Murad Bayar is the head of Turkey's defense procurement agency (SSM)
Few people expected Murad Bayar, a management consultant at Booz Allen Hamilton’s New York office, to become Turkey’s longest-serving official overseeing multibillion-dollar programs when he was picked in 2004 for the job by Prime Minister Recep Tayyip Erdogan. He had worked for the SSM 1989-98 with a portfolio that included critical programs such as the attack helicopter contract he later sealed as SSM chief. His term in office has seen the country’s first efforts to locally design, develop and make systems Turkey traditionally has bought off the shelf, such as drones, corvettes and main battle tanks. Now, local industry works to develop a basic trainer aircraft, a fighter jet, missiles, a light helicopter and engines. Despite rumors this year that he would step down, Bayar remains. His challenges today include improving how Turkey handles procurement, earning local firms new capabilities and turning his country into a major exporter.
Q. How will SSM’s primary mission take shape in the future?
A. SSM aims to reinforce its role as an efficient manager of modern procurement programs while primarily safeguarding the national industry’s infrastructure and capabilities. Thus, we hope to earn defense and security entities not just equipment but, essentially, capabilities. We think it is essential to establish a procurement mechanism that will successfully manage all cycles of the process, from design to phase-out. We think it is also important to establish a model for systematic technology management.
A complementary function will be to manage a modality in which Turkey plays an efficient role in international programs with economical, technological and political gains. When doing this we will surely have a view of both Turkey’s alliance in NATO and friendships and other alliances Turkey has historically, geographically and politically established [with non-NATO countries].
Q. How can Turkey improve its procurement and project management?
A. Particularly since the early 2000s, we have given emphasis to local development in meeting the needs of the Turkish armed forces. We have primarily based this model on maximum utilization of national assets, a policy which has produced several indigenous systems. During this process, we have switched from production under [foreign] license to local engineering and design. Meeting procurement requirements through local development and design has become a national policy. This has yielded positive results in terms of meeting the military’s modernization requirements and developing the national industry.
Taking into account the national industrial infrastructure and its qualified labor force, we think that delivering systems to the end user is only part of the producer’s responsibility. It is the producers’ task to efficiently use resources and maintain systems. Thus, we are planning to spread life-cycle management. We aim to create a modern program management system including determination of needs, procurement, maintenance and phase-out; encourage solutions based on industrial partners’ own capabilities; maximize government-industry cooperation for efficient use of national resources; prevent overlapping investments and encourage private-sector investment; develop analytical product-support strategies; attain high system readiness and cost efficiency.
All that would enable us to achieve high export potential and increasing and sustainable international competitiveness. SSM is working out a comprehensive plan to launch life-cycle management system for programs including the Coast Guard radar system, indigenous helicopter program, mobile and fixed radars, the national basic trainer aircraft [Hurkus], Long Horizons long-range surveillance system and the national automatic rifle program.
Q. Do you think Turkey could improve its national policy to go for local solutions? Based on Turkey’s technological capabilities and scientific shortcomings, which areas could be exempted from this policy?
A. SSM has managed to achieve 76.2 percent of its goals in reducing dependency on foreign systems, boosting exports, industrial integration, international cooperation programs and systematic management as stated in our 2007-11 strategic plan. We have taken important steps in producing warships, wheeled and tracked armored vehicles, weapon systems, ammunition, missiles, rockets and defense electronics. We produce at international standards, thus defense exports this year [as of September] have reached [an all-time high of] $1.26 billion. We aim for $25 billion in aviation and defense exports by 2023. Our 2012-17 strategic plan aims to consolidate all that progress. Despite its relatively small size, our defense industry in recent years started to produce advanced systems like a main battle tank [Altay], drones [Anka], corvettes [MILGEM], rifles, rockets and missiles.
We have our limitations compared to countries with advanced defense technologies. Such countries have advanced [nondefense] industries, which we lack. It will take time to establish companies that develop platforms and design subsystems. Another limitation is insufficient technological contribution from research institutions and universities. We also have problems about product-based specialization of companies. This makes it difficult for us to create international brands.
Q. You said in 2006 that Turkey should avoid designing and developing aircraft, which Turkey is doing now.
A. In 2006, we mostly aimed to modernize existing foreign systems with locally produced subsystems. We have achieved that target to a major extent with the T-38 [trainer aircraft] upgrade, C-130 [transport aircraft] upgrade, and with the attack helicopter program in which the body is produced by a foreign company. We used the design and development capabilities we earned with the Anka and Hurkus in designing aviation platforms.
Now we have a most challenging program for the local design and production of a warplane featuring stealth, ultrasonic speed, high maneuverability and modern sensors. We know this will be difficult, but we believe our industry has the capability to develop and fly this aircraft in 15 to 20 years.
Q. How far is Turkey from the capability to produce engines for major platforms?
A. We are assessing bids in a program for the local design and development, prototype production, test and qualification of a diesel engine for our national tank. In February 2012, we signed a deal with Kale Havacilik and [state scientific research institute] TUBITAK for the development of a cruise engine for our first indigenous cruise missile, Som. This project will be completed in 48 months and will make the basis for a complete national engine.
As part of SSM’s technology acquisition roadmap, we signed in December 2012 a contract with [national engine maker] Tusas Motor Sanayi [TEI] for the production of five prototype engines for the Anka. The design, production and certification tests will take four years.
Q. Have earlier plans for the consolidation of big players been scrapped?
A. In Europe and the US, big companies have merged. Those efforts aim to create more powerful players. Turkey should not be an exemption to this trend. If you want an industry that can compete in local and international markets, consolidation is inevitable. We are working on this.
Q. What are your expectations from Teknopark Istanbul?
A. We primarily aim to gain high-tech capabilities in chosen sectors: aviation and space, defense industry, maritime, energy, advanced electronics, advanced equipment (nano and micro), industrial software and health industries. We are hoping to create powerful technology transfer between the industry and universities. This is a $2 billion investment. In 15 years, nearly 1,000 companies and 30,000 experts will create $6 billion to $7 billion in advanced technology business annually. The first research and development [R&D] building has been completed.
Q. Turkey has moved from an off-the-shelf buyer to program partner. What will be its future role?
A. We have come a long way from co-production and production under [foreign] license to local design and indigenous solutions. Direct acquisitions from foreign suppliers have dropped to less than 15 percent based on contract price. We plan in the next decade to move toward commercial off-the-shelf usage and layered project partnership systems, like the F-35 program that involves foreign partners for subsystems to be locally developed. We will also encourage, in some cases with [governmental] partnership, companies that will target friendly country markets and boost defense and aviation exports.
Q. What are the obstacles to a more innovative industry?
A. Companies targeting only the domestic market face the risk of elimination. Our companies with a vision to sustain competitiveness should reach high quality standards. In recent years, we have allocated substantial resources for indigenous design programs.
I cannot say that we have successfully supported this with major R&D programs. Developed countries allocate 5 [percent] to 15 percent of their defense budgets to R&D. Today, the Turkish industry can develop ships, tanks and other land vehicles, but we cannot talk about a serious level of system engineering and technology and product development. It is our strategic objective to develop strategies that will make the armed forces ready for future combat.