DEFENCE PRODUCTI ON, SALES AND PROCUREMENT: I NTERNATI ONAL BEST PRACTI CES: DEFENCE I NDUSTRI AL COOPERATI ON W I TH FOREI GN COUNTRI ES PROFESSOR ADRI AN KENDRY FORMER NATO SENI OR DEFENCE ECONOMI ST AND ADVI SER TO THE 1 2 TH NATO SECRETARY GENERAL DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 1 1-2 FEBRUARY 2017 SALES AND ACQUISITION SSG DEFENCE
DEFENCE PRODUCTI ON, SALES AND PROCUREMENT: I NTERNATI ONAL BEST PRACTI CES ∗ Adrian Kendry experience: 1 9 9 0 s Crow e Chair in the Defence I ndustrial Base and w orking w ith AI AA ( LM, NG, B, 3 M, BAE, RR) and NATO ∗ Building I ntegrity program m e and defence industry and procurem ent: EDA, European Defence I ndustry Association ( ASD) , BI Conference and the defence sector ∗ Trends in international defence spending and procurem ent: assessing effectiveness in defence procurem ent in creating capabilities ∗ Meeting the challenges of disruptive technologies and upgrading legacy system s ∗ Meeting the challenges of short term urgent requirem ents ( 0 -3 years) , m edium term needs ( 3 -8 years) , longer term m odernisation of the defence industrial base ( 8 -1 5 years) DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 2 1-2 FEBRUARY 2017 SALES AND ACQUISITION SSG DEFENCE
THE CHALLENGES CONFRONTI NG UKRAI NE’S DEFENCE PROCUREMENT ∗ “The regional security environm ent particularly affects the dem and for m ilitary capital equipm ent, as w ell as m aintenance and life- cycle m anagem ent of existing equipm ent ∗ Understanding the context in w hich Ukraine defence procurem ent reform w ould occur is essential. Military organizational structures globally w ere prim arily designed and built in a period that had considerably less com plexity ∗ I n 2 0 1 6 , the velocity of technological change and the sw iftly evolving international strategic environm ent has resulted in defence establishm ents scram bling to keep pace w ith transform ational change ∗ Under these circum stances, a principally static defence establishm ent can lead to inadequate or inefficient organizational practices and procedures” ∗ ( Dr. Ross Fetterley) DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 3 1-2 FEBRUARY 2017 SALES AND ACQUISITION SSG DEFENCE
RUSSI AN DEFENCE PROCUREMENT AND POLI CY: UKRAI NI AN ANALYSI S ∗ On partial inform ation, the budget of the Russian Federation provided 2 .5 0 1 trillion rubles for m ilitary funding in 2 0 1 4 . I n 2 0 1 5 the sum w ent up to 3 .0 7 8 trillion rubles. I n 2 0 1 6 , the planned defense w as estim ated at 3 .1 4 5 trillion rubles ∗ Current procurem ent pattern of the Russian Ministry of Defense dem onstrates Russia’s urge for m ore aggressive presence at sea and in the air, the priority is given to navy, air force and electronic w arfare and intelligence ∗ Significant funds are allocated to the m eans of increasing m ilitary and political pressure on neighboring countries and blocks ( m obility of strategic nuclear w eapons, sea com ponent of the nuclear triad DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 4 1-2 FEBRUARY 2017 SALES AND ACQUISITION SSG DEFENCE
RUSSI AN DEFENCE PROCUREMENT AND POLI CY ∗ I m proving the efficiency and adaptability of conventional w eapons through the use of battle m anagem ent system s and support for ground troops ∗ Probably insufficient funds for a large-scale rearm am ent of ground forces ∗ Priority is im proving the efficiency of existing com bat platform s ∗ Utilization of m ore advanced associated technology ( com m and and control and electronic w arfare system s, m odern accurate tactical and guided m issiles, w eapon stations) ∗ Bypassing sanctions through “front com panies” buying dual-use goods DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 5 1-2 FEBRUARY 2017 SALES AND ACQUISITION SSG DEFENCE
DEFENCE PRODUCTI ON, SALES AND PROCUREMENT: I NTERNATI ONAL BEST PRACTI CES ∗ W hat international experiences in accountable, transparent and cost effective defence procurem ent are able to guide Ukraine at the beginning of an uncertain political budgetary and econom ic year? ∗ W hat are the key lessons learned from international defence procurem ent? Trends in international defence spending and procurem ent: assessing effectiveness in defence procurem ent in creating capabilities ∗ UK, US, China, I ndia, France, Germ any ∗ Current Reform Priorities ∗ W eaknesses in oversight structures and possible solutions ∗ Capacity developm ent needs and best practice DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 6 1-2 FEBRUARY 2017 SALES AND ACQUISITION SSG DEFENCE
