Industrial Cooperation Policy in the Spanish Ministry of Defense Jerusalem, May 8 th 2007
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Transcript of Industrial Cooperation Policy in the Spanish Ministry of Defense Jerusalem, May 8 th 2007
INDUSTRIAL COOPERATION POLICY INDUSTRIAL COOPERATION POLICY
ICCOPR-071356-1LL
Industrial Cooperation Policyin the Spanish Ministry of DefenseJerusalem, May 8th 2007
Industrial Cooperation Policyin the Spanish Ministry of DefenseJerusalem, May 8th 2007
Mr. Manuel García RuizDeputy Director Industrial Cooperation DirectorateSpanish Ministry of Defence
Mr. Manuel García RuizDeputy Director Industrial Cooperation DirectorateSpanish Ministry of Defence
INDUSTRIAL COOPERATION POLICY INDUSTRIAL COOPERATION POLICY
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1. Goals2. Policy and Directives3. Industrial Cooperation Agreement (ICA)4. ICA generated activity5. Cooperative programs6. Return on Investment7. Conclusions
1. Goals2. Policy and Directives3. Industrial Cooperation Agreement (ICA)4. ICA generated activity5. Cooperative programs6. Return on Investment7. Conclusions
SUMMARYSUMMARY
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MAIN INDUSTRIAL COOPERATION GOALS• Consolidate defense related strategic
industrial sector• Obtain self-sufficiency in weapon systems
life cycle support and upgrading programs• Build the basis for the industry to have
access to foreign markets either on individual or cooperative ways
MAIN INDUSTRIAL COOPERATION GOALS• Consolidate defense related strategic
industrial sector• Obtain self-sufficiency in weapon systems
life cycle support and upgrading programs• Build the basis for the industry to have
access to foreign markets either on individual or cooperative ways
GoalsGoals
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SECTOR CONSOLIDATION:• Obtaining technologies• Participating in the supply contracts• Becoming prime contractor• Being open to participate in multinational
programs
SECTOR CONSOLIDATION:• Obtaining technologies• Participating in the supply contracts• Becoming prime contractor• Being open to participate in multinational
programs
GoalsGoals
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ACCESS TO FOREIGN MARKETS:• Promoting subcontracting or cooperative
activities• Improving quality and program management
capabilities• Supporting industry abroad
ACCESS TO FOREIGN MARKETS:• Promoting subcontracting or cooperative
activities• Improving quality and program management
capabilities• Supporting industry abroad
GoalsGoals
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LIFE CYCLE SELF-SUFFICIENCY:• Increasing nationalization levels• Improving capabilities in maintenance
(authorized service centers), logistics and modernization
LIFE CYCLE SELF-SUFFICIENCY:• Increasing nationalization levels• Improving capabilities in maintenance
(authorized service centers), logistics and modernization
GoalsGoals
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The Industrial Cooperation Agreement seek the fulfillment of several objectives, among which are the following:
• Obtaining of advanced technologies or improving the existing ones, for their use by the Armed Forces and the defense industry
• Obtaining of capabilities related to the acquired system in order to improve the effectiveness and efficiency of its support throughout its life cycle
The Industrial Cooperation Agreement seek the fulfillment of several objectives, among which are the following:
• Obtaining of advanced technologies or improving the existing ones, for their use by the Armed Forces and the defense industry
• Obtaining of capabilities related to the acquired system in order to improve the effectiveness and efficiency of its support throughout its life cycle
GoalsGoals
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• The increase of the industrial activity, fostering the industrial, economic, labor and commercial interests of Spain
• The leveling of the balance of defense trade • The increase of the local content of the
supply
• The increase of the industrial activity, fostering the industrial, economic, labor and commercial interests of Spain
• The leveling of the balance of defense trade • The increase of the local content of the
supply
GoalsGoals
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• The increase of presence of Spanish industries in the international markets
• The certification of Spanish industries to become suppliers and, if possible, as a sole source of components and parts of the systems acquired
• To promote Spanish defense industry and products in the international markets
• To foster international cooperation
• The increase of presence of Spanish industries in the international markets
• The certification of Spanish industries to become suppliers and, if possible, as a sole source of components and parts of the systems acquired
• To promote Spanish defense industry and products in the international markets
• To foster international cooperation
GoalsGoals
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Three lines of action of the acquisition policy:
• Use of local capabilities within the appropriate scenario of competitiveness
• Requirement of Industrial Cooperation Agreements
• International Cooperative programs
Three lines of action of the acquisition policy:
• Use of local capabilities within the appropriate scenario of competitiveness
• Requirement of Industrial Cooperation Agreements
• International Cooperative programs
Policy and directivesPolicy and directives
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INDUSTRIAL COOPERATION AGREEMENT:• No National law has been released• The Secretary of State for Defense’s Directive nr.
