Preface

Though production and acquisition of armament is a national ­responsibility, NATO has a long and successful history with respect to cooperation and exchanging information and technological ­research in the field of armaments. The key forum is the Conference of National Armament Directors (CNAD), its sub-committees of which are ­responsible for promoting cooperation between countries in the ­armaments field.

In a changing security environment and in times of financial austerity, the CNAD continues to facilitate dialogue between nations and to promote multinational cooperation in developing, acquiring and operating weapon systems, e.g. in the framework of Smart Defence which aims at filling capability gaps. The NATO Industrial Advisory Group (NIAG) supports the CNAD by offering the opinion of industry on how to enhance the NATO-Industry relationship. In turn, industry profits by getting ­first-hand information about NATO capability priorities and relevant ­policies. Other groups under the CNAD are active in fields such as ­am­munition safety, system life cycle management and codification.

In NATO, Air (and Maritime) capabilities were always central to maintaining the advantage for the Alliance during the Cold War in view of a numerically superior adversary. The CNAD conceived NATO’s most successful ­international programme – the NATO Airborne Early Warning and Control (NAEW&C) programme – and several other multinational programme management and procurement agencies were set up following this ­example to manage Air Force Programmes such as the TORNADO, the ­EUROFIGHTER TYPHOON, NATO Alliance Ground Surveillance (AGS) ­programmes and the ACCS programmes NADGE and ACCS.

Industrial cooperation among Allies is also a common feature in the area of logistics for the supply of spare parts, missiles and ammunition and mass supply items etc. For decades, NATO’s Maintenance and Supply Agency (NAMSA) and its follow-on organization, the NATO Supply and Procurement Agency (NSPA), have procured spare parts for aircraft, missile and radar systems, e.g. the F-104 G Starfighter, NIKE, HAWK, GCA-radars etc, mass supply like ammunition and fuel, e.g. for NATO’s NAEW&C Fleet, and other items that can be purchased more cost effectively when Allies combine their orders. This includes the support of forces in NATO-led peace support operations in particular.

Aim

Analyzing the evolution of technological and industrial cooperation and the tools NATO has developed to promote these among Allies, this paper aims at identifying potential solutions and options to make cooperation more attractive thereby facilitating the development of urgently needed capabilities. While most of the proposals are of a more general nature applicable to any technical and industrial cooperation among Allies and Partners the paper also tries to identify example areas in which technology research should be concentrated to enhance Air Power related capabilities addressing the challenges of a contested environment. This work should be given appropriate priority.

From Chicago to Warsaw: Taking Industrial Cooperation into Focus

At the Chicago Summit Alliance Heads of State and Government (HOS / G) pledged to improve a wide range of capabilities (the NATO forces 2020 Goal) through the NATO Force Planning Process. A fundamental role in acquiring key capabilities is the multinational Smart ­Defence initiative, e.g. for Ballistic Missile Defence (BMD) and the Joint Intelligence, Surveillance and Reconnaissance (JISR) project AGS. The Smart Defence and the EU’s Pooling and Sharing Initiatives need to be coordinated to ensure they are complementary and mutually re­in­forcing.

Under the Connected Forces Initiative (CFI) Allies intended to regain the full range of capabilities needed to address the full range of Alliance missions, including Collective Defence which appeared to lose momentum after more than a decade of stabilization operations in Afghanistan.

During the Wales Summit the Alliance addressed the radical changes in the security environment and the urgent need to take action to improve responsiveness and availability of forces for Collective Defence. These activities were listed in the Rapid Action Plan (RAP). A key initiative which focuses on multinational approaches to or reinforce the capa­bilities needed in the changed security environment is the Framework Nation Concept (FNC) which combines elements of Smart Defence (multinational acquisition of capabilities) with operational concepts and structures. As agreed by Defence Ministers Allied and partner countries work together to maintain and expand current capabilities and to lay the foundation for the development of new capabilities in the medium to long term. The initiative can also be seen as a mechanism for collective training and exercising forces grouped under this concept, e.g. the ­Multinational Air Forces, as proposed by Germany.

