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With Congress now shut down for the November presidential

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With Congress now shut down for the November presidential

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									      Cover Story - Presidential Election



     THE DEVIL IN THE DETAIL - II




     Defence trade treaty too elusive
      for overwhelmed Congress
                                                                                                                                 DEMOCRAT CAMPAIGN PHOTO


Defence officials in the UK and Australia have reluctantly                      Key Points
admitted that, overwhelmed by the rush to pass the
                                                                                •	 A 2007 initiative by President Bush to substantially free
US$700 billion financial market ‘bail out’, Congress will                          up defence cooperation and arms transfer arrangements with
not realistically get back to seriously considering a Defense                      Australia and the UK, has failed to win support from a Congress
Trade Cooperation Treaty with each country until well                              since overwhelmed by the Global Financial Crisis (GFC).
into the middle of 2009, if at all. Already frustrated by
US Senators fearing a loss of control over sensitive arms                       •	 Bush Administration eagerness to push the US Senate
transfer approvals, the atmosphere that will greet Treaty                          to ratify the Defense Trade Cooperation Treaty, has fuelled
consideration in the 111th Congress – thanks to the global                         opposition from Senators claiming insufficient visibility was
economic crisis – will be significantly different than the one                     being given to substantive regulatory amendments underpinning
leading to its brokering at the close of 2007.                                     the Treaty.

                                                                                •	 The US State Department has since issued a series of
     Trevor J Thomas/WASHINGTON                                                    ‘exclusions’ specifically limiting benefits for Australia under the



W
                                                                                   Treaty, which were not canvassed in the enabling documents
            ith Congress now shut down for the November presidential               first signed by John Howard & President Bush.
            elections as global markets remain volatile despite unprec-
            edented government interventions, the very high prospects           •	 Australian interests in signing up to new administrative
for a major economic recession in the United States over 2009 can be               requirements do not appear to have been adequately addressed
expected to drive a resurgence of protectionist pressures, especially with         via the Fact Sheet & National Interest Analysis accompanying the
                                                                                   Treaty when it was first tabled in the Federal Parliament.
the Democrat-controlled Congress.
    So no matter which flavour of politics is ultimately held by the new
President, and irrespective of the hopeful aspirations of defence officials   Minister, Tony Blair. Logically, the close timing and similarity of the ini-
in London and Canberra, the prospects of US legislators rushing to            tiative with two of the US’ closest allies, practically suggested the text of
share their country’s deepest military secrets with other nations, even its   the two treaties would be substantively the same.
closest trusted allies, any time early in the new President’s term now ap-
pears severely in doubt.                                                      LACK OF TRANSPARENCY IN TREATY MAKING: Independ-
    Following the 5 September 2007 signing – on the periphery of the          ently, ADBR was able to obtain for early inspection the text of the
APEC meetings in Sydney – by former Australian Prime Minister, John           Treaty signed between the United States and the United Kingdom in
Howard and US President, George W Bush, of a formal Treaty between            September of 2007, given that the Australian Government elected to not
the two Governments concerning ‘Defense Trade Cooperation’, Aus-              release the United States/Australian text until December. As predicted,
tralian Defence Business Review (ADBR) magazine reported (see Vol.26,         both treaties followed a common line in seeking to overcome problems
Nos.08/09, p35) the likely closeness of the prospective Australian agree-     experienced in overcoming US International Traffic in Arms Regulations
ment with one earlier (June) signed in Washington by then UK Prime            (ITAR)-based export controls, themselves derived from the implement-

