Industry Looks To Aid NATO

March 2009
By Robert K. Ackerman
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Peter Flory (l), NATO assistant secretary general, defense investment division, listens as NATO Secretary General Jaap de Hoop Scheffer speaks to participants in a NATO Conference of National Armaments Directors (CNAD) meeting last October. Industry is striving to play a greater role in helping NATO shape the future force.
Alliance group aims to provide more input on vital armament issues.

International defense acquisition reform finally may come from a NATO industrial group traditionally known for generating studies rather than initiating innovative reorganization. The NATO Industrial Advisory Group, known as NIAG, is striving to redefine the relationship between industry and the 26 nations that constitute its parent alliance.

These efforts do not entail a wholesale restructuring of NATO defense acquisition. The complexity of military procurement involving more than two dozen nations precludes that approach. Rather, NIAG endeavors to bring NATO acquisition out of the past and into the present, where new technologies appear quickly, and traditional acquisition procedures are increasingly obsolescent to the point of being counterproductive.

The industrial group already has taken the first steps to clear the way for NATO defense acquisition reform. It has reached out to nontraditional clients in the NATO community, and it has increased the type of products it can generate in support of NATO endeavors.

NIAG is striving to be more relevant to NATO, declares the group’s chairman. Dr. Raffaele Esposito, who also is the Italian industrial representative to the NATO Research and Technology Board, says that industry is working to find better ways to interact with NATO.

The 40-year-old NIAG is organized in NATO’s Conference of National Armament Directors, or CNAD. Members come from the 24 NATO nations that have indigenous defense industries, and it is supported by NATO’s Defense Industrial Division. It does not represent countries or companies, Esposito emphasizes. Its annual budget under the CNAD runs about €2.5 million, but the group complements this funding with whatever it can receive from other NATO organizations that it may help. And, industry contributes about three times as much money, Esposito adds.

The group recently has expanded its operating realm beyond its traditional mission. In addition to working for the CNAD, it now works for any other NATO body that can benefit from its assistance, Esposito relates. These include the new Allied Command Transformation (ACT), the NATO Consultation, Command and Control (NC3) Board and the NATO Research and Technology Organization, among others.

Most of NIAG’s activities have involved generating feasibility studies for the NATO Armament Group—usually about 10 studies each year. It also provides “eye-level advice” in the form of position papers on vital topics such as trans-Atlantic dialogue or problems implementing cooperation rules. All told, NIAG has done more than 120 studies, and the pace is accelerating, Esposito says.

Feasibility studies tend to focus on three areas. One is defense against terrorism, which touches on a CNAD program of that name founded in NATO more than four years ago. The program comprises 11 areas of interest, and NIAG has contributed to all 11 areas. For example, when NATO inquired about detecting chemical, biological, radiological and nuclear (CBRN) threats, NIAG offered solutions that involve networking different sensors. This networking approach was not even in the original request, Esposito relates.

The second category encompasses long-term capability requirements, and NIAG’s studies are geared toward specific requirements. Esposito points out that NATO does not have an official single capability development process model. When NIAG receives a study request from an armament group, the use of that study’s output is not always clear. Sometimes the results are fielded rapidly, he notes, such as when NATO needed to develop a defense against terrorist motor attacks. With the Netherlands as lead nation, NIAG developed several solutions that have been deployed successfully.

The third focus area is interoperability and how to accomplish it. Esposito relates that one of NIAG’s eye-level studies currently underway focuses on interoperability from industry’s point of view. This is a novelty, he states, because traditionally interoperability has begun from the customer’s requirement. Not enough attention has been paid to interoperability originating as an industrial requirement.

NIAG only recently identified it as an important subject, Esposito explains. A study being led by the Netherlands aims to determine why systems are not “born interoperable.” Industry may hold the key, and the solution may be a combination of industrial and government attention, he suggests.

Esposito lists three strategic goals. One is to continue to provide good service to NATO and its community. Among recent success stories is an effort to defend large aircraft against ground missiles. One solution is aboard U.S. transport aircraft and is being installed on NATO Airborne Warning and Control Aircraft System (AWACS) aircraft.

The second goal is to conduct more work in command, control, communications, computers and intelligence (C4I). This need arises from a NATO reorganization that took place several years ago. The NC3 community used to be a part of the CNAD with NIAG; but after it was removed from the CNAD, it did not interact with NIAG as closely as before. “We want to do more work in C4I,” Esposito declares.

Because the CNAD has authorized NIAG to work with other groups, contact between the group and the NC3 community is increasing. Esposito has been invited to NC3 Board meetings, where he participates as he does at CNAD meetings. The NIAG already has performed what he describes as significant studies on software-defined radios, and this is emblematic of a migration toward C4I, he says.

NIAG can continue to enhance NATO’s C4I, Esposito continues. Industry is rife with C4I expertise, so helping CNAD really boils down to encouraging customers to ask relevant questions of NIAG, he says.

The third goal is to engage NIAG member nations to a greater degree. Historically, the larger and more influential countries have dominated the group. But NATO enlargement brought into the alliance many nations that were not fully prepared to participate in organizations such as NIAG. “We are trying very much to involve them more so that they can contribute more to this advisory group,” Esposito says.

But NIAG’s outreach does not stop at alliance borders. With the approval of NATO, NIAG is trying to involve Partnership for Peace (PfP) countries wherever possible, and Esposito relates that NIAG tries to engage PfP nations in its activities whenever it has a chance. This is part of NATO’s thrust to increase involvement with PfP nations, and two or three NIAG studies each year are open to PfP countries.

A major NIAG goal is to ensure that its output leads to the actual development of a system, Esposito offers. He believes that the traditional route of pursuing contracts in a defined budget is historically passé. Instead, the group wants industry to cooperate with NATO “in a more timely and less competitive way,” particularly in early program phases.

This will require fundamental changes in the way NATO does business. One model might be the U.S. cooperative research and development agreement, or CRADA. Esposito offers that NATO is trying to establish a similar approach with its Framework for Cooperation with Industry, or FFCI. It will include the possibility that industry would work with NATO without being paid. Instead, industry would invest with governments or NATO in common projects that could lead to a full program.

Esposito believes that NATO feels that better interaction with industry could be advantageous, especially with the extensive technical expertise found in the commercial sector. NATO also feels that industry should be more involved in its programs, he adds.

Yet, NATO has been slow to change its relationship with industry. Often it is difficult to persuade nations to discuss their priorities, let alone agree on them. More effort must be devoted to creating a truly international armaments industry, Esposito says. There are many ways that industry can become involved in a noncompetitive way to help NATO address its needs. “We all need to be more creative in trying to find new ways of defining and regulating the NATO-to-industry relationship,” he declares.

And clearing the deck may be imperative given the global financial crisis, Esposito continues. International cooperation may be necessary to start many programs.

NATO armament cooperation tends to mean trans-Atlantic cooperation, Esposito states. Europe already is neck-deep in armament cooperation through the European Union and through other groups and programs. Esposito offers that NIAG is trying to involve the United States as much as possible in its studies; and if a study translates into a program, then the United States is positioned to be a trans-Atlantic partner in it.

One reason that trans-Atlantic cooperation is lagging involves U.S. export rules, Esposito continues. These rules prevent companies from working more closely and more efficiently, so NIAG produced a study—led by the United States—that generated 19 recommendations on how to solve the problem. He reports that the study was well-received, and the CNAD has tasked NIAG with organizing a conference on improving these regulations. This conference could take place later this year or early next, he adds.

Web Resources
NATO Defense Against Terrorism program:


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