Opportunities for UK technology companies in the US defence market
Speech by Mr Philip Dunne, Minister for Defence Equipment, Support and Technology.
Introduction
We couldn鈥檛 have chosen a better venue to discuss our US defence relationship than the Cabinet War Rooms.
Because this is where Churchill would discuss the progress of the Second World War鈥n a daily basis with President Roosevelt鈥�
鈥roviding a reminder that ours is a partnership based on the firmest of historic footings
In World War Two鈥hat unique combination of UK/US expertise鈥as perhaps personified in the Tizard Mission which produced a paradigm shift in radar technology.
During the Cold War鈥t was our special relationship that enabled us to strike the Polaris鈥� and later Trident鈥� agreements 鈥hat strengthened both our nations in the face of the Communist threat.
And today co-operation continues in all areas 鈥hether in intelligence鈥n force protection鈥� in airborne ISR鈥r in the interoperability of our force structures.
Today鈥檚 relationship
Of course, given the US鈥檚 technological pre-eminence in many areas it is inevitable that we still purchase a significant amount of equipment from our American friends 鈥rom Huskeys and Harpoons to Ridgbacks and Reapers
But this relationship is as deep as it is broad.
Yes, we buy capability from the US.
But often, as in the case of Rivet Joint, we find new and innovative ways to operate it.
At the same time there are instances of reciprocity.
So the C17 programme might be built by Boeing in the US but their high-tech international training centre is in Farnborough.
While with the Chinook Fleet we get the best availability.
At the same time the US remains one of our biggest customers.
Official Statistics from UKTI DSO cite 12% of UK defence exports going to north America last year,
In 2013 the Department of Defense procured $1.5 billion in supplies, services, fuel and construction from UK entities 鈥�
Plus there is the unseen but growing British content in the supply chains of US defence companies, which draws upon a gamut of dual use technologies.
And while the US rarely procures platforms and major systems from overseas鈥� when it does鈥t often chooses British.
Whether it is the US versions of the Harrier Jump Jet and the Hawk Jet Trainer in decades past.
Whether it is our Rolls Royce MT30 engines or our Martin Baker Ejection Seats fitted in every F-35 which will come into service for decades to come.
Some of the companies here today provide excellent examples of British success trading in the US defence market:
鈥�.Ultra Electronics, TMD, Cobham, Astute Electronics 鈥�. to name but a few.
Each demonstrating that you don鈥檛 have to be a prime contractor to break into the market.
Yet what has sustained our relationship and kept it fresh over the years is continual collaboration.
Once upon a time we were pioneering jet propulsion
Today we are working on the most advanced jet aircraft on earth in the form of the F35 鈥ith the UK proud to be the US鈥檚 only level one partner.
We鈥檙e also partnering today on a wide range of 100 other S&T projects.
Working hand-in-glove to develop the Common Missile Compartment
鈥he infra-red counter measures for aircraft鈥� 鈥nd advanced night vision capability.
New opportunities
Yet you鈥檙e here today because that priceless prize of working with the US is growing.
Like us 鈥� the US is looking to the future.
As equipment technology advances exponentially鈥� as advanced surface-to-air and anti-access area weapons proliferate.
鈥s multiple potential adversaries increasingly compete to acquire fifth generation technology 鈥he US has seen its technological advantage 鈥he bedrock of its defence for the past 60 years 鈥radually erode
So it is looking to make another giant leap forward 鈥pgrading, developing and fielding breakthrough technologies and systems.
That is why the US, last year, launched its new Defence Innovation Initiative, the Third Offset Strategy, which I discussed with Deputy Secretary Work in December.
Bob Work is asking serious questions about how to improve US capability in a host of areas:
How can it increase its resilience and reduce its dependence on space technology?
How can it increase its underwater capabilities to counter anti-access and area denial, and focus on autonomous systems and underwater payloads?
How can it maintain air dominance and continue to strike in non-permissive environments?
How can it counter electronic warfare, maintain stealth and develop jam-resistant missiles?
And how can it keep up to speed with emerging technologies and concepts such as autonomy and advanced manufacturing 鈥hen investment in the commercial sector is outstripping military research and development?
The challenge for the US is that it must do all this while still driving down its costs鈥� 鈥omething with which we鈥檙e only too familiar in the UK.
Last year, Frank Kendall, the US Secretary of Defense for Acquisition, Technology and Logistics unveiled his acquisition reform program 鈥楤etter Buying Power 3.0鈥�.
A strong sign that 鈥�.like us鈥� in tough times 鈥�.our American counterparts see the virtue of cooperative research, co-development, and co-production.
Why pay to duplicate technology solutions that already exist elsewhere?
We believe the determination of the US to broaden its horizons鈥� is now opening up new opportunity for its allies as I was discussing with Frank only on Sunday at IDEX in Abu Dhabi.
This is especially so for those British companies, with the expertise the US is looking for.
And that鈥檚 why you鈥檙e here today.
A big challenge
I鈥檓 not saying it will be easy to break into the American defence market place.
I鈥檓 speaking as someone who spent some years working in the US myself, so I am under no illusion as to the challenges.
I know the US Defence market is truly vast.
10 times the size of our own in this country.
For example, the US Special Operations Command, its smallest service, is roughly the size of the British Army
And that the US Marine Corps, also regarded in the US as 鈥渟mall鈥�, is the size of the whole of UK defence鈥nd can muster a similar spectrum of capability.
All this presents genuine challenges, especially to small businesses
Yet at the same time it brings huge possibilities beyond anything we see in Europe.