26    Australian Defence Business Review September-October 2008
                                                                                   Case Study: Defence Exports


ing instructions of the Cold War-era US Arms Export Control Act.
    Statistics released by the US State Department indicated that liter-
ally thousands of export licences and technical data agreements were           EOS finds road to glory
regularly approved for both allies, suggesting the ITARs were not actu-
ally preventing US military technology from being passed to the UK and
Australia. Instead, the effect of the regulations and their accompanying
                                                                               not always paved in gold
bureaucracy and licence administration more often frustrated the process
by slowing down technology transfers, whilst imposing added complex-
                                                                               A high profile ceremony in the relatively unknown
ity to the lives of those seeking to provide better outcomes for national
                                                                               community of Richland Township near Johnstown
warfighters in the course of improving interoperability between respec-
                                                                               (Pennsylvania) in August, and marking the award of a
tive national forces.
                                                                               US$28.8m contract by the US Air Force & US Army to
    As it turned out, the treaties signed by Bush respectively with Blair
                                                                               Kongsberg Defence & Aerospace for deliveries of its
and Howard turned out to be remarkably similar, both in terms of their
                                                                               ‘Protector’ crew remotely-operated weapon station, has
good intentions – to ‘strengthen and deepen’ the defence relationship,
                                                                               capped off a ‘rocky road’ experience for one of Australia’s
and ‘leverage the respective strengths’ of defence industries. However,
                                                                               most impressive high technology exporters.
the real workings of the Treaty relied on effecting a series of accompany-                                            worked to cause significant cost
ing ‘Implementing Arrangements’ (then still to be drafted) and finalised         Trevor J Thomas/JOHNSTOWN            over-runs in establishing this busi-
for mutual approval and subsequent consent by the Australian Parliament                                               ness’.



                                                                               E
and US Congress. In the latter, this involves the US Senate which, in re-             ncouraged by the mantra of          Supply arrangements for
cent years, has shown considerable interest in not only preserving, but               Defence industry policy and     CROWS I systems – which have
actually strengthening arms export controls.                                          Austrade officials (including   been in-service since early-2005
    The relationship between the execution of US Foreign Policy and the        successive ministers) to team with     – saw ROI manufacturing gun sys-
approval of arms transfers has a very long and controversial history, par-     foreign companies to penetrate         tem stabilized weapon mounts at
ticularly during the Cold War era. It functions within a complex political     global supply chains in the quest      its Illinois facility, while EOS built
trade-off between the need for legitimate governments to be provided           to develop international export        its electro-optic fire control & sen-
with the means of stabilising volatile fledgling democracies, whilst at        business, Canberra-based Electro       sor components at its own factory
the same time ensuring that transferred arms and military technologies         Optic Systems (EOS) could not          in Tucson (Arizona) – also set up
do not end up in the wrong hands, and/or used for suppressing human            have been blamed for thinking          as the base for the provision of
rights and enabling the committing of atrocities against national popula-      it had struck gold in 2000 when        ongoing depot support. The pair
tions.                                                                         – teamed with US-based Recon           then went about progressively
                                                                               Optical Inc (ROI) – it was selected    refining their patented ‘Raven’
LEGISLATORS RESIST BEING CUT OUT OF THE DEAL:                                  to supply its targeting and fire       R-400/CROWS I technologies,
This is where the effect of the ITARs have traditionally come into play.       control system into the ‘Raven’/       and subsequently found further
By way of enforcing strict export licensing arrangements – said to be          R-400 crew remotely-operated           commercial success in late-2006
viewed on a case-by-case basis by State Department personnel trained           weapon station (CROWS I) solu-         with the Australian Defence Force,
in the detection of fraudulent documents (and attempts to divert arms          tion for the US Army.                  for systems destined for use in
shipments for non-legitimate purposes) – senior elements within the               On the back of the CROWS I          Afghanistan.
US Government, and particularly legislators, retain a strong belief that a     order, EOS and ROI got in early on         By the end of June 2008,
modicum of justice can be achieved in a global trade that is not without       the bow-wave of burgeoning inter-      the Australian Army had 116
its moral critics.
                                                                               national demand for weapon sys-        EOS-based SRWS systems in
    Hence, the need for proper oversight and transparency in the de-
                                                                               tems that eliminated the need for      service on their project Land 116
tail and nature of proposed arms transfer deals – despite the angst of
                                                                               light gun operators to be exposed      ‘Bushmaster’ infantry mobility ve-
some arms recipients – which are regularly made available to the public
                                                                               to insurgent snipers, as tragically    hicle fleet, while US Army orders
through the US Defense Security Cooperation Agency (DSCA) notices,
                                                                               experienced in operational circum-     pushed over 560 units (known
prior to their cases being further developed for approval by Congress.
                                                                               stances in the Middle East.            as the M101 CROWS), for use
    Having been interpreted in some quarters as ‘parting gifts’ by Presi-
                                                                                  The benefit was short-lived,        in Operation ‘Iraqi Freedom’. The
dent Bush to close Prime Ministerial colleagues for their firm support
                                                                               however, as EOS latterly concedes      first ‘Raven’ units were fielded in
in the execution of US Foreign Policy in the Middle East, Bush is un-
                                                                               ‘continuously changing specifica-      2004 in Iraq, and employed by
derstood to have been naturally eager to see the US Senate quickly ratify
                                                                               tions and the sporadic (stop-go)       US Special Forces, military po-
the two treaties, with administration officials citing ‘enhanced execution
                                                                               nature of early stabilised remote      lice, infantry and transport units.
of the war against terrorism’ as a prime reason they should be dealt with
                                                                               weapon system (SRWS) demand,           CROWS I units currently equip the
quickly. As the US Senate Foreign Relations Committee (SFRC) began its
first hearing on the two treaties in May, it quickly became clear the Presi-
dent’s expectations were running into trouble.
    The shared (hostile) reaction of the SFRC – particularly from Chair-
man Senator Joe Biden (D-Delaware) and Senator Richard Lugar (R-
Indiana) – appear to have taken the Acting Undersecretary of State for
Arms Control & International Security Affairs, John Rood (along with
the State Department) by surprise, as there was genuine belief the Com-
mittee had been provided with all the necessary detail required to achieve
ratification.
    Washington insiders have subsequently told ADBR that to be ‘sur-
prised’ in a Congressional hearing – especially one of such significance
and well telegraphed anticipation of a favourable outcome – is generally                                                                        ADBR PHOTO
reflective of poor (pre-hearing) staff work.
                                                                                       Australian Defence Business Review September-October 2008
                                                                                         Australian Defence Business Review September-October 2008        27
                                                                                                                                                           27
       Cover Story - Presidential Election


