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EDITIONS
Monday, 3 December, 2001, 15:51 GMT
Private sector's military bid
Privately financed helicopter flight simulator
PFI flight simulator: "Will you be privatised next, sir?"
by BBC News Online's Stefan Armbruster

An unprecedented military planning meeting takes place in Paris this week at which the partial privatisation of the armed forces of Europe and elsewhere will be discussed.

Britain leads the sales offensive, promoting the benefits of the controversial private finance initiative (PFI), at a conference attended by 17 countries and dozens of companies, including most of the world's big arms manufacturers.


lt would be like going into battle with Eddie Stobart trucks bring up the rear

UK military official
The Defence Partnerships conference, which runs until Wednesday, boasts its aim is "identifying and pursuing opportunities for private sector involvement in the delivery of defence related services through public private partnerships".

It is the latest stage in the UK government's plans to use private money to improve public services, and could prove even more controversial than plans to build privately owned schools and hospitals for the NHS.

It is nothing new to have a country's armed forces backed by civilian contractors, but the PFI offers this with a twist.

One conference session's title sums it up as 'Paying privately for the defence we cannot afford publicly'.

Calling up the PLCs

Under a PFI deal equipment and services - like planes, ships, trucks, training and accommodation - are leased from a private company.

Theoretically the military only pay for the equipment and personnel they use, saving them money.

The private sector takes on the risk of supplying what is needed, when it is needed, and is allowed to cover costs by leasing the same equipment, services and personnel out to other customers during the down time.

Eddie Stobart truck
Military operations brought to you by Eddie Stobart?
These PFIs do not involve tanks and fighter jets or other direct frontline equipment and personnel, but much of the support capability.

One senior British military figure described the scheme as like "going into battle with Eddie Stobart trucks bring up the rear".

Britain is the world leader at applying the PFI to its armed forces and only a few other countries, like Australia, have copied the model, producing mixed results.

Just two weeks ago, a 300m computerised payroll PFI had to be bailed out by the British government after the contractor failed to deliver what was needed.

This latest example of a defence PFI gone wrong should provide a good starting point for one of the key sessions entitled "Examining the lessons learned from the UK defence PFI experience".

Raising the corporate standard

The conference will not just expose defence force officials to the PFI scheme but also allow those already investigating its use to outline their needs to the defence contractors, who to date are the major financial beneficiaries.

The conference offers private companies helpful seminars on "Industrial participation in the Swiss Armed Forces", "The future opportunities for private sector investment in the Swedish defence sector", and "Examining the scope for global development of the PFI market in the defence sector".

All this and much more will be discussed by top military brass and corporate officials.

With the defence sector one of the few corporate bright spots in the global economic downturn, few companies will want to pass up the opportunity to expand their role as providers of military services.

How defence has become the latest target of privatisation initiatives


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