Increasingly it is common for governments to pool resources with allies to fund development of hi-tech defence equipment. The most high-profile example of this currently underway is the joint strike fighter (JSF) that has brought several foreign governments on board as partnersand observers. This programme has to date involved foreign government contributions of more than $200m to the $1,600-million, concept-demonstration phase.

The JSF programme office (JPO) has in turn awarded two contracts to international consortia to build rival concept demonstrator aircraft. The next phase of the programme, for engineering and manufacturing development (EMD), is also going to result in an international consortium being awarded a contract by the JPO that is in turn funded by contributions from the US and several other foreign governments. The UK alone is being asked to contribute $1.6 billion to the $9 billion EMD phase.

Funding problems

The British and US governments are funding jointly the development of a new family of reconnaissance vehicles, termed FSCS in the US and TRACER in the UK. Four-year concept demonstration contracts were awarded to two Anglo-US consortia in 1999. The US, German and Italian governments also are working to develop the medium extended-air-defence (MEADS) project to replace the Hawk surface-to-air missile and are in the process of finalising a further development contract for a three-nation consortium. Both these programmes have been dogged by funding problems in the US Congress because of the US legal requirement to appropriate funds only on an annual basis combined with shifting US military requirements. For these reasons, many US international partners have developed mixed feelings about their partnership with US companies on Pentagon programmes.

US companies, however, have successfully participated in a number of NATO-administered procurement programmes that have a large European production and logistic-support element. These include the NATO standard missile, HAWK SAM and NATO AWACS programmes.

Licence for US market

The US defence market is notoriously difficult for foreign companies to penetrate because of protectionist tendencies in the US Congress. To date the most successful way to get around this problem has been by partnering with a US company to establish a production line under licence. For example, McDonnell Douglas (now Boeing), produces the AV-8B Harrier and T-45 Goshawk in the US under licence from BAE Systems.

Israeli companies also have taken this route with Elbit Systems teaming with Kaiser Industries on the helmet-mounted cueing system and Rafael linking with Lockheed Martin to produce the AGM-142 Have Nap missile in the US. The latter two companies are offering the Python 4 air-to-air missile to the USAF Reserve. Meanwhile the Anglo-French Matra BAe Dynamics has entered into a strategic relationship with Boeing to offer the ramjet-powered Meteor air-to-air missile to the US Navy.

The future is partnership

While US companies have a strong track record of success in international partnerships on commercial deals and projects with foreign governments, the results of international partnerships involving the US government are mixed.

The US government's technology transfer bureaucracy and the attitude of the US Congress to this issue have made many foreign defence companies wary of doing business with the Pentagon. Increasingly the Pentagon and the US defence industry realise that the American defence market is no longer able to fund the development of the next generation of military hardware, such as the JSF. Foreign participation and sales are essential for the success of the JSF programme.

Resolving the problem of how to do business on equal terms with the global defence industry will be very near the top of the agenda for President Bush's new administration.

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