At the Warsaw Summit NATO reaffirmed the importance of international industrial cooperation highlighting the following key messages:

• Strong partnerships play a key role in effectively addressing cyber challenges. NATO will continue to deepen cooperation with the EU, including through the implementation of the Technical Arrangement between ­NATO’s Computer Incident Response Capability (NCIRC) and the EU’s Computer Emergency Response Team (­CERT-EU) which contributes to better prevention and response to cyber-­attacks.
• NATO intends to enhance partnerships with other international ­organizations and partner nations, as well as with industry and ­academia through the NATO Industry Cyber Partnership (NICP).
• A stronger defence industry across the Alliance is envisaged which includes small and medium sized enterprises. Greater defence industrial and technological cooperation across the Atlantic and within Europe and a robust industrial base in the whole of Europe and North America are essential for the acquisition of the required capabilities.
• To keep its technological edge, it is of particular importance for the Alliance to support innovation with the aim of identifying ­advanced and emerging technologies, evaluating their applicability in the ­military domain, and implementing them through innovative solutions.
• NATO welcomes initiatives from both sides of the Atlantic to maintain and advance the military and technological advantage of Allied capabilities through innovation. NATO encourages nations to ensure such initiatives will lead to increased cooperation within the Alliance and among Allies.
• Moreover, the Warsaw Summit Communiqué¹ lists a series of examples and projects where multinational approaches under the Framework Nation / Smart Defence Concept have already increased the ­efficiency of available forces and resources.

Approaches and Initiatives

The 21 capability shortfalls that NATO needs to solve in order to successfully conduct its full range of missions are periodically reviewed at the political level. They cover a broad capability range from Countering IED, Improving Air-and Sea-Lift Capabilities, Missile Defence (MD), and Cyber Defence to Stabilization and Reconstruction. Some of the capabilities are pursued in multinational industrial and technological cooperation. ­Approaches chosen are: Smart Defence, Framework Nations Concept and Collective Logistic Contracts.

Military requirements are evolving continuously, demanding capabilities that become increasingly complex and expensive. Multinational co­operation offers a solution to deliver critical capabilities in a cost-effective manner. Some high-end capabilities can be achieved only if countries and ­national armament industries cooperate. EU and NATO are closely coordinating their work to ensure that Smart Defence and the EU’s ­pooling and sharing initiative stay complementary and mutually ­reinforcing. Smart Defence can also contribute to maintaining a capable defence industry in Europe by stimulating the widest possible industrial cooperation.

While Smart Defence has proven very beneficial, its scope is limited to defined projects², e.g. the Demark-led consortium for precision-guided ammunition . However, national industry often appears reluctant to ­accept these examples of successful projects as best practices. Outside stakeholders are seen as competitors, rather than as potential partners toward conceiving the best ways to apply the principle of cooperation when trying to fill capability gaps.

The Framework Nation Concept adopted following the Wales Summit appears to be more attractive. There are already three key Framework Nation groups, led by Germany, Italy and United Kingdom. The Framework Nation Concept is broader and more operationally focused than ungoverned cooperation alone, and has the capability of significantly reducing redundancy and maximizing the efficiency of European forces. The system is based on nations voluntarily participating in initiatives led by a framework nation offering to bear the brunt of the effort⁴. The framework nation is also responsible to offer incentives to potential ­partner nations and industry to join. It offers an opportunity for the ­nations with greater financial means to directly invest in operational ­capabilities of participating countries, thus contributing to NATO’s ­overall Collective Defence Capabilities. The concept also contributes to inter­operability through standardization. Moreover, by encouraging partners to contribute their share of funding, NATO resources are freed to be ­dedicated to other priorities. All multinational approaches were ­developed to significantly reduce duplication and maximize the ­effic­iency of European Forces. It is important to make further progress and ­produce more tangible results.

