A major change to the way European defence contracts are publicised takes effect next week, making it easier for small companies previously shut out from doing business abroad to pitch for work on programmes run by Europe's biggest primes.

The latest version of the European Defence Agency's web-based bulletin board goes live on 29 March, with BAE Systems, EADS, Saab and Thales among those inviting bids for around 100 contracts. The original version, launched in July, included only direct government contracts for which primes could compete.

Around €7 billion ($9 billion) of defence business is currently advertised on the site, with 22 of the EDA's 24 members signing a code of conduct requiring them to open all non-security-sensitive defence contracts to competition. Currently, only contracts worth at least €1 million are posted, but there will be no minimum once the new version comes on stream.

Defence spending

The EDA says the new site will "provide European defence suppliers with a single portal - a one-stop shop - for reviewing defence procurement opportunities at both prime contractor and subcontractor levels" and will "establish a more open, fair and competitive defence equipment market throughout the supply chain".

The body representing Europe's aerospace and defence sector welcomes the initiative. François Gayet, secretary general of the Aerospace & Defence Industries Association of Europe, says expanding the electronic bulletin board is a "strategic change", adding: "Until now, most small companies in the defence industry had to get their work directly from their ministry of defence. Now the SME in Poland, Greece or Portugal faces competition coming into the country, but, vice versa, they can compete abroad. They can identify their strengths and weaknesses and whether they should try to do everything or focus on a niche."

The EDA has fought a battle for credibility since coming into being in 2004 as a product of the European Security and Defence Policy agreed in 1999. It has no role in military operations, procurement or strategy, but is a "back office" to help governments spend their defence budgets efficiently by encouraging industrial competition and co-operation.

In a speech in Washington DC last month, EDA chief executive Nick Witney acknowledged that the politicians that agreed the common defence policy had different agendas. These ranged from those wanting any policy to be compatible with NATO, to some harbouring ambitions of creating a standing European army and powerful industrial infrastructure not reliant on US technology, to others determined to shore up domestic champions at all costs.

Against this background, the progress towards creating a steamlined European procurement process has been good, says Witney. "[Member states] want to stop spending their money on the wrong things and spend it on the right things instead and they recognise the necessity of increasingly pooling their efforts and resources," he says. "Everybody knows that if Europeans want to preserve military clout, and a globally competitive industry, they have no choice but to co-operate."

The era in which the business of defence can be managed "in 24 separate national boxes in Europe is now over. None of us can any longer afford it," he says.

The security get-out clause in treaties governing competition within the European Union has allowed governments to protect national industries by allocating contracts directly to domestic companies or making it cumbersome for foreign manufacturers to bid for work directly or indirectly. But this has fragmented Europe's defence technology and industrial base, with the EU's procurement and research dollars, already dwarfed by the US budget, spread among favoured local manufacturers and research projects.

Europe needs more competition and co-operation, says Witney. "If governments can consolidate demand - offer the market more joint programmes - the supply side will respond. Anything else is economically unsustainable."

Source: Flight International