    To be fair, the State Department had submitted to the SFRC details        and regulations being subject to advice and consent by the Senate was
of the ‘Implementing Arrangements’ (as similarly circulated to Austral-       resolved, “I can tell you as chairman of this committee that we are not
ian stakeholders) associated with the two treaties, a move undertaken         going to move.”
in accordance with long-standing Committee requests as a condition of             With SFRC Democrat and Republican leadership presenting such a
hearing scheduling.                                                           clear and bipartisan front on the imperative for the State Department
    What was not submitted – and which the Department of State in-            to come forth with the regulatory minutae underpinning the working
dicated the Senate’s ratification would not be sought by the President        of the Treaties to the Committee, Secretary of State Rice was formally
– were the detailed changes to the ITAR regulations (and other re-            informed in mid-September that administration officials had fatally mis-
lated trade law) – that Senators maintained were ultimately required to be    read the Senate’s feeling on concerns that both Treaty proposals risked
sighted in order to achieve their confidence that the ratification of such    conflicting with established US arms export laws, meaning they would
Treaties would not undermine Congressional oversight of sensitive arms        ultimately exceed the horizon of the 110th Congress.
shipments.                                                                        Sensing the pending catastrophe for Australia’s Treaty as media re-
    State Department officials went on to concede such regulatory             ports filtered in from Washington, Defence Minister Fitzgibbon – dur-
changes were massive, with detailed resolution taking many months to          ing a 10-day US visit in July – ostensibly to ‘reaffirm the strength of
draft and refine upon the receipt of legal advice, and hence, requiring       Australia’s bilateral relationship with the US, and to advance Australia’s
considerable administrative and staff effort in the run-up to Washington      security, defence & foreign policy interests in the Asia-Pacific region’
closing down for the Presidential election.                                   – made separate calls on the Chairman of the House Armed Services
    The State Department responded with a commitment to closely con-          Committee, Congressmen Ike Skelton, and Senator Joe Lieberman (Air/
sult Congress in the ITAR re-drafting process, and critically, reaffirmed     Land sub-committee Chairman), to raise accumulating problems with the
there was absolutely no intention or suggestion of changes (despite           Trade Cooperation Treaty’s ratification.
Senator Lugar’s fears) to the Congressional notification and oversight
processes for major arms sales to the UK, Australia, or any other nation.     KNOCKING ON THE WRONG DOORS: Oddly, Minister Fitzgib-
                                                                              bon’s 17 July release justifying his 10-day sojourn (which took in Hawaii,
BIDEN ON FREEWAY TO FAME: Still, Biden and Lugar were                         Texas, New York & Washington), did not indicate any effort had been
‘taken aback’ by a perception of arrogance in the Department of State’s       made to schedule talks with SFRC Chairman, Senator Joe Biden, who by
approach, pointing to fundamental flaws in thinking. The Senators             a quirk of fate is now Vice Presidential running mate of Democrat US
argued that if Congress did not like the administration’s regulations, it     Presidential hopeful, Barack Obama. Hence, and in a different world
could pass new legislation to change them. Alternatively, once having         post-4 November, Biden’s enduring opposition to ‘the war on terrorism’
ratified a Treaty, the Senate is unable to make any further changes. Bi-      being justified for proposals seeking to circumvent Congressional over-
den responded that until the issue of the Implementing Arrangements           sight on major defence & foreign policy issues is likely to find   >>>32