Experience gained in allied operations in Kosovo and Afghanistan led to the conclusion that it is more efficient to make best use of existing ­multinational logistic capabilities through Collective Logistical ­Contracts. Therefore, NATO is examining procedures for the development and management of rapidly usable contracts, in conjunction with attractive compensation methods. Collective Logistics are also applied during redeployment from theatres of operation to optimize the use of multinational capabilities.

Three other initiatives from the Wales Summit should also be mentioned as they have an impact on technological and industrial cooperation:

The Defence Investment Pledge (DIP)

Basically, the DIP emphasizes output and asks Allies to increase their Defence Budgets to reach 2 % of GNP as the goal by 2024. A second element of the pledge asks Allies to raise the percentage of investment to 20 % of the defence budget. Investment priorities should be given to NATO’s ­capability shortfalls. A large number of NATO countries invest well below the 2 % goal. Defence Ministers will continue to review progress of the DIP.

The Partnership Interoperability Platform

The Partnership Interoperability Initiative (PII) should ensure that the ­connections built between NATO and partner forces over many years of operations will be maintained and strengthened. In this way, partners can contribute to future crisis management, including in NATO-led operations and, where applicable, to the NATO Response Force (NRF). An important element of the initiative follows a format where Allies and partners discuss projects and issues that affect interoperability for future crisis management, such as Command and Control (C2) systems, education, training and exercises, or logistics. The Partnership Interoperability Platform and the Framework Nation Concept are complementary.

Defence Capacity Building

Aim of the Alliance’s Defence Capacity Building Initiative is to enable ­partners assisting NATO to build up their defence and security, e.g. Iraq.

Technological and Industrial Cooperation

Solutions to appropriately respond to the challenges posed by the new security environment can be found both in the areas of technology and logistics.

Technology Area

NATO Activities

Science and technology lay the foundation for the development of ­capabilities to counter the new threats to NATO, including Hybrid warfare. Required is a complex system of multi-layered and diverse capabilities in a networked system within all domains, able to deliver a multi-dimensional response⁵. For quite some time, NATO nations have been pursuing ways to enhance cooperation and to develop synergies in fields such as battle space awareness, C2, force application and protection and working in a secure cyber environment. Another recent example is the effort of ­NATO’s operational community to acquire response capabilities that ­minimize or exclude collateral damage.

If forces can respond only in a lethal kinetic manner, civilian as well as military personnel would be endangered and mission failure and / or severe political consequences may result. Based on previous work led by Canada to identify Non-Lethal Capabilities (NLC), Germany is leading an initiative with a view to make forces familiar with a range of NLC, and to promote emerging non-­lethal technologies in exercises. Belgium and France are co-leading a project on standards for non-lethal weapons. Good progress was made in three other capability areas but implementation may need to be accelerated⁶.

Defence capabilities against hybrid air threats are part of the Defence Against Terrorism Programme of Work (DAT POW). They are grouped into the following areas:

• airport Protection against hybrid aerial attacks;
• protection of Aircraft against MANPADs – already under way with the United Kingdom as lead nation within the NATO Air Force Armaments Group (NAFAG); and
• technologies and concepts for Intelligence, Surveillance, Reconnaissance (ISR) and target acquisition.

What to Ensure, What to Avoid – Incentives, Mechanisms, Levers, and Principles

To stimulate successful multinational, industrial cooperation and to ensure the availability of technological capabilities it is important to identify suitable mechanisms and levers:

