Interview with Martin Sonderegger, Head of Switzerland’s Federal Office for Defence Procurement armasuisse.
Switzerland’s military procurement is unique, in that all defence projects are subject to a parliamentary decision, and in individual cases also to a referendum. ESD spoke with Martin Sonderegger, the Swiss Armament Director and Head of the Federal Office for Defence Procurement armasuisse.
ESD: How long has armasuisse been in existence as the Federal Office for Defence Procurement? What is the structure and what are the main tasks of your organisation?
Sonderegger: The Federal Office for Defence Procurement armasuisse is the procurement organisation of the Federal Ministry of Defence, Civil Protection and Sport (Verteidigung, Bevölkerungsschutz und Sport – VBS) and, as an administrative unit, reports directly to the Head of the VBS. Its activities range from the evaluation, procurement, maintenance and liquidation of systems and materials to real estate management at the VBS and the provision of scientific and technical services. Even though we are increasingly taking on third-party contracts for other departments, the armed forces clearly remain our main client and customer.
Last year, armasuisse celebrated its 50th anniversary. armasuisse emerged from its predecessor organisations Gruppe für Rüstungsdienste (GRD) and Gruppe Rüstung (GR). The trigger for the establishment of the GRD in the sixties was the so-called MIRAGE Affair. The Military Technical Assistance Department (KTA), which was subordinate to the army, was separated from the area of responsibility of the military leadership and transferred to an independent, civilian organisation directly subordinate to the head of the department.
Today, armasuisse employs some 850 people in a wide variety of job profiles. In addition to the main locations in Bern, Thun and Emmen, armasuisse operates nine branch offices in the real estate sector throughout Switzerland. Internationally, we are present with offices in Brussels/BEL and Washington DC/USA.
ESD: If you compare armasuisse with other defence procurement organisations like Sweden’s FMV or Germany’s BAAINBw, where do you see commonalities, where differences?
Sonderegger: I regularly exchange views with my counterparts, especially from European countries. We also discuss country-specific differences in defence procurement. One of the special features of defence procurement in Switzerland is certainly the more politically dominated procurement process. Parliament has a decisive influence in this process and approves all procurement programmes. Voters can also have a say in certain procurements via direct-democratic instruments such as referendums and popular initiatives. As the procurement authority, we are therefore called upon to explain transparently to politicians and the public how we work. For many states, on the other hand, the general framework of procurement law is relatively similar. At the technological level, we are confronted with comparable issues.
ESD: Do armasuisse’s responsibilities include research and development for new defence materiel?
Sonderegger: armasuisse conducts research programmes with the objective of recognising and evaluating emerging technologies in time. The findings reduce armed forces planning risks. In addition, research serves the development of competences necessary to be able to expertly assess technologies in the context of procurement processes. While the development of entire systems tends to be the exception in Switzerland, development projects for the integration of system components or for system-of-systems integration are inevitable.
ESD: What are the major current and upcoming defence procurement programmes for the Swiss armed forces? Are any of these programmes executed in cooperation with other countries?
Sonderegger: The largest and most important procurement programme currently in place is AIR2030. The programme comprises the replacement of all airspace protection systems, i.e. combat aircraft, anti-aircraft defence and air surveillance systems. In the coming years, there will also be further need for renewal and regeneration, particularly in indirect fire support at short and very short distances, tactical reconnaissance and mobile communication. In the 2020s, in addition to the entire system for protecting this airspace, almost all the other main systems procured by the armed forces in the 1980s and 1990s will reach the end of their service life within a few years. In particular, this applies to artillery, the LEOPARD main battle tanks, all special vehicles of the engineer troops and artillery still based on the M-113 infantry fighting vehicle, Type 93 reconnaissance vehicles and the entire fleet of PIRANHA wheeled infantry fighting vehicles. It remains to be seen whether these innovations could be implemented in cooperation with other states.
ESD: In 2013, the procurement of the GRIPEN fighter aircraft was cancelled based on a respective confederative referendum. Are any of the above programmes threatened by a similar fate? As a rule, when is a defence procurement effort made subject to a national referendum?
Sonderegger: It is likely that at least the planned procurement of fighter aircraft will be subject to a public vote, either on the aircraft alone or on a package of aircraft and an extended-range ground-based air defence system.
A public vote can be brought about in two ways: by government and parliament adopting a planning decision or law relating to the procurement, or by any interest group proposing, by popular initiative, an amendment to the constitution referring to limiting or prohibiting the planned procurement.
Parliament decided in 2018 that it wants a referendum, thus the question is currently which instrument to use to bring this about – probably a planning decision. A public vote could take place in 2020 at the earliest. Even if the procurement is approved in the scope of such a referendum, it remains still possible to try to block it subsequently by a popular initiative.
ESD: In what areas can the materiel requirements of the Swiss armed forces be met by the national defence industrial base, and in what areas do you have to cooperate with foreign suppliers?
Sonderegger: Today, there are only a few states that can fully equip their armed forces supported by their national defence industrial base alone. Switzerland is not one of them. Although Swiss industry has proven top products in individual areas, we are dependent on the procurement of foreign systems and components.
ESD: In what way do the public procurement directives in Switzerland differ from those of other European countries? Does RUAG, as a state-owned defence company, enjoy a position of preference?
Sonderegger: In Switzerland, the emphasis is on the principle of economic efficiency and, as far as possible, the generation of competitive situations. The equipment to be procured must always be assessed comprehensively throughout its entire service life. In order to reduce costs, international standards are also to be applied wherever possible, and commercially available material is given preference. The purchasing potential can be further optimised by establishing long-term and reliable partnerships with industry. The state-owned RUAG is the most important industrial partner of the Swiss Armed Forces. It has a special position in that it generally acts as a centre of material competence for the Swiss Armed Forces in the procurement of complex and safety-relevant systems.
ESD: To what extent do industrial policy considerations influence the procurement of defence materiel? Are there any offset and compensation requirements for foreign suppliers?
Sonderegger: Throughout the entire procurement process, we pay attention to long-term and sustainable business relationships with industry. Already in the planning phase, a business model with a clear allocation of tasks, responsibilities, procedures and responsibilities is defined for cooperation with external industrial service providers.
At the same time, an efficient national technological and industrial base is an important component of security policy. Selected technologies and industrial capabilities, the mastery of which is central to national security, should therefore be strengthened in Switzerland. The focus is on strengthening the competitiveness of companies and research institutions with such capabilities. This is to be achieved with measures that are fundamentally compatible with the market. One example of this is offset business.
If defence material is procured abroad, a compensation of 100 percent of the procurement volume in Switzerland is generally required from the foreign supplier in the case of larger transactions. A distinction is made between two types of offset business: In the case of direct transactions, the services provided by Swiss companies are included and considered for the defence equipment to be procured. In indirect transactions, Swiss companies receive orders that are not directly related to the equipment items to be procured. In our view, offset business can thus open up access to cutting-edge technologies, enable expertise to be acquired, generate additional export volumes and strengthen the position of Swiss industry on international markets.
ESD: Does armasuisse support the export efforts of the Swiss defence industry?
Sonderegger: armasuisse does not actually play an active support role. Of course, we support my foreign counterparts with information and direct contacts to the national industry.
ESD: Are there any materiel, logistic or training requirements in Switzerland that are being addressed through public–private partnerships?
Sonderegger: No, there are currently no public–private partnerships in these areas.
The interview was conducted by Jürgen Hensel.