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  UK takes steps forward in major land system competitions, but budget uncertainty looms

  By: Andrew Chuter MILLBROOK, England — Major procurement programs were top of the mind at the Defence Vehicle Dynamics show, with the UK Ministry of Defence and industry pointing to notable progress for two of the largest system buys on the horizon. And yet, budget uncertainty looms, leaving market executives to question how the British military will fund programs long term. Boxer buy Recently appointed Defence Procurement Minister Stuart Andrew announced that the Ministry of Defence last week issued a request for quotations with the intention of purchasing an initial batch of 500 Boxer mechanized infantry vehicles for the British Army. The Artec's Boxer was nominated in March as the preferred choice for the requirement after the MoD controversially opted to select the vehicle without a competition. The MoD previously said it would purchase 500 vehicles over a five-year period, with the first Boxers delivered in 2023. Cost is put at £4.4 billion (U.S. $5.8 billion), although that includes the first 10 years of support. The British intend to use the Boxers alongside General Dynamics' new Ajax family of tracked vehicles and other platforms, meant for two strike brigades currently being created by the British Army. Boxer is a German-Dutch program managed through OCCAR. The move announced by Andrew gives the green light for Artec — a joint venture between Rheinmetall and Krauss-Maffei Wegmann — to begin signing up British supply chain companies ahead of a final go-ahead decision by the MoD in late 2019. Artec has signed a memorandum of understanding with a number of companies in the U.K., including Pearson Engineering, Thales and Raytheon as it tries to meet its commitment to perform 60 percent of the manufacturing in the U.K. Challenger 2 update Rheinmetall's program targets in the U.K. are not limited to Boxer. The company is embroiled in a second possible land procurement effort in the U.K. — the update of the British Army's Challenger 2 main battle tank in a life-extension program. Rheinmetall and BAE Systems, which built the Challenger 2, have conducted competitive assessment phase contracts for the MoD ahead of selection of a winning contractor, who would lead the program starting sometime next year. The assessment phase officially concludes at the end of this year, but both sides have delivered their proposals to the MoD ahead of the Army' preliminary design review next month. The life-extension program began as a means of combating the obsolescence of several Challenger systems rather than a capability upgrade. But the emergence of the new Russian T-14 tank and the perceived threat by Moscow and other potentially hostile states has driven a more ambitious approach to improve Britain's tank capability. And industry has responded with options to boost the platform's capability. Rheinmetall has offered to swap the Challenger's 120mm rifled gun for a smoothbore weapon, while the BAE-led partnership Team Challenger 2 offered to fit an active protection system. The Army would probably like both, but given the dire state of the defense budget, affording even one of those options is problematic. “At the moment, the assessment phase excludes the gun and an active protection system. However, Team Challenger 2 [members] have planned in an APS from the start, and it is designed for, but not necessarily with, a system,” said Simon Jackson, the head of land vehicle upgrades at BAE. The Team Challenger 2 partnership also includes General Dynamics, Leonardo, Qinetiq, Safran and Moog. “The gun is outside the requirement, but if MoD decide they want a smoothbore, we have already done the work fitting a new gun to Challenger 2 in 2006. It's not difficult. You need to change turret stowage for the new ammunition and make fire control modifications. It's not difficult, but it takes time,” Jackson added. “Today, the rifled gun with the Charm 3 ammunition meets the need, but it depends to an extent on how long the Army want to keep Challenger 2 in service as to whether they want a smoothbore or not. It's also got to be an affordability question. “It's not a disadvantage for us; we have fitted a smoothbore on Challenger before. We clearly know all about the interfaces with the turret, which our rivals do not." However, Rheinmetall is among the world leaders in 120mm smoothbore weapons. Peter Hardisty, the managing director at Rheinmetall Defence UK, said despite “some challenges, they are completely manageable.” “We have informed the MoD we have a cutting-edge smoothbore weapon available on the Leopard 2 tank if required,” Hardisty said at the DVD event. Some analysts wonder if the expected release of an invitation to tender for the program could be delayed so the Army can consider its options for a gun and active protection system. Some executives Defense News spoke to said they expected the invitation imminently, but Hardisty said he doesn't expect the invitation to tender until "the first or second quarter of next year.” Team Challenger 2 made a surprise announcement ahead of the show that it was bringing to DVD a demonstrator vehicle known as Black Night, equipped with a suite of new sighting systems, fire control systems, a laser warning capability and other upgrades meant to keep the aging tank viable through to its current 2035 out-of-service date. The main item of interest on Black Night was the provision of an Iron Fist active protection system supplied by Israel's IMI Systems. BAE and General Dynamics each have experience installing the Iron Fist, but Jackson said any active protection system could be fitted. The MoD is sticking to its request for a makeover for 227 Challengers 2 tanks for now ; but like most other defense equipment programs, it's hostage to possible change caused by budget shortfalls. The MoD's defense modernization program review may have to balance a significant mismatch between available funds and commitments. Hardisty believes the Challenger 2 update isn't especially vulnerable to the review, but added that the review will likely impact a host of vehicle programs required by the Army. “There is always uncertainty, it's the nature of the sector. We feel comfortable about Boxer and the mechanized vehicle requirement, and reasonably comfortable about Challenger 2,” he said. Budget uncertainty However, many executives here acknowledge that Defence Secretary Gavin Williamson has probably lost his fight for a substantial spending boost. And as Britain's impending departure from the European Union could damage the economy, the British defense sector is bracing for even tougher times ahead. An MoD spokesman at the DVD event said the ministry intends to publish the outcome of the defense modernization program review by late autumn. Some industry executives, however, think it's more likely the review will be released piecemeal over time to reduce the impact of program and capability cuts. Britain has been in an almost perpetual defense review for the last four years. U.K. defense commentator Howard Wheeldon offered the view last week that a further defense review delaying spending decision is possible next year — a sentiment shared by a number of senior executives at DVD. https://www.defensenews.com/land/2018/09/21/uk-takes-steps-forward-in-major-land-system-competitions-but-budget-uncertainly-looms