French and U.S. defense industrialists recently met to discuss
how they could increase cooperation between both nations.
In an open letter to the Franco-American defense industrial community,
Edward C. “Pete” Aldridge Jr., U.S. undersecretary of
defense for acquisition, technology and logistics, and his French
counterpart, Gen. Yves Gleizes, wrote that transatlantic cooperation
between the two countries is more important than ever.
Aldridge and Gleizes said that both nations should work to improve
interoperability, to jointly define future equipment needs and to
strengthen the relationship between the French and American defense
Many American and French officials noted that there are both cultural
barriers and bureaucratic difficulties in working together. During
the France-U.S. Defense Industry Business Forum, held in Baltimore
in December, government and industry representatives from both countries
discussed business opportunities and various initiatives designed
to change procurement practices.
Among the changes sought by the French are more access to compete
in U.S. defense programs, the streamlining of U.S. export-control
policies and a more-even playing field for transatlantic competition.
“The forum sought to provide an understanding of the two business
operating environments, as well as provide opportunities for face-to-face
meetings between French and U.S. executives,” said Frank Cevasco,
the conference chairman.
“There must be strong political will on both sides for French-U.S.
industrial cooperation to succeed,” said Francois de L’Estang,
France’s ambassador to the United States. “Progress
on a joint declaration of principles for the defense industry would
be very welcome,” he said. Such a joint declaration of principles
would go a long way toward building alliances, pooling scarce resources
and leveraging technologies, he said. “Our respective governments
must set rules to govern, in full respect of each country’s
national security regulations, to mutually benefit armament cooperation
efforts,” L’Estang said.
“The days are long gone when troops can forge their own musket
balls around the campfire the night before the battle,” Aldridge
said. “Defense industries cannot be invented on the eve of
a national emergency. ... Defense industries must be maintained
[by government] in peacetime as well as in war, with the ability
to ramp up as needed.”
Aldridge recalled that on September 10, in a speech to his employees,
he said that three of the last five major wars where the United
States participated came by surprise. “Twenty-four hours later,
that figure had been modified to four of six,” he said. “This
illustrates that ways must be found around sparse defense budgets
to be prepared for conflict when necessary,” Aldridge said.
“There is value as well as challenges to coalition warfare,
but international cooperation is of critical importance in this,”
he said. “If each country had to develop capabilities by themselves,
we would isolate ourselves, and further widen the interoperability
But Aldridge also acknowledged that there are major structural
barriers to transatlantic cooperation. “There are too many
items on the [State Department’s] munitions list, technology
transfer is too difficult, and the administrative process required
for export controls takes too long,” he said. “But interoperability
is key even when the bureaucracy is resistant to change.”
Deirdre Lee, director of procurement at the Pentagon, said that
great difficulties are encountered by French firms trying to do
business with the U.S. Defense Department. For example, “the
Buy American Act,” part of the Federal Acquisition Regulations,
says that any item with military or federal government use cannot
be purchased outside of the United States unless no one in the country
makes it. There are also statutory restrictions on purchases of
food, clothing, fabrics and specialty metals from foreign sources.
The legislation is known as the Berry Amendment.
Lee said, however, that there are restrictions associated with
the U.S. procuring items that are unavailable in the United States,
such as goat hair. “The area near the collar of a military
uniform needs goat hair to keep its shape, but it is not available
in the United States, so the government has to go through lots of
hoops to acquire it from elsewhere,” she said.
Changes in the way the U.S. military buys equipment are necessary
to ensure interoperability with allies such as France, said Brig.
Gen. Bernard Malavielle, that nation’s director for strategic
affairs at the Ministry of Defense. “Interoperability is quite
essential. It is clear that future conflicts will be dealt with
by coalitions,” he said. “The best way to ensure interoperability
is to work out satisfactory military capacity. ... We need to have
our acquisition procedures coordinated, so we receive the same results.”
As an example of a successful transatlantic venture, Aldridge cited
the partnership between French and U.S. industrial conglomerates
Thales and Raytheon. The firms created Thales Raytheon Systems in
May 2001. The joint venture focuses on air defense/command and control
centers and ground-based air surveillance and weapons-locating radars.
Between France and the United States, Thales Raytheon Systems employs
1,300 people, with sales predicted at $600 million for 2001.
“It is a model of the new industrial environment,”
said Laurent Giovachini, the director for cooperation and industrial
affairs at the French Ministry of Defense.
Suzanne Patrick, U.S. deputy undersecretary of defense for industrial
policy, spoke at the conference after returning from a tour of European
defense companies. She said she was struck by the heterogeneity
of the defense industry in France, Germany and the United Kingdom.
“We were surprised by so much flexibility with extremely different
standards. It is a futuristic, flexible, innovative work force.
“We have a substantive operational understanding of the European
defense industry, but it has to get more real than just paper and
agreements,” Patrick said.
“The idea of increasing globalization is here to stay,”
said Kent Kresa, chairman and chief executive officer of Northrop
Grumman Corp. “Globalization is even more essential after
September 11 than before,” he told the conference. “The
threat is very much worldwide, and as it is a global problem, it
must have a global solution. The defense budget in the United States
has turned upward, but this isn’t that way in Europe,”
Kresa said. “Over the past five years, European defense spending
has declined by 21 percent, while U.S. defense spending has increased
by 5 percent. In France, overall defense spending has fallen 37
percent since 1995.”
Low levels of defense spending in Europe, however, are only part
of the story, Kresa added. “There is talk of a technology
gap, but I don’t think that’s what it is. I think it
is a capabilities gap. Where we’ve (U.S. companies) had opportunities
to build new equipment, when that has not been the case for Europe.”
More companies in Europe are going “global,” said Pierre
Chao, managing director of Credit Suisse First Boston, a Wall Street
investment firm. A case in point is the European Aeronautics, Defense
and Space giant, EADS. “EADS has a multi-national presence
in France, Germany and Spain, and 50 percent of its revenues are
earned outside Europe,” he said. Chao noted that Thales employs
50 percent of its employees outside France, and “SNECMA, which,
like EADS, earns 50 percent of its revenues outside Europe, has
as its largest customer, the U.S. Air Force.”