Thursday, 12 January 2012

Pooling of Demand and Effective Procurement Methods – Common Off-the-Shelf Procurement: a new EDA Pooling & Sharing Initiative

Why pooling of demand? At the recent Steering Board of the European Defence Agency (EDA) on 30 November 2011, European Ministers of Defence had an intense discussion on Pooling & Sharing, an EU flagship initiative aiming at increasing further multinational cooperation among European Union Member States. Pooling & Sharing can take various forms, like common training, common logistic support solutions or combining transport capacities, but all have one thing in common: the aim to use decreasing resources in a more efficient and effective way through collaboration and prevention of redundancies.

It goes without saying that procurement is an area very well-suited to the increase in the effectiveness of military spending. This is also reflected in the EDA’s mandate as laid down in Art 45 of the Treaty on European Union which tasks the Agency, among other things, to promote the adoption of effective procurement methods as well as to contribute to identifying and, if necessary, implementing any useful measure for strengthening the technological and industrial base of the defence sector and for improving the effectiveness of military expenditure.

Accordingly, the Ministers of Defence, during the previous Steering Board in May this year, called upon the EDA to explore new opportunities for more effective procurement methods through developing practical and innovative ways for more cooperative action, including common military and commercial off-the-shelf procurement and to develop guidelines and best practices facilitating bi- and multilateral collaborative procurement.
In the current economic climate, implementing these tasks becomes even more pressing to ensure the continuous support of our Armed Forces by getting best value for money at the same time. In some instances and for some EU Member States pooling demand could actually be the only way to grant access to a specific capability.

Pooling demand should automatically lead to more consolidation and more standardisation on the buyers’ side of the European Defence Equipment Market, which in turn should contribute to an improvement of interoperability and permit industries to attain bigger production lots with better planning, again reducing unit cost and therefore prices. By the same token, pooled and consolidated demand could be an incentive for the defence industries of EU countries to intensify their cross-border cooperation and consolidation.

Continue reading here.

by Reinhard Marak, EDA’s Senior Officer for Defence Market.

This article was published by Defence Procurement International.