• Shortfalls must be clearly explained to selected ‘trusted’ partners to prevent any misunderstanding of the requirements. The onus is on NATO to ensure there is no ambiguity with respect to the operational concept (or concept of operations) as this forms the basis for Industry’s toward ­developing solutions.
• Some of the most relevant strategic technologies tend to be constrained by national laws. The principle of ‘need to share’ should be applied and common practice between project partners.
• Ensuring proper coordination between Alliance MoDs, their agencies and the EU Defence Agency (EDA) during the development and the ­application of special financial instruments.
• Emphasize simplicity and speed of implementation, especially in hybrid warfare related R&D. By reducing bureaucracy the procurement system will be better postured to take advantage of innovative ideas and to bring these the opportunities to maturity.
• Ensure that regulations do not unnecessarily hinder the process. This should allow innovative solutions to mature rather than become lost in the requirements analysis process.
• Procurement processes should be made more transparent, simpler and faster and be attractive to new suppliers, particularly from smaller ­companies which may have the potential to innovate but are challenged by an overly complex procurement mechanism. New suppliers from ­different backgrounds and schools of thought may offer new ­perspectives and solutions to problems, thus enabling innovative ­responses to both short- and long-term requirements.
• Analyze standards and identify constraints that could be eliminated. ­Defence Standards should not unnecessarily constrain the potential range of innovation. Standards can have the potential to be a driver of innovation by defining the space in which innovation should be sought and by offering prospects for the commercialization of ideas. At the same time, standards risk being restrictive, outdated or sometimes ­conflict with existing standards of nations. Each of these risks could become a major stumbling block, limiting potential market prospects and, thereby, reducing the likelihood of securing investment returns. Standards can also become significant barriers when only large companies have the resources to meet them. Thus, their market dominance is even increased. NATO should analyze the effect the strict enforcement of ­Defence Standards has on the innovation process and identify those standards that need to be updated to allow for greater innovation.
• Effective standardization and training supports interoperability among Allies and partners. Open standards may strengthen the relationship with the defence and security industry. Interoperability is also a force multiplier that may streamline national efforts.
• Innovation should be measured against the level of maturity achieved. The innovation framework should allow partners to understand the ­requirement for a new solution.
• Innovative solutions should be available for operations in a reasonable timeframe⁷: Quick wins should be appropriately prioritized.
• Without a clear idea of defence priorities it is very difficult for external actors (particularly non-traditional defence industry partners) to know where and how to interact with NATO.
• Clear priorities are more likely to attract external providers to invest in areas of NATO interest thus increasing the likelihood of profitable ­returns on their investment.
• Industry should accelerate the R&D of new technologies capable to ­address hybrid threats. Technologies should focus on the following ­aspects: Prevention, Deterrence, Denial, Detection, Assessment, ­Warning, Engagement and Consequence Management.
• Convince industry that they gain from international cooperation and do not loose. Technology should be driving cooperation rather than competition. NATO should be able to present convincing arguments.
• Proper competition can drive innovation. NATO could benefit from competition by increasing the likelihood of cost savings as well as ­innovation. Lower barriers to enter the market could also help small and medium sized companies to join the competition. However, competition is only one tool among others to promote innovation. At the early stages of development, competition can stimulate the generation of a whole range of excellent ideas, whereas competition at later stages might reduce the incentive for industry to invest more of its own ­resources. Competition is, therefore, an activity to be managed carefully, balancing the interests of NATO and industry.
• Explore a set of incentives as part of an industrial policy that underlines the importance of research in defence and convinces industry to invest in research programmes and complex technical development.

Logistics

Logistical cooperation is a bridge between forces in operations and ­industrial production. It is based on requirements, building up stocks and ­capabilities, and sustaining weapon systems and forces in theater. Each country is responsible to ensure that own forces have the required logistical ­support through individual or cooperative arrangements.

In January 1996, logisticians recognized new challenges facing the ­Alliance. In particular, dwindling military resources underlined the need for increased cooperation and multinational logistics support. The new ­challenges required the Alliance to logistically sustain non-Article 5 crisis response operations, even at great distances from the supporting national logistical and industrial base, sometimes on non-NATO territory without host nation support. Operations of significant duration also raised sustainability issues, including the logistic force elements required to keep the combat forces supported.

Supply, maintenance, movement and transportation, fuel and petroleum products, infrastructure and medical support are elements provided and functions performed by NATO in NATO-led operations. Thus, contracting has become increasingly important for operations, especially for those conducted out-of-area. NATO coordinates national efforts and encourages multinational activities to fulfill operational needs. At the beginning of any cooperative arrangement a common set of standards is agreed to because standardization allows for more efficient use of resources, enabling NATO and partner countries to work together and prevent duplication.