DEFENCE PRODUCTI ON, SALES AND PROCUREMENT: I NTERNATI ONAL BEST PRACTI CES ∗ Transparency and m eeting the challenges of short term urgent requirem ents ( 0 -3 years) , m edium term needs ( 3 -8 years) , longer term m odernisation of the defence industrial base ( 8 -1 5 years) ∗ Oversight Monitoring Com pliance and Penalties ∗ National priorities and m aintaining integrity and reducing corruption ∗ Defence Production, Sales and Procurem ent:I nternational Best Practices ∗ W hat international experience in accountable, transparent and cost effective defence procurem ent is able to guide Ukraine at the beginning of an uncertain political budgetary and econom ic Year? DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 7 1-2 FEBRUARY 2017 SALES ANSSG DEFENCE
DEFENCE PRODUCTI ON, SALES AND PROCUREMENT: I NTERNATI ONAL BEST PRACTI CES ∗ AK and Ukraine ∗ Ukraine JW GES 2 0 1 2 . UKROBORONPROM m anagem ent of defence sector and budgetary, delivery, technological and DI B m anagem ent challenges. ∗ AK and Building I ntegrity: The Defense Acquisition Process US AI AA and EU ASD and EDA ∗ Building I ntegrity program m e and defence industry and procurem ent: EDA, European Defence I ndustry Association, BI Conference and the defence sector ∗ ∗ Global defence spending and procurem ent: ∗ Accountability and Meeting the challenges of disruptive technologies and upgrading legacy system s DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 8 1-2 FEBRUARY 2017 SALES AND ACQUISITION SSG DEFENCE
PRI NCI PLES OF DEFENCE ACQUI SI TI ON: THE NAVAL POSTGRADUATE SCHOOL MONTEREY CALI FORNI A ∗ Defense Procurem ent & Contracting Overview ∗ Legal Aspects of Contracting ( Contract Law , Form ation, and I nterpretation) ∗ Transparency, Fraud & Ethics ∗ Acquisition Planning ∗ Com petition ( I nternational Com petitive Bidding through Directed Single Sourcing) ∗ Contracting for Services ∗ Outsourcing ∗ Supplier Source Selection ∗ Foreign Military Sales / Foreign Military Financing and Offsets ∗ Contract Managem ent DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 9 1-2 FEBRUARY 2017 SALES AND ACQUISITION SSG DEFENCE
GLOBAL DEFENCE SPENDI NG DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 10 1-2 FEBRUARY 2017 SALES AND ACQUISITION SSG DEFENCE
GLOBAL DEFENCE SPENDI NG 2 0 1 4 AND 2 0 2 0 DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 11 1-2 FEBRUARY 2017 SALES AND ACQUISITION SSG DEFENCE
TRENDS I N I NTERNATI ONAL DEFENCE SPENDI NG: NATO AND THE REST OF THE W ORLD DEFENCE SPENDI NG 2 0 1 3 AND 2 0 1 4 , BI LLI ONS $ CURRENT EXCHANGE RATES 2 0 1 4 2 0 1 5 % CHANGE USA 7 6 2 .9 7 4 4 .9 -2 .3 6 CHI NA 1 3 0 1 4 5 1 1 .5 JAPAN 4 0 4 2 .8 7 RUSSI A 6 2 7 7 2 4 I NDI A 3 6 .1 4 0 1 0 .8 UK 5 5 5 4 -1 .8 FRANCE 4 0 .9 4 1 .2 .7 GERMANY 4 4 .3 4 1 .7 -5 .8 6 TURKEY 2 0 .6 2 3 .9 1 6 DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 12 1-2 FEBRUARY 2017 SALES AND ACQUISITION SSG DEFENCE
DEFENCE SPENDI NG AS % GDP DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 13 1-2 FEBRUARY 2017 SALES AND ACQUISITION SSG DEFENCE
EUROPEAN UNI ON GLOBAL STRATEGY ON SECURI TY AND DEFENCE ∗ “W hile insisting on the undisputed fact that NATO rem ains the prim ary fram ew ork for m ost Mem ber States, the Strategy underscores that the EU needs to be strengthened as a “security com m unity: European security and defence efforts should enable the EU to act autonom ously w hile also contributing to and undertaking actions in cooperation w ith NATO” ∗ ( Federica Mogherini, Novem ber 2 0 1 6 ) DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 14 1-2 FEBRUARY 2017 SALES AND ACQUISITION SSG DEFENCE
EUROPEAN UNI ON GLOBAL STRATEGY ON DEFENCE AND SECURI TY ∗ For Europe to achieve strategic autonom y and becom e a security provider capable of responding to external crises and keeping its territory and citizens safe, Mem ber States need to have at their disposal “all m ajor high- end m ilitary capabilities and equipm ent”, as w ell as the technological and industrial m eans to acquire and sustain such capabilities ∗ “This im plies full-spectrum land, air, space and m aritim e capabilities, including strategic enablers” DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 15 1-2 FEBRUARY 2017 SALES AND ACQUISITION SSG DEFENCE
EUROPEAN UNI ON GLOBAL STRATEGY ON DEFENCE AND SECURI TY ∗ Europeans m ust also im prove the m onitoring and control of flow s w hich have security im plications ∗ This requires investing in I ntelligence, Surveillance and Reconnaissance, including Rem otely Piloted Aircraft System s ( RPAS, or drones) , satellite com m unication DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 16 1-2 FEBRUARY 2017 SALES AND ACQUISITION SSG DEFENCE
NATO DEFENCE SPENDI NG DCAF RAZUMKOV CONFERENCE ON DEFENCE PRODUCTION, 17 1-2 FEBRUARY 2017 SALES AND ACQUISITION SSG DEFENCE
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