375/2000 establishes that an ICA has to be negotiated prior to the acquisition to any foreign company
INDUSTRIAL COOPERATION AGREEMENT:• No National law has been released• The Secretary of State for Defense’s Directive nr.
375/2000 establishes that an ICA has to be negotiated prior to the acquisition to any foreign company
Industrial Cooperation Agreement (ICA)
Industrial Cooperation Agreement (ICA)
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• Directorate of Armament and Material is responsible of the implementation of the Directive of Industrial Cooperation Agreement
• Gerencia de Cooperacion Industrial (Industrial Cooperation Directorate) has the duty to negotiate and follow-up the industrial agreements
• Directorate of Armament and Material is responsible of the implementation of the Directive of Industrial Cooperation Agreement
• Gerencia de Cooperacion Industrial (Industrial Cooperation Directorate) has the duty to negotiate and follow-up the industrial agreements
Industrial Cooperation Agreement (ICA)
Industrial Cooperation Agreement (ICA)
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ICA negotiation:• To be negotiated with all foreign potential dealers and
sub-contractors• The ICA is to be taken into consideration in the evaluation
process• The ICA becomes effective when the acquisition contract
is awarded• The contract cannot be awarded if the ICA has not been
previously set up• Every ICA has a compliance plan
ICA negotiation:• To be negotiated with all foreign potential dealers and
sub-contractors• The ICA is to be taken into consideration in the evaluation
process• The ICA becomes effective when the acquisition contract
is awarded• The contract cannot be awarded if the ICA has not been
previously set up• Every ICA has a compliance plan
Industrial Cooperation Agreement (ICA)
Industrial Cooperation Agreement (ICA)
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The main terms and conditions of the ICA are:• Commitment. It is a percentage of the contract value. The
reference objective is 100%• Compliance period. Is similar to the one of the acquisition contract• Life-cycle clause. This permits to apply the same terms and
conditions for future contracts
The main terms and conditions of the ICA are:• Commitment. It is a percentage of the contract value. The
reference objective is 100%• Compliance period. Is similar to the one of the acquisition contract• Life-cycle clause. This permits to apply the same terms and
conditions for future contracts
Industrial Cooperation Agreement (ICA)
Industrial Cooperation Agreement (ICA)
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• Milestones. Partial accomplishment milestones are set up
• Categories: Defense related activities are preferred. Non defense related activities have to be agreed case by case and have to be similar in technologies.
• Milestones. Partial accomplishment milestones are set up
• Categories: Defense related activities are preferred. Non defense related activities have to be agreed case by case and have to be similar in technologies.
