, and the consequent significant widening of
membership, would have the potential to produce more complications
than benefits. Without experience of OCCAR working with a fully
endorsed legal status, there is no compelling reason to change
the conventions and principles under which such "minor"
programmes are presently managed by transferring them to a new
organisation which operates with very different terms of reference.
Whilst, in principle, OCCAR is a sensible solution
to meeting the needs of the Member States to achieve affordable
procurement of complex major programmes its eventual effectiveness
will be determined by significant factors outside of its control,
but within the control of the Member States. OCCAR will only become
truly effective when the Member States recognise the need to have
a common requirement for defence systems. This could imply a European
solution to defence needs as opposed to the existing individual
national requirements, the rights to which are protected in the
Treaty of Rome. Many past and present European multi-national
defence projects have encountered difficulties due to differing
requirements by the participating states in terms of timescale,
role, performance, cost etc. Until such conflicts of interest
are resolved it is difficult to see how OCCAR will be able to
demonstrate fully its ability to deliver the benefits envisaged
at the outset. Only then will it be possible to judge its suitability
to become the preferred vehicle for the rationalisation of European
procurement.
As previously indicated, this political initiative
to rationalise procurement may well be overtaken by the growing
commercial pressures for cross-border rationalisation of the defence
industry.
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