     EOS Annual Report – Ctd from page 27                                        Following media inquiries, EOS          schedule, management, logistic
                                                                              in December 2007 confirmed that            support, price, government
     M1114 up-armoured HMMWV             which forecast a maximum 6,500       the CROWS II contract award was            purpose license rights, past
     (Armoured Scouts/Military Po-       weapons mount and targeting sys-     currently the subject of ‘a strong         performance, and small disad-
     lice), and M1116 up-armoured        tems would be ordered over the       protest’ by its US partner, Recon          vantaged business being the
     HMMWV (US Air Force); the           life of a new CROWS II contract.     Optical Inc, with a determination          sub-factors assessed.”
     M93A1P1 nuclear, biological,        Drawn by the sheer volume of         to be made by the US Govern-                  ROI/EOS and Kongsberg were
     chemical reconnaissance ve-         weapons systems prospectively to     ment Accounting Office (GAO) in            both said by the GAO to have
     hicle, scout vehicle and some       be ordered, new entrants came        January 2008.                              based their proposals and bid
     of Textron’s M1117 Guardian         quickly to the market, with EOS         Outlining its observations on the       samples on existing CROWS
     Armoured Security Vehicles          butting up against Norwegian-        solicitation process in its final re-      systems that each firm had pro-
     (Military Police).                  based Kongsberg Defence & Aero-      port, the GAO judged the CROWS             vided under prior contracts, with
        A subsequent Netherlands R-      space’s M151 ‘Protector’ system      II award had been made “on a               modifications or proposed modi-
     400 remotely-operated weapon        in an Australian competition to      best value basis with (in descend-         fications to meet the CROWS II
     system order in July 2007 for its   equip RCWS to Australian Army        ing order of importance) technical,        RFP requirements. ROI, however,
     Thales Australia-supplied ‘Bush-    ASLAVs heading for service in the
     master’ fleet was greeted by        Middle East.
     EOS as being of “huge strategic         EOS lost the Australian compe-
     importance”, and represent-         tition to the M151, and it is now
     ing a breakthrough in terms of      a matter of record (August 2007)
     accessing the European NATO         that the ‘Protector’ system was
     market. This order was followed     selected for the US Army follow-
     30 May 2007 by the sale of          on CROWS II solution. Leading
     ‘Raven’/CROWS systems to            attributes for Kongsberg were that
     an unidentified Asian country,      the M151 ‘Protector’ had been in
     valued at up to $50 million for     full scale production since 2001,
     completion by 2010.                 with more than 1,500 systems
        In parallel with these devel-    delivered to the US Army through
     opments, US forces in August        the ‘Stryker’ M1126 Infantry Car-
     2006 moved to define a fol-         rier Vehicle program, with over
     low-on crew remotely-operated       1,000 units fielded in Iraq since
                                                                                                                      CROWS ON ‘BUSHMASTER’ IMV - ADBR PHOTO
     weapons system solicitation,        2003.