Industrial Cooperation Agreement (ICA)
Industrial Cooperation Agreement (ICA)
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Penalties:• Increase of commitment. Lack of fulfillment of the partial milestones
conveys to an increase of the total commitment• Liquidated damages. Lack of fulfillment of the commitment at the
end of the compliance period conveys to a penalty in form of liquidated damages payable to the public treasury
Penalties:• Increase of commitment. Lack of fulfillment of the partial milestones
conveys to an increase of the total commitment• Liquidated damages. Lack of fulfillment of the commitment at the
end of the compliance period conveys to a penalty in form of liquidated damages payable to the public treasury
Industrial Cooperation Agreement (ICA)
Industrial Cooperation Agreement (ICA)
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Benefits:• ICA’s have been an efficient tool of the SMOD industrial policy• ICA’s have contributed to the development of Spanish Technological and
Industrial Base for Defense (TIBD) and contributed to the European TIBD• ICA’s have provided strong foundation to Spanish Industry undertaking
the participation in cooperative programs
Benefits:• ICA’s have been an efficient tool of the SMOD industrial policy• ICA’s have contributed to the development of Spanish Technological and
Industrial Base for Defense (TIBD) and contributed to the European TIBD• ICA’s have provided strong foundation to Spanish Industry undertaking
the participation in cooperative programs
Industrial Cooperation Agreement (ICA)
Industrial Cooperation Agreement (ICA)
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Some representative figures as of December 2006
• Generated activity (returns): 8.054 M€ constant December 2006
• About 900 Spanish organizations with effective participation
• 181 Foreign contractors• More than 15,672 Approved transactions
M€ = Million Euros
Some representative figures as of December 2006
• Generated activity (returns): 8.054 M€ constant December 2006
• About 900 Spanish organizations with effective participation
• 181 Foreign contractors• More than 15,672 Approved transactions
M€ = Million Euros
ICA´s Generated activityICA´s Generated activity
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• The Defense activities requirements have grown along the years progressively Generated activities through ICA’s
• The Defense activities requirements have grown along the years progressively Generated activities through ICA’s
ICA’s Generated activityICA’s Generated activity
32%
68%
15%
85%
20061984 - 2006
• 329 Finished and Follow-up agreements • 163 agreements in negotiation• Committed returns as of 31st December 2006: 1,822M€
• 329 Finished and Follow-up agreements • 163 agreements in negotiation• Committed returns as of 31st December 2006: 1,822M€
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• A second cooperative effort has as pillars the Cooperative Programs
• Spain is an active player in armament programs in either political, military, multilateral or bilateral environments
• NATO• European Union• Multilateral• Bilateral• Consortia
• A second cooperative effort has as pillars the Cooperative Programs
• Spain is an active player in armament programs in either political, military, multilateral or bilateral environments
• NATO• European Union• Multilateral• Bilateral• Consortia
International Cooperative Programs
International Cooperative Programs
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• NATO Programs:
• SOSTAR (Stand off Surveillance Targeting and Acquisition
Radar) FR, IT, NE, GE, SP (10%)
• NAEW (NATO Airborne Early Warning) 13 nations SP (3,5%)
• ACCS (Air Command Control Systems) 18 nations SP (3,3%)
• MIDS ( Multifunctional Distribution Information System) FR, IT,
GE, USA, SP (15%)
• European Union Programs (EUCLID) Research
and Development Programs. New Technologies.
• NATO Programs:
• SOSTAR (Stand off Surveillance Targeting and Acquisition
Radar) FR, IT, NE, GE, SP (10%)
• NAEW (NATO Airborne Early Warning) 13 nations SP (3,5%)
• ACCS (Air Command Control Systems) 18 nations SP (3,3%)
• MIDS ( Multifunctional Distribution Information System) FR, IT,
GE, USA, SP (15%)
• European Union Programs (EUCLID) Research
and Development Programs. New Technologies.
