Smaller companies to get help on EU defence contracts

The European Union will join major defence companies this week to launch a new system to make it easier for smaller firms to compete for armaments contracts across the EU, officials said Tuesday.

“It's an opportunity for nontraditional supplies to get into the defence game”, said Nick Witney, chief executive of the European Defence Agency (EDA), the EU body which will coordinate the new system.

The plan will be launched Thursday with the activation of an EU-wide ‘bulletin board’ on the EDA website where Europe's big defence companies can post contracts for suppliers.

The new business-to-business portal extends a system launched in July where governments from 22 nations post defence contracts; an initiative aimed at opening up the EU's multibillion dollar annual defence market to greater crossborder competition.

EU governments have long been able to protect national defence industries because of clauses in the Union's treaty which largely exempt military contracts from rules that have torn down barriers to trade in other sectors across the EU.

Last year, faced with mounting complaints that such protectionism was hindering efforts to strengthen the European industry against international competitors, all but five of the EU's member nations agreed to a ‘code of conduct’ to open up their markets by offering EU-wide tenders on the Web portals.

Witney said it was too early to assess how successful the system has been. Although about 140 contract opportunities have been posted, worth an estimated $9.29 billion, Witney said only four contracts had been awarded; all by the Polish government to Polish companies who were the only ones competing.

“Defence procurement does not work with the speed of a striking cobra”, Witney told a news conference. “Eight months is the blinking of an eye in terms of the pace.”

However he said the system was working “tolerably well” and that the value of contract opportunities posted was in line with what was expected.

He said 28 of Europe's largest defence companies had indicated their participation in the system to be set up this week and said about 100 opportunities for subcontractors were expected to be posted immediately after the launch jointly by the defence agency and the head of the Association of Aerospace and Defence Industries in Europe.

Denmark, Spain, Hungary, Romania and Bulgaria have so far declined to take part in the code of conduct on defence purchases, but their companies will be able to bid for contracts posted on the portal.

Source: P. Ames - Associated Press

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