28     Australian Defence Business Review September-October 2008
  Cover Story - Presidential Election




                                                                                                                SENATOR JOE BIDEN - DEMOCRAT CAMPAIGN PHOTO


had received either a ‘red’ or        ing, because its bid sample did         ness” rating because the source          (R-400s were claimed to have
‘high risk’ rating under three        not operate successfully at 20          selection authority had “doubt           an operational readiness rate of
of the most important factors         volts direct current (VDC) during       that ROI will be capable of provid-      over 95% in Iraq & Afghanistan),
(‘Technical’, ‘Schedule’ & ‘Man-      testing, and a critical message         ing a production system capable          but not on units that were still in
agement’), which then “raised         instructing the user to shut down       of operating reliably and safely         the factory – with RFP language
uncertainties regarding their abil-   the system was displayed.               down to -50 [degrees Fahrenheit],        said to have made no such
ity to meet schedule, resulting           ROI was also said to have had       prior to production delivery.”           distinction. System level testing
in delayed fielding of the Urgent     Engineering Change Proposals               Testing was said to have re-          was also not planned to be com-
Material Release item with an at-     (ECP) required and pending, which       vealed that ROI’s production             pleted by ROI until three months
tendant increase in expenditure       in terms of tender evaluators,          system did not meet rotation or          after contract award, and soft-
of [government] resources.” In        raised concerns that the weight of      elevation speeds at -50 degrees          ware safety analysis would not
contrast, Kongsberg was rated as      external components (not includ-        Fahrenheit as well as problems           be conducted until government
providing a technically superior      ing the weapon & ammunition)            with the display – the “monitor          testing was complete.
proposal at a lower price.            above the roof may be over 400          was distorted and several verti-            The evaluation agency also
   ROI relied for its submission      pounds when fully included, and         cal lines appeared on the screen         expressed concern ROI’s pro-
on the company’s fielding of over     so might impact overall system          … (and lasted for) approximately         duction process was highly
250 systems in Iraq since first       performance.                            three minutes” – and with “un-           dependent on the success of its
being awarded the initial devel-          Again, under the ‘Stabilization’    commanded movement in the                subcontractors (ie: EOS), be-
opmental ‘Raven’ SRWS contract        subfactor, the procurement agen-        form of a continuous side to side        cause the company “maintains
in 2000. Since February 2007,         cy gave ROI a “weakness” rating         tremble of the mounted weapon.”          minimal stock”, and had pro-
however, the GAO observed no          as it maintained it was unable             The evaluation agency went            vided only limited information on
units were said to have been          to “extrapolate the true weapon         on to consider ROI had ‘an im-           EOS, which would have respon-
fielded, and the relevant pro-        stabilization performance” of the       mature system’ that did not have         sibility for building approximately
curement agency had moved to          CROWS II response from the data         any demonstrated or documented           half the CROWS II systems.
issue ROI with a ‘show cause’         and information that ROI provided.      system reliability that provided         According to authorities, “The
letter and termination for default    It was said ROI’s stabilization tests   confidence a minimum and inher-          information provided raised ad-
cure notice due to performance        did not account for weapon move-        ent reliability of 1000 hours mean       ditional concerns related to the
problems.                             ment in the cradle, and its stabili-    time between system aborts               major subcontractor’s efforts to
   The GAO further noted that         zation system did not account for       [MTBSA] was achievable prior to          outsource components and its
under the ‘Vehicle Interfaces’        ‘linear disturbances.’                  production delivery.                     ability to meet and maintain the
sub-factor, ROI’s proposal was            ROI’s ‘Temperature’ proposal           ROI had relied on reliability data    manufacturing schedule.”
given a “major weakness” rat-         was also given a “major weak-           experienced with fielded units                                      >>>31

                                                                                         Australian Defence Business Review September-October 2008            29
   Case Study: Defence Exports - Ctd from p29