NATO has been encouraging multinationality and interoperability in ­logistic support at all levels. NATO performs logistical functions in the form of

• Cooperative logistics and
• Multinational logistics.

Multinational Logistics includes standing up Multinational Integrated ­Logistic Units and focuses on improving efficiency and effectiveness by offering multinational responses to operational needs. Relevant concepts include the appointment of a lead-nation, role specialization and multi­national integrated logistic support. Cooperation is the principle for the development of policy and doctrine covering the functional areas. ­National and NATO logistic plans must ensure sufficient resources, both in quantity and in quality, are available at appropriate readiness and ­deployability levels to support the forces until resupply is in place. More­over, to sustain combat power for the duration of the operation, it is ­necessary to sustain sufficient stocks or have assured access to industrial capabilities including agreements for contractor support. In this context, expertise from the private sector is vital to enable NATO and nations to assess how best to build up an effective capability. The Smart Defence and Framework Nation Concept projects demonstrate where NATO, NATO countries and industry are working together.

Overcoming Shortfalls – Considerations and Proposals

Technology Area

In order to close the gaps in the technology area NATO should establish a prioritized list of capabilities that must be available for new operational concepts. The CNAD should continue to promote cooperation in fields such as space awareness, C2, force application, protection and cyber ­security, using Smart Defence or better Framework Nation Concept ­structures to reduce duplications and maximize efficiency.

Because NATO Joint Air Power should also be able to successfully operate in a contested environment (hybrid warfare, A2AD⁸, etc.) cooperative ­Research and Technology of Allies should focus on following concrete ­capability areas:

• detecting, tracking and engaging ‘low-slow-small-stealthy’ (‘LSSS’) ­objects and ‘swarms’ of micro / small / medium sized Unmanned Aerial Systems (UAS);
• passive sensors supporting lowest-level flying (to prevent early detection of aircraft);
• electronic Counter Measures-(ECM-)resistant information distribution systems;
• new airborne ECM- / cyber platforms, capable to cover the full range of electronic and cyber threats to airborne systems from stand-off ­distances;
• all-weather ECM-resistant precision air-to-ground weapons;
• surface-to-air weapons systems capable to defend against steep vertical dive (30°+) cruise missiles;
• non-kinetic weapons and directed energy weapons denying effective use of UAS;
• new technologies integrating detection, identification, and reaction to hybrid threats into current Integrated Air and Missile Defence (IAMD) C2 systems;
• cyber awareness capability for C2-nodes (JFAC, Air Operations Centre (AOC));
• new intelligence tools to process mass data gathered by JISR-assets, ­including non-traditional ISR platforms;
• active, passive, lethal and non-lethal capabilities.

Moreover, in cooperation with the EU, NATO should offer incentives for industry. NATO should also consider the use of open standards as a feature of further cooperation whenever feasible. NATO should openly encourage industries to accelerate defence technology R&D and encourage countries to reduce bureaucracy in order to be able to implement new capabilities faster.

To increase interoperability it is important to review Standardization Agreements (STANAGs) to reduce constraints that could negatively impact on competition and cooperation. Furthermore, NATO should ­propose a policy to make the defence business attractive.

In order to support the sharing of strategic technologies for better ­co­operation NATO should develop a suitable legal framework.

Proposals:

• The Framework Nation Concept should be the favored approach for multinational cooperation.
• NATO should clearly communicate gaps and priorities to the stake­holders.
• In coordination with the EU, CNAD should develop financial instruments and industrial incentives.
• Concentrate cooperative research and technology for Joint Air Power Capabilities (JAPC) in areas vital to successfully operate in a hybrid / contested environment.
• NATO should promote the sharing of strategic technologies to broaden the basis for intensified cooperation. If required, an appropriate legal framework should be developed.
• NATO should revise STANAGs, where necessary, to stimulate industrial cooperation. Open standards should be used whenever feasible.

