FARNBOROUGH, England — British industry executives say they are concerned over the government’s failure to permanently appoint an official to lead the country’s defense export organization despite the Treasury apparently relaxing pay restrictions to attract the right candidate.
Several executives, who all spoke to Defense News on condition of anonymity, pointed the finger of blame at the Treasury for the nine-month delay in finding a suitable candidate to head the £10 billion (U.S. $13 billion) defense and security export support effort.
The previous permanent director of the Defence and Security Organisation, Stephen Phipson, announced his intention to move on nearly a year ago, leaving the post filled on a temporary basis at a time when Britain is looking for a major boost in defense exports to balance pretty much flat domestic spending in the sector.
Efforts to find a replacement for Phipson late last year failed. Simon Everest, DSO’s well-respected director of operations and security, took on the job in an interim capacity after Phipson departed in December.
Executives at the Farnborough Airshow have told Defense News that while they remain concerned at the delay, they understand the Treasury recently decided to soften its line on pay.
And yet that may prove insufficient in attracting the right caliber of candidate, they said.
“We are hearing DSO may be allowed to pay a maximum of between £170, 000 and £180,000 for the right candidate, but frankly that’s not enough. They should be looking at £250,000 as a minimum,” one executive said.
By way of example, Phipson’s annual salary in his new post as director of the EEF, an engineering employers' organization, has been reported at £400,000.
Consultant Alex Ashbourne-Walmsley of Ashbourne Strategic Consulting said industry should be allowed to partly fund the salary to ensure DSO secures the right candidate.
“It’s time to revert to the practice of previous decades when industry was asked to contribute to the salary to make it up to the level to attract the right level of person for such an important and high-profile position,” she said.
A second executive here said: “They have already started looking again but are probably not going to find the right candidate with the required knowledge of the defense and security industries, an understanding of the international security situation, and a 24/7 commitment."
Alan Cook, the executive who co-chairs the industry-government Defence Growth Partnership organization set up to boost British exports, skills and technology, said there was considerable concern at the delay in recruiting a new boss for the DSO.
“Yes, we are concerned. One of the key tenants when DGP was set up some four years ago was to enhance exports. Not having a senior leader at the DSO — without taking anything away from Simon Everest — is concerning. Not having people the caliber of previous heads [of government defense exports] like Alan Garwood and Charles Masefield in that position is a worry. If you spoke to other people in the industry, they would tell you the same thing,” Cook said.
Philip Dunne, a former defense procurement minister, hinted at the fact DSO needs a high-end individual to represent the government in export markets. His remarks were made in a review of the defense industry, which was commissioned by the Ministry of Defence and published earlier this month.
The government’s export effort “requires committed senior leadership for DSO to engage at appropriately senior level with allies and partner nations,” the review read.
Treasury guidelines require any remuneration package above £150,000 — the prime minister’s annual paycheck — to be approved by the chief secretary of the Treasury. That boost in salary appears to have gotten the nod from the Treasury, although there is, as yet, no confirmation of that.
The Treasury referred calls on the issue to the Department for International Trade, the ministry responsible for DSO operations. A spokesman for the DIT did not respond to questions about whether the recruitment process had restarted or whether the DSO had been given special dispensation to relax the salary cap on the job.
DSO remains a key element of the government’s support for a defense and security export drive, which netted £10.2 billion of sales in 2016, helping generate top-level technology and thousands of high-grade jobs. Defense exports accounted for £5.9 billion of that total.
DSO has recently seen its position as the British government’s lead organization for defense and security exports erode, with the MoD taking the lead on the sales effort for Typhoon combat jets, Type 26 frigates and complex weapons.
Ashbourne-Walmsley said that with the MoD leading many of the big export campaigns and the department now committed to supporting exports, it may be time to consider returning DSO to the stewardship of the Defence Ministry.
The Labour government in 2008 stripped out what was then called the Defence Exports Sales Organisation from the MoD and handed it the business department. The organization was subsequently moved onto the DIT when it was formed following the Brexit referendum in 2016.
“It sends a muddled message to our customers if it appears that the defense department is not leading on some exports, but is on others," she said. “One of the greatest strengths of the old DESO was that it was clearly an extension of the MoD.”
Another executive said there was a “growing feeling it’s time to go back to the MoD.”