    ROI contended that “as the         from industry in the form of com-     ties), compared to a net loss of       emerge from 2009, and requir-
incumbent contractor”, ROI was         mercially available products.         $20,734,269 for the year ended         ing a diverse range of weapon
the only offeror which has pro-        Outsourcing arrangements already      31 December 2007.                      systems.” Outside of the US,
duced stabilized CROWS units,”         in place will allow EOS to produce       As at 30 June 2008, the con-        EOS is continuing to expand
and therefore was more likely          more SRWS in 2009 than in             solidated entity – which operates      sales to Asia (Asian custom-
to meet the delivery schedule          2007, with less than 50% of the       more broadly across Australia,         ers have ordered dual weapon,
than the other two tenderers           staff employed in 2007.”              the USA (as EOS Technologies)          airburst and marine systems),
(ROI’s system was assessed as             Directors add the company’s        and Germany (as EOS Optron-            Europe (NATO) and the Middle
third best overall). The evalua-       investments in new technology         ics GmbH) – in the development         East, with up to 90% of military
tion agency responded by citing        and product evolution “have also      manufacture and sale of tele-          business now generated outside
records showing ROI “had dif-          been reduced to reflect a tighter     scopes and dome enclosures, la-        of the USA, and expected to be
ficulty meeting schedule and           focus on key customer objectives.     ser satellite tracking systems and     sustained in this fashion through
performance requirements under         In the absence of significant new     the manufacture of electro-optic       2009.
the incumbent contract.”               contracts, EOS now has the ability    fire control systems for defence,         The half year report goes on
    Subsequent to the CROWS II         to execute the closedown of the       held cash totalling $22,522,095.       to state the combined value of
decision, and having built up a        US military manufacturing facility       The accounts note flexibility       these programs – EOS serves as
production base in the United          by 30 November 2008, and Ger-         with $5,616,713 is restricted,         prime contractor in these mar-
States to service the CROWS I          man operations by 31 October          as the cash pool secures bank          kets – (and outside the US) ex-
requirement, the loss of CROWS         2008.”                                guarantees relating to perform-        ceeded A$43m, with firm funded
II to Kongsberg has impacted              The aftermath of the CROWS II      ance on some extant contracts.         orders exceeding $22m. Austral-
adversely on EOS’ 2007 finan-          experience has seen EOS bidding       Directors went on to affirm, “the      ia is also said to have emerged
cial results, as well as its 2008      for new military contracts “the re-   ability to continue as a going con-    “as a major customer in the past
outlook, with the event being          sults of which are not yet known,     cern remains dependent upon the        two years, and in the half-year
described as “placing large-scale      but (we are) confident of winning     company’s ability to achieve target    to 30 June 2008 a total of 60
US production orders out of            during the next 12 months.” Di-       production levels for the military     weapon systems were shipped
reach for at least 24 months,          rectors estimate the worldwide        business in the second half of the     for use by Australian forces.”
slowing growth in revenue and          RWS market will exceed 12,000         calendar year.”                           The company similarly main-
potentially deferring the com-         units (or $4 billion in contracts        Successful re-positioning initia-   tains it is supporting “over 600
                                       by 2014), noting that in the past                                            previously shipped weapon sys-
pany’s transition to profitable                                              tives were also said in the half-
                                                                                                                    tems, with approximately 400
operations.”                           two years the number of SRWS          year report to have re-based the
                                                                                                                    fielded in current conflict areas.”
    In response, EOS directors         producers has doubled to ten,         company from being competitive
                                                                                                                       EOS is also re-focusing its
moved to substantially re-posi-        including BAE Systems Bofors          & profitable at annual revenues
                                                                                                                    traditional telescope business
tion the company in late-2007,         (Lemur), FN-Herstal, Krauss-Maf-      over $60m (achieved in 2006),
                                                                                                                    through military optical gimbals
advising that “production redun-       fei Wegmann, Elbit Systems (OR-       “to an entity with profitable op-
                                                                                                                    to weapon system gimbals for
dancies between plants in the          CWS), Oto Melara, Rafael (RCWS        erations at $40m per annum.
                                                                                                                    conventional ballistic weapons,
US and Australia – required only       & ‘Samson’ families), Rheinmetall     New military orders received in
                                                                                                                    and a new market for directed
for large-scale production to criti-   and Thales (SWARM).                   2007 totalled $46m, with a total
                                                                                                                    energy weapons, which are
cal schedules – were eliminated.          Summing up the current out-        backlog at 31 December of $56m
                                                                                                                    both areas of new capability
The company’s staff numbers            look, EOS Holdings’ half-year         – representing 18 months of
                                                                                                                    development for the Australian
world-wide were reduced from           financial report (six months          production capacity from diverse
                                                                                                                    Defence Force expected to be
235 to 134, by 30 June.”               ended 30 June 2008) released          customers not identical to CROWS
                                                                                                                    included in the new Defence
    Outsourcing of production is       27 August, indicated the firm         business.
                                                                                                                    White Paper.
further said by EOS management         had now substantively recovered          Directors indicated the com-
to have “continued to achieve          its position from the CROWS II        pany was now “actively preparing
a reduced level of production          loss, achieving a net profit of       for the next wave of US remote
complexity … over 50% of SRWS          $2,400,974 (generated prin-           weapon system requirements …
technology can be purchased            cipally from defence activi-          with opportunities expected to                                       ADBR




