LONDON — The British government department responsible for international trade is reviewing how it can boost the effectiveness of its defense and security exports arm.
Industry executives said the focus of the work appears to be an effort to increase overseas sales in the cyber and security sector.
Companies, leading trade bodies like ADS and others have already been consulted in a review of operations at the Defence and Security Organisation. A report is likely to be completed in the next few weeks, they said.
DSO was formerly part of the government’s business department but moved to become an arm of the Department for International Trade when it was formed last year following Britain’s decision to exit the European Union.
A spokesman for DSO confirmed the review was underway but declined to go into details.
“A nonexecutive director has been asked to have a look at DSO to ensure that it, and the wider department, are able to provide the best possible support to our security, cyber and defense sectors. He is consulting a wide range of stakeholders and has not yet reached any conclusions. It would be premature to speculate about the potential outcome,” the spokesman said.
The nonexecutive in question is Simon Walker, a well-known business figure in England, and the lead nonexecutive director at the Department for International Trade.
Walker was one of several individuals appointed to the board of the government department last year by Liam Fox, the international trade secretary and ex-defense secretary.
One industry executive, who spoke on condition of anonymity, said one of the aims of the review was to help support the many small and medium-sized companies working in the cyber and security sector.
Paul Everitt, the CEO of ADS, said the government needs to increase the level of security expertise and resource in DSO without impacting the defense side.
“Part of the work is about creating a stronger strategic relationship with other government departments like the Home Office and the [Department for Transport] to support potential export campaigns. The Ministry of Defence does that on key campaigns, and we need to be able to do that with other government department[s],” Everitt said.
A second industry executive said if Walker really wants to boost defense and security industries in England, he should recommend DSO be run by the Cabinet Office.
“Having the prime minister’s office running DSO would make it clear to other government departments and overseas customers that defense and security exports are a priority of wider strategic importance to U.K. plc than just doing a deal,” he said.
Resources have been an ongoing issue across DSO’s operation for a while. Like most other government departments, employee numbers at DSO have dwindled over the last few years in the face of budget constraints.
That trend has recently been partially reversed by the introduction of industry experts seconded to the organization as part of what is known as the defense growth partnership — an arrangement between the government and industry to primarily help boost exports.
Overseas demand for British technology in cyber and security saw exports reach £4.3 billion (U.S. $5.7 billion) last year. Although that’s a robust 7.4 percent increase over the previous 12 months, the growth rate is not as strong as in previous years.
Cyber accounted for more than a third of export revenues in 2016, with critical national infrastructure, border security and services also doing well.
By comparison, defense exports last year totaled £5.9 billion, although that’s well down on the average for the British sector.
It’s unclear how exports have performed this year, but expectations are that there will be a significant increase if the £6 billion deal earlier this month with Qatar for Typhoon jets and an associated package of weapon and training is counted in the 2017 figures.
The Ministry of Defence leads the British Typhoon and complex weapons export effort, although DSO does much of the leg work.
Everitt said he sees no reason why “security exports could not continue to grow to the point where they were equivalent to the figures achieved by defense.”
Prospects for the local defense and security sectors overall are likely to be influenced by a national security capability review due to be completed by the Cabinet Office in the next few weeks.
Additional spending on cyber could be one of the items on the agenda, maybe at the expense of extra funds to stave off defense capability cuts caused by budget problems.
Mark Sedwell, the national security adviser leading the review, is said to believe that boosting cyber spending is more important than increasing the armed forces budget to stave off possible capability and program cuts.
The Walker review for the Department for International Trade comes at an opportune time as the DSO looks for a new boss to replace Stephen Phipson, who recently left the organization to take up the post of chief executive at the U.K. engineering employers association EEF.
Applications for the post recently closed, and an appointment is expected in the new year.
Andrew Chuter is the United Kingdom correspondent for Defense News.