Logistics Cooperation

Cooperative logistics arrangements in multinational operations allow for more efficient use of resources. The reduction in resources available for defence stresses the need for intensified multinational and industrial ­cooperation.

In addition to the already existing smart defence agreement of multi­national logistical partnership for the provision of fuel, there are other ­logistical functions e.g. in the areas of general supply, aircraft maintenance, airport infrastructure etc. … that call for multinational cooperation.

Proposals:

• Prepare a list of options for a multinational solution to provide the ­logistics required to sustain non-Article 5 crisis response operations.
• CNAD should continue promoting logistical cooperation between countries and industry in the framework of Smart Defence or the Framework Nation Concept.
• NATO should develop a policy offering industry better access to logistics support tasks.

Analysis of Impact vs Costs / Priorities – Key Reccommendation Areas

Costs / Impact / Prioritization Matrix

Impact: low, medium and high. Low means a low effect on the improvement of the capabilities and increasing knowledge and skills. Medium ­implies a significant effect. High means a great effect on the capabilities and increasing knowledge and skills.

Costs: Low :< 1M $. Medium: < 10M $. High: > 10M $. In the context of this paper low and medium costs are defined as affordable. With regard to the affordability of medium costs, the industrial and technology cooperation proposals must meet the following criteria: Firstly, they must have strategic implication, derived from their high or medium impact on the improvement of capabilities, Knowledge, and skills. Secondly, the pro­posals should be joint / combined in nature. Thirdly, the proposals should be ­actionable.

Key Recommendation Areas

From the preceding matrix the following strategic recommendations can be derived:

• continue to promote the Framework Nations Concept;
• establish a priority list for technology and industrial cooperation;
• concentrate cooperative research and technology for JAPC in areas vital to successfully operate in a hybrid / contested environment;
• intensify the cooperation with EU and develop suitable financial instruments and incentives; and
• orientate and accelerate technology R&D i. e. through challenging standards and use open standards whenever feasible.

Conclusions

Constructive industrial and technology cooperation is a key factor and ­important for innovation, acquisition and development of required ­capabilities. Smart Defence and Framework Nations Concept (FNC) are both good tools to enhance cooperation, but the FNC offers more potential to reduce duplication and maximize efficiency.

NATO should offer a clear picture of its defence priorities and should, in close coordination with the EU, lay out a policy of incentives offering ­prospects for a worthwhile return on investment to attract industry’s ­interest. Reviewing standards could remove constraints and barriers to more competition. New capabilities should be made available and ­integrated as fast as possible. NATO should concentrate cooperative ­research and technology for JAPC in areas vital to successfully operate in a hybrid / contested environment.

NATO is advocating interoperability as a force multiplier. Interoperable ­solutions can be promoted by effective standardization (including more use of open standards) and by strengthening the relationship with the defence and security industry.

Logistical cooperation is the bridge between deployed forces and the ­industrial base. Cooperative arrangements for the sustainment of forces in multinational operations allow for more efficient use of resources.

The CNAD will continue to promote cooperation among countries in the armament fields, by identifying the mechanisms and levers to facilitate successful industrial cooperation at international levels and, in doing so, ensure the development of new capabilities.

See Warsaw Summit Communiqué, issued by HOS / G, paras 77 / 78.

Examples of EU Pooling and sharing initiatives are the European Air Transport Command (EATC), the European Personnel Recovery Centre (EPRC). Similar operational Smart Defence activities on the NATO side are the Strategic Airlift Interim Solution (SALIS) and the Heavy Airlift Wing (HAW) in Hungary.

Warsaw Summit Communiqué, para 78.

Good examples are the Multinational Air Forces Initiative, led by Germany or the Deployable Air Activation Modules (DAAM).

NATO describes this response as Comprehensive All-domain Operations (CADO).

Cyber security, maritime strategy and capability, and counter-hybrid warfare.

A typically bad example is the ACCS-Programme.

Anti-Access, Area Denial.