  TAKING CARE OF BUSINESS USA-STYLE: US Army Humvees (far L) fitted with the ROI/EOS ‘Raven’ R-400 crew remotely-operated weapons
  system (CROWS I); US Congressman John P Murtha (L), as Chairman of the House Appropriations Defense Subcommittee, says he’s seen every
  kind of new military capability acquisition pitch that’s ever been proposed, and is always happy to welcome new defence-industry investment into
  his own 12th Congressional district; Kongsberg Defence & Aerospace M151 ‘Protector’ CROWS II SRWS and controller (R); Kongsberg opened its
  138,000sqft ‘Protector’ manufacturing facility in Richland Township, Pennsylvania on 14 August.                             US ARMY & ADBR PHOTOS




                                                                                        Australian Defence Business Review September-October 2008         31
      Cover Story - Presidential Election


very little tolerance, thus ensuring treaties of the nature proposed for           As noted above, ‘List C’ operates to exclude from the Treaty manu-
the UK and Australia will continue to butt up against opposition if pro-       facturing technology for a large range of platforms and systems of key
gressed in the same manner as advanced by the Bush administration.             relevance to the ADF, which Wylie concludes will “significantly reduce
    Further revelations as to the diminution of the benefits of the Aus-       the utility of the Treaty in terms of facilitating Australian industry in-
tralia-United States Defense Trade Cooperation Treaty first signed off by      volvement in the supply of platforms and systems.”
John Howard and George Bush emerged recently in an article by Robert               In short, this pours salt into a long-festering sore in Australia’s se-
Wylie, published in the Kokoda Foundation’s ‘Security Challenges’ journal      curity relationship with the US, given Wylie’s observation “the denial
(Vol.4, No.3). The article provides a useful expose of the scope and in-       of access to the source code required to configure US-origin platforms
tent of the proposed Treaty, along with observations regarding develop-        and systems for operation by the ADF in Australia’s region of primary
ment of the accompanying ‘Implementing Arrangements’ and the utility           strategic concern has long vexed defence business relations between the
of the overall arrangements for Australian-based defence companies.            US and Australia at both government-to-government and commercial
                                                                               levels. ”
PROTECTIONISM SETS IN ON FREE TRADE: The article
notes that since the Treaty was first signed – and perhaps reflective of       ANAO ON THE MONEY, AGAIN: To illustrate his point, Wylie
concerns expressed by Congress to retain firm control over major arms          cites problems identified by the Australian National Audit Office
export deals – the US State Department has promulgated a tripartite (A,        (ANAO) in 2004 (Report #32), where it was said a lack of US Gov-
B and C) list of Treaty exclusions, which critically, might reasonably have    ernment export licenses for some of project Air 5077’s (‘Wedgetail’
been relied upon by the Australian government in populating future mili-       AEW&C) advanced technology, worked to preclude local industry from
tary capability acquisitions arising out of the new Defence White Paper.       involvement in some $44 million worth of contracts in such areas as sys-
    In brief, the exclusions lists now proposed to be applicable to the        tem design and development, system integration, software and systems
Australia-US Defense Cooperation Treaty covers stealth and counter-            engineering.
stealth technology, satellite technologies and a                                                        While the Australian Parliament’s Joint Stand-
range of enabling (including manufacturing)                                                         ing Committee on Treaties has yet to report on the
technologies related to precision guided muni-                                                      merits of ratifying the Defense Trade Cooperation
tions, electronic warfare tools and systems for                                                     Treaty in the changed environment of the introduc-
submarines.                                                                                         tion of new restrictions and exclusions, Wylie points
    Wylie points out that the ‘List A’ exclusions                                                   out such developments have thrown up a conflict
appear likely to have the effect of “reinforcing                                                    with Rudd Government statements as to “the im-
the appeal of the US Defense Department’s                                                           portance to Australian defence self-reliance of selec-
Foreign Military Sales (FMS) program” to an                                                         tive Australian industry involvement in the supply