So you need to know where to start..
鈥ow to find the right route to market 鈥nd how to establish good local partners
You need not just the ability to grow鈥eliver at scale 鈥nd at the pace such a large customer demands.
鈥ut to get to grips with an unwieldly procurement machine that is considerably more complex than UK MOD 鈥here the preference for domestic suppliers is enshrined in law 鈥nd where export controls and the infamous International Traffic in Arms Regulation control the proliferation of US technology.
Don鈥檛 be put off
But don鈥檛 be put off.
If you鈥檙e already concentrating your business on exportability, modularity and innovation鈥�.
鈥nd we鈥檝e rewritten our policy to ensure 鈥榚xportability鈥� must be actively considered from the very beginning of our own acquisition cycle
鈥hen you鈥檙e in the right place
And today鈥檚 sessions will help you with some of the practicalities.
The US experts in this room
鈥rom our MOD staff in Washington, 鈥�.UKTI鈥檚 Defence and Security Organisation, 鈥nd BIS in London 鈥tand ready to use their excellent local knowledge 鈥o help you disentangle the complex web of regulation 鈥ecode the unfathomable jargon 鈥nd navigate around the labyrinthine US procurement structure
I would also like to thank the experts from law firms Crowell & Moring, and Stoock
鈥s well as from Bloomberg Government for the time they have taken and the interest they have shown in supporting UK industry.
鈥y travelling from the US to share their professional advice with you today.
Bilateral agreements
Yet their advice alone isn鈥檛 the only thing that should give you the confidence to go to America.
We鈥檝e also drawn up a raft of bilateral agreements to help your cause.
In December I renewed the Reciprocal Defence Procurement MOU
It is designed to create a level playing field for UK and US companies accessing each country鈥檚 market.
We鈥檙e also coming up to the second anniversary of the Defence Trade Cooperation Treaty which eases the export control burden for certain categories of technology.
Colleagues in MOD are now working with authorities in the US to ensure the treaty retains its value in the wake of reforms that have begun easing US export control regulations in some technology areas.
And we also have the Science & Technology communiqu茅 that I signed with Frank Kendall last year.
It is there to accelerate our joint programmes of research in disruptive technologies 鈥hether in situational awareness, satellites and communications
And it is already paying dividends.
There are currently around 100 distinct R&D programmes underway between the UK and the US.
鈥n increased number of US exchange scientists and engineers in the UK.
鈥nd a new scheme for short term exchanges between UK and US scientists.
The value of the Communiqu茅 has been affirmed by the development of co-operation into quantum technology, autonomy and directed energy.
While the recently signed master submarine research agreement, and related agreements on undersea technologies mean greater opportunities in those areas as well.
Inevitably, the names of these agreements matters less than what they will do for you.
Again our experts here today can give you chapter and verse.
Defence Growth Partnership, new solutions centre and DSIEP
But today鈥檚 event isn鈥檛 the only place you鈥檒l find advice to help your business succeed when crossing the Atlantic
Our Defence Growth Partnership now provides a collaborative environment for the best brains from industry, academia and government to come together.
鈥aking the UK defence industry more sustainable and more competitive 鈥nd assisting industry in providing leading edge capability for our armed forces around the world.
Our new Defence Solutions Centre is designed to act as a fulcrum for international requirements.
By utilising the latest market data and making the most of its understanding of the UK鈥檚 value chain鈥� it will create capability and technology roadmaps to respond to future international opportunities.
Undertaken in an environment where the UK remains a leader in academic research.
鈥et鈥檚 not forget the UK still publishes 16% of the world鈥檚 top quality research
鈥� still punching way above our weight
鈥t will help British business make the most of its great potential
Meanwhile, our Defence and Security Industrial Engagement Policy is encouraging overseas companies鈥ncluding several US primes鈥o work with the UK鈥檚 defence and security sector.
We are working with UKTI DSO to offer showcase events for non-domiciled primes to meet the UK defence and security supply chain, engineer to engineer, I have attended 2 such events in the past year, with Boeing and Raytheon, where each met over 100 UK supply chain SMEs, and real business has resulted.
We are seeking to use this policy to help our industry become better placed to secure exports as well as support front line capability.
Investment in innovation
Bi-lateral agreements and top quality advice will help you punch above your weight when competing in the American market.
But the government is also helping you in another way 鈥e鈥檝e put aside investment for innovation鈥he lifeblood of defence
We鈥檝e protected our annual investment in S&T鈥o it remains at least 1.2% of the defence budget鈥�
And we鈥檙e channelling that money into our Centre for Defence Enterprise鈥�
鈥hich is already developing novel high risk, high potential benefit innovations 鈥uch as game changing quantum technologies 鈥ew advanced materials 鈥nd a powerful neutron microscope 鈥hat will allow us discover materials for faster planes, new and better computer chips and feather lightweight kit for our military
Conclusion
So my message to you today is that when it comes to the US market 鈥he market is changing
Becoming more transatlantic.
In both directions.
So please enjoy the day.
Chat to the experts.
Share your experiences.
Make the connections who can help you break into this market.
The US accounts for almost 37% of worldwide defence expenditure 鈥� in a market estimated back in 2013 to be over US$1.7 trillion
That鈥檚 a massive opportunity
And we鈥檙e keen to do what we can to help you get your share.
As for those concerned the journey ahead might seem a long one 鈥et me leave you with a bit of sage advice from Churchill himself:
鈥淵ou can always count on Americans to do the right thing, after they鈥檝e tried everything else鈥