Cooperative programsCooperative programs
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• International Cooperative Programs:
• Fighter: EUROFIGHTER-TYPHOON: GE, IT, UK, SP (13,5%)• Harrier II Plus, VSTOL Aircraft: US, IT, UK, SP • Beyond visual medium range air-air missile Meteor: SWD, UK,
FR, GE, IT, SP (10%)• Evolved Seasparrow: AUS, CAN, DK, GE, GRE, NE, NOR, TU, US,
SP (3,2%)• Transport Aircraft A-400M: GE, BE, FR, TUR, UK SP (15%)• Tiger Combat helicopters: GE, FR, SP (13%)• Iris-T Missile: GE, IT, GRE, NOR, SWD, SP (18%)• Helios observation satellite: FR, BE, SP (3%)• Pleiades observation satellite: FR, IT, SP (3%)
A-400M and Tiger helicopter are managed by OCCAR
• International Cooperative Programs:
• Fighter: EUROFIGHTER-TYPHOON: GE, IT, UK, SP (13,5%)• Harrier II Plus, VSTOL Aircraft: US, IT, UK, SP • Beyond visual medium range air-air missile Meteor: SWD, UK,
FR, GE, IT, SP (10%)• Evolved Seasparrow: AUS, CAN, DK, GE, GRE, NE, NOR, TU, US,
SP (3,2%)• Transport Aircraft A-400M: GE, BE, FR, TUR, UK SP (15%)• Tiger Combat helicopters: GE, FR, SP (13%)• Iris-T Missile: GE, IT, GRE, NOR, SWD, SP (18%)• Helios observation satellite: FR, BE, SP (3%)• Pleiades observation satellite: FR, IT, SP (3%)
A-400M and Tiger helicopter are managed by OCCAR
Cooperative programsCooperative programs
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• Bilateral Developments: • LPD - Landing Platform Dock NAVANTIA-Royal
SCHELDE (The Netherlands)• Pizarro - Infantry Fighting Vehicles (tracked) SBS-
STEYR (Austria)
• Industrial consortium• Scorpene Submarines NAVANTIA and DCN (France)• AFCON - Frigates and surface ships NAVANTIA and
LOCKHEED MARTIN (USA)
• Bilateral Developments: • LPD - Landing Platform Dock NAVANTIA-Royal
SCHELDE (The Netherlands)• Pizarro - Infantry Fighting Vehicles (tracked) SBS-
STEYR (Austria)
• Industrial consortium• Scorpene Submarines NAVANTIA and DCN (France)• AFCON - Frigates and surface ships NAVANTIA and
LOCKHEED MARTIN (USA)
Cooperative programsCooperative programs
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• This ratio is an indicator to determine the industrial,
technological or/and economic outcome of a Defence
investment
• This ratio is a factor to evaluate programs under:
• Industrial Cooperation / Offsets agreements
• Cooperative Programs MOU´s
• Or a mix of both
• Helps in the analysis of different candidate proposals, and
serves to show other than Defense merits of a given
program
• This ratio is an indicator to determine the industrial,
technological or/and economic outcome of a Defence
investment
• This ratio is a factor to evaluate programs under:
• Industrial Cooperation / Offsets agreements
• Cooperative Programs MOU´s
• Or a mix of both
• Helps in the analysis of different candidate proposals, and
serves to show other than Defense merits of a given
program
Return on InvestmentReturn on Investment
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Offset, is a debatable concept:
- In the transatlantic scenario
- In the European “arena”
- In the world market
Spain as a member of the EU, NATO, LOI, OCCAR,
has debated and still debates about offset, in each of
the above mentioned organizations as well as in the
frame of the EDA
Offset, is a debatable concept:
- In the transatlantic scenario
- In the European “arena”
- In the world market
Spain as a member of the EU, NATO, LOI, OCCAR,
has debated and still debates about offset, in each of
the above mentioned organizations as well as in the
frame of the EDA
ConclusionsConclusions
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The SMOD industrial requirements related to its acquisitions
have evolved from offset to a mix of offset and industrial
participation, and finally to industrial cooperation.
The continuity of cooperative policy, either on the basis of
international collaborative programs or on the ICA´s basis
is to be supported by the SMOD
At the present moment the work is oriented to industrial
participation and industrial cooperation.
Currently cooperative programs constitute our priority as
well as industrial participation in the same
The SMOD industrial requirements related to its acquisitions
have evolved from offset to a mix of offset and industrial
participation, and finally to industrial cooperation.
The continuity of cooperative policy, either on the basis of
international collaborative programs or on the ICA´s basis
is to be supported by the SMOD
At the present moment the work is oriented to industrial
participation and industrial cooperation.
Currently cooperative programs constitute our priority as
well as industrial participation in the same
ConclusionsConclusions