Australian Defence customer he observes is                                                          and support of defence materiel.”
“already predisposed to buy proven equipment                                                            The commitment is all the more important given
already in-service. It is also likely to encourage                                                  recent industry consolidations mean the majority of
US companies to market military-off-the-shelf                                                       the Australian defence market is now substantively
solutions to Australian capability requirements ...                                                 controlled by overseas-owned companies, and recent
(and is) likely to inhibit Australian industry involvement in the supply and   new entrants (eg: Ultra Electronics, QinetiQ, Cobham, etc) all hark from
support of platforms involved.”                                                the UK. As Wylie notes, the UK and Australian treaties broke important
    In respect of ‘List B’ exclusions, the paper notes that while such tech-   ground on creating trusted communities ‘to share advanced technology
nologies will not be the subject of technology access benefits provided        pursuant to common political and strategic interests’.
for under the Treaty, “such technologies are expected to continue to               However, changing political and economic circumstances over 2009
be subject to the existing ITAR licensing processes.” In short, this will      associated with a re-emergence of trade protectionism, suggest the Unit-
force a reconsideration of the utility of the Treaty from the Australian       ed States will be most likely to act first in pursuit of its own interests,
side, with Wylie warning, “Australian stakeholders should bear in mind         above those of others. Australian defence firms might accordingly look
that (the treaty) seems unlikely to contribute materially to the realisation   to persisting with the ‘devil we know’ – in terms of the existing ITAR ar-
of Australia’s key capability development objective” in network enabled        rangements – and just get on with doing business.
operations.                                                                                                                                              ADBR




FCS technology progressing as NLOS cannon fired
                                          The tests were described as            In a related development, the           its on-board computers and con-
     Canberra Bureau Report
                                        representing “a significant step in    FCS program also successfully fired       trols.
                                        design verification” testing for the   the first artillery projectile from the     The NLOS-C has the ability to rap-

R    aytheon, working in partner
     ship with the US Army, and
the Future Combat System (FCS)
                                        system, which
                                        includes defeating
                                                                                                    manned ground
                                                                                                    vehicle non-line-
                                                                                                                         idly deliver precision munitions in
                                                                                                                         both urban and conventional battle
                                        multiple incoming                                           of-sight cannon      space, and is the lead prototype in
Lead Systems Integration team (ie:      projectiles simul-                                          (NLOS-C) proto-      the US Army’s family of eight FCS
comprising Boeing, Science Appli-       taneously while                                             type on 24 Sep-      manned ground vehicles. Soldiers
cations International and BAE Sys-      on the move - a                                             tember, marking      at the Army’s Evaluation Task Force
tems), reported 7 October it had        unique capability                                           the first 155mm      are scheduled to receive the first of
successfully completed stationary       for the provision                                           round fired from a   18 NLOS-C platforms at the start
and moving target intercept tests       of active protection for Future        fully automated howitzer mounted          of 2010.
for the new FCS Active Protection       Combat System manned ground            on an FCS hybrid-electric chassis
                                                                                                                                                         ADBR
System (APS).                           vehicles.                              and remotely commanded through

32    Australian Defence Business Review September-October 2008

								
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