1. DIRECCIÓN GENERAL DE ARMAMENTO Y MATERIAL MINISDEF Industrial Policy Focused to SMEs Conference Strengthening European Small and Medium sized Enterprises in the Defence Sector, Madrid 28 January 2010 Ángel Jara Albarrán Deputy National Armament Director Directorate of Inspection and Technical Services MINISTRY OF DEFENCE ( SPAIN )

2. DIRECCIÓN GENERAL DE ARMAMENTO Y MATERIAL 2 1.NATIONAL DEFENCE INDUSTRIAL SCENARIO. 2.INDUSTRIAL POLICY ACTIONS 3.KEY POINTS TO IMPROVE THE DEFENCE SUPPLY CHAIN 4.STRATEGIC ACTIONS 5.CONCLUSIONS OUTLINE

3. DIRECCIÓN GENERAL DE ARMAMENTO Y MATERIAL 3 NATIONAL DEFENCE INDUSTRIAL SCENARIO I One of the National Armament Directorate - DGAM - role is to maintain an updated knowledge about production capabilities, technologic level and economics aspects of the National Defence Industry with the objectives: One of the National Armament Directorate - DGAM - role is to maintain an updated knowledge about production capabilities, technologic level and economics aspects of the National Defence Industry with the objectives: To assure National Defence needs are cover by the national industrial cluster. To assure National Defence needs are cover by the national industrial cluster. To identify and promote Defence strategic industrial areas. To identify and promote Defence strategic industrial areas. To promote Industry access to international market To promote Industry access to international market From DGAM 2009 analysis carried out over the Defence National Industry, two main points appears regarding Small and Medium Enterprises: National Defence Industrial cluster is dominated by SMEs. Defence Department Industrial contracts budged goes mainly to Prime Companies.

4. DIRECCIÓN GENERAL DE ARMAMENTO Y MATERIAL 4 NATIONAL DEFENCE INDUSTRIAL SCENARIO II NOTE: Consolidated Data until 31/12/2009. SOURCE: MINISDEF-DGAM Enterprises Database NUMBER(%) of SMEs and Primes Enterprises distribution in the National Defence Industry Sector Primes SMEs SMEs and Primes Enterprises percentage in the National Defence contracts (M) Primes SMEs

5. DIRECCIÓN GENERAL DE ARMAMENTO Y MATERIAL 5 INDUSTRIAL POLICY ACTIONS Spanish Defence Industrial Policy is moving forward: To guarantee the National independence in technologic strategic sectors To assure Defence requirements can be covered now and in the future with the best price-quality relationship. Actions to improve the competitiveness of National SMEs in the Defence Sector shall be harmonized taking into account: European Directives as: EDA CoC on Defence Procurement EU Defence Package adopted on 5 December 2007 European Directive 2009/18/EC National Environment as: Spanish Law for Public sector contracts Analysis of the National Defence Industry scenario

6. DIRECCIÓN GENERAL DE ARMAMENTO Y MATERIAL 6 TO SUPPORT THE ROLE OF THE SMEs HELPING IN THEIR INCORPORATION IN THE DEFENCE SUPPLY CHAIN TO INCREASE THE TECHNOLOGY LEVEL OF THE INDUSTRY TO DEVELOP NEW SCENARIOS WITH A HIGH LEVEL OF ABILITIES TO PROMOTE EQUAL TERMS FOR SMES AND PRIMES. TO PROMOTE THE VISIBILITY OF THE DEFENCE CONTRACTS. TO INCREASE THE TECHNOLOGICAL AND INDUSTRIAL CORE OF THE SPANISH DEFENCE INDUSTRY, AT NATIONAL AND EUROPEAN LEVEL TO SHARE THE RISK AND THE BENEFITS IN THE DEFENCE CONTRACTS, IMPROVING THE DEVELOPMENT OF THE DEFENCE INDUSTRIAL SECTOR TO MAXIMIZE THE DEFENCE BUSSINES OPORTUNITIES FOR ALL ENTERPRISES (SMEs, PRIMEs) IN AN OPEN COMPETITION ENVIRONMNET KEY POINTS TO IMPROVE THE DEFENCE SUPPLY CHAIN TO INCREASE THE INTER-INDUSTRY KNOWLEDGE OF THE ENTERPRISES CAPABILITIES IN ORDER TO PROMOTE JOINT DEFENCE INITIATIVES.

7. DIRECCIÓN GENERAL DE ARMAMENTO Y MATERIAL 7 STRATEGIC ACTIONS I Three major supporting measures are derived from the Industrial Policy Revision with direct application to SMEs: To DEFINE the Defence Strategic Industrial Capabilities To DEVELOP an Industrial Intelligent System. To IMPLEMENT a CoC on Defence Procurement.

8. DIRECCIÓN GENERAL DE ARMAMENTO Y MATERIAL 8 STRATEGIC ACTIONS II Strategic Industrial Capabilities Definition Identify Factors to be taken into account. Establish correlation with the actual and near future Defence needs. Clarify the different actions to be undertaken in the Industry.

9. DIRECCIÓN GENERAL DE ARMAMENTO Y MATERIAL 9 STRATEGIC ACTIONS III Industrial Intelligent System Development OBJETIVE: To integrate in a Database the totality of useful information for National Defence Industry analysis with: A new taxonomy about industrial capabilities. A new Enterprise Database. The possibility of generating Industrial Business Intelligence Technical Notes. The access to the different Ministry of Defence Data Base. The capacity of supporting National decision-makers tasks in the development of future Defence industrial Policy and Defence Contracts.

10. DIRECCIÓN GENERAL DE ARMAMENTO Y MATERIAL 10 STRATEGIC ACTIONS IV Development of CoC on Defence Procurement To be applicable to all PRIMEs and SUBCOs along the supply chain. To make public all the contract opportunities To provide the same information to all providers To establish clear objectives and evaluation criteria to select the contractor. To communicate the final decision to all bidders To recommend PRIMEs to maintain same Defence Department contract conditions to SUBCOs. To distribute along the supply chain the ratio risk/ benefit.

11. DIRECCIÓN GENERAL DE ARMAMENTO Y MATERIAL 11 CONCLUSIONS SMEs play an key role in the National Defence Industry. Points to be improved, in the Defence supply chain, has been identified Correction actions at National level are carried out in order to increase the SMEs opportunities in the Defence Sector: Strategic Industrial Capabilities Definition Industrial Intelligent System Development CoC on Defence Procurement Development

12. DIRECCIÓN GENERAL DE ARMAMENTO Y MATERIAL THANK VERY MUCH FOR YOUR ATTENTION 12