Denmark - Defense Industry

Denmark has never had a large defense industry (it currently ranks as the smallest of the four Nordic nations), and the decline of defense equipment associated with the end of the Cold War, did not have a major impact on Danish industry. In 1997, for example, the total Danish defense industry output totaled only US$166.6M, with US$103M in exports, and the defense industry employed only 1,300 people. Danish defense companies are generally small and look to find success as niche suppliers.

There are approximately 25 companies involved in the defense industry, mainly focusedon high-technology radar and sensory equipment. Market leaders include Terma A/S andSystematic A/S. These companies have very little U.S. presence. The major companiesare members of The Association of Defense Manufacturers in Denmark (FAD), which isa member-based organization under the aegis of the Confederation of Danish Industry.

The one area in which Danish industry has primacy is in naval shipbuilding. Denmark requires that all contracts for new surface ships are awarded to Danish shipbuilders. Danish shipyards and manufacturers of naval defense equipment have formed an umbrella organization, Naval Team Denmark, which also includes, as associate members, a number of foreign suppliers to the RDN.

The following three tenets are basic to Danish defense procurements.

1. First, although normal business terms and conditions apply, all defense procurements must take place strictly in accordance with the Defense Purchase regulations, the content of which is dictated by the fact that risk to taxpayers' funds must be limited.
2. Second, purchase items must take place with due consideration to competitiveness of Danish produced items.
3. Third, military procurement agencies must accept the bid with the lowest total cost which, in addition to adhering to all bid conditions, fulfills the requirements for industrial cooperation (offset).

Most defense procurement contracts are firm fixed price. Cost-plus contracts may in certain cases be allowed if the contracting period is of long duration. The rules governing tendering procedures are transparent, objective and non-discriminatory. All tenders are kept unopened until expiration of the bids due date. Prospective contractors are not present at bid openings; however, the results are normally announced to all participants by letter or telephone. Payment is normally 30 days upon net receipt of invoice and delivery / acceptance of the equipment or service. Before any payment can be made, a certificate of conformity or an acceptance test certificate signed by the supplier is usually required.

An import license granted by the Danish Ministry of Justice is required for civilians to import arms and ammunition. Otherwise, Denmark generally requires no import licensesor end-user certificates. For classified projects, bidders must have an appropriate security clearance. Contractors must ask the DOD Defense Security Service to verify clearances to the ODC in Denmark before scheduling any visits to Materiel Commands or military installations in Denmark. According to the Danish Defense Procurement Bulletin, any foreign supplier who sells defense systems and equipment to the Danish Armed Forces for more than DKK5 million can be required to enter into an Industrial Co-operation Contract (ICC) with the National Agency for Enterprise and Construction (NAEC).

On May 28, 2002 the U.S., Denmark signed a Agreement on the Joint Strike Fighter. Denmark had been part of this program since 1997 and has now signed on for an additional ten years. The value of the Danish investment in the SDD phase with government and industry is an investment of $125 million. The amount paid by the industry is $20 million. For Danish industry participation is of great importance, of course. The Danish defense industry may be small in size, but they are great in performance and great in quality. They know very well that they will have to be competitive and to excel to get their share of the work. The opportunity to get access to valuable business opportunities and to further develop business relations with American industry, sharing knowledge and technology will strengthen the industry in both countries. This has certainly been acknowledged by Danish industry and it has been demonstrated by their contribution to the financing of participation the SDD phase which is in itself an exciting cooperation between the Danish armed forces and Danish industry.

On March 18, 2009 the Boeing Company and Terma A/S signed a Memorandum of Agreement that aims to provide Terma a minimum of 30 percent of the industrial-cooperation investments outlined in Boeing's Super Hornet proposal to Denmark. The Super Hornet strike fighter is one of three finalists in Denmark's New Combat Aircraft competition.

Lockheed Martin and Danish defense industry leader Terma A/S have responded to the U.S. Navy's challenge to develop an integrated air and missile defense capability built on an open, flexible, modular set of software components for the domestic and international defense market.

On September 1st, 2010 more than 60 representatives from the Danish and American Defense as well as representatives from the American and Danish defense industries participated in a Defense Industrial Event hosted by the Danish Embassy in Washington, DC. The occasion for the event was the visit of Lieutenant General Per Ludvigsen, Commanding General of the Danish Acquisition and Logistics Organization (DALO). DALO acquires, maintains, develops and phases out materiel capacities and ensures provisions in due time for the Danish Defence operations. The theme of the event was pointing at business opportunities for both the American and Danish defense industry and the possibility of creating partnerships. Furthermore the strategic prospects for the defense industry in the years to come were discussed.

Hydrema one of the leading suppliers of high-technology, earth-moving equipment, announced today that it has been awarded a five-year indefinite contract with a ceiling of $168 million dollars with the U.S. Army for the delivery of area mine clearing systems (AMCS), as well as spares, training and maintenance of these vehicles.

As a member of the Western European Armaments Group (WEAG), Denmark periodically published details of its requirements for defense equipment in an electronic journal entitled "Danish Defense Procurement Bulletin" available via the Danish Defense Command's web-site www.fko.dk.

Denmark F-16

Denmark was a member of the four-nation consortium that first brought the Fighting Falcon to Europe. This consortium of European NATO countries considering the recapitalization of their fighter jet fleets in May 1974 consortium considered the Saab AJ 37 Viggen, the Dassault Mirage F1, and the F-16 Fighting Falcon. The USAF announced its selection of the F-16 and committed to purchasing 650 in mid-January 1975. A few weeks later, the European consortium assessed the F-16 to be both technologically superior and less expensive than the Viggen or Mirage. The Defence Ministry committee concurred on 5 February. The Danish government confirmed the choice of the F-16 on 28 May and, along with the Netherlands and Norway, signed a Memorandum of Understanding with the United States on 30 May. The Danish parliament then authorized the acquisition of 48 F-16s, with an option to acquire 10 more, on 11 June 1975 by a vote of 114 to 48. The initial Royal Danish Air Force order was for 58 F-16 aircraft. These planes went through final assembly in the Belgian Societe Anonyme Belge de Constructions Aeronautiques (SABCA) plant. All were built to the initial Block 1 standards. Deliveries to the Royal Danish Air Force began in January 1980. A follow-on order of 12 Block 15 F-16 aircraft was placed in August 1984. Intended as attrition replacements, these latter aircraft were built by Fokker in the Netherlands.

At 2.65 billion Danish Kroner (DKK), this was the largest military acquisition in Danish history. Each F-16 was expected to have a useful service life of 4000 hours — or roughly 20 years. The first F-16 was delivered to Denmark in 1980 and deliveries continued through 1985. It was therefore to be expected that they would require replacement in the 2000–2005 timeframe; however, a refurbishment program in the 1990s enabled the planes to fly an additional 4000 hours, or roughly another 20 years. This meant an outside deadline of 2020–2025 for a replacement aircraft to enter the Royal Danish Air Force’s (RDAF) inventory. Danish foreign and defense officials gave due weight to the signal that their choice of aircraft would send to their partners in the Atlantic Alliance. This consideration was perhaps overshadowed by the assessed technical superiority of the F-16 and its comparatively lower price, and the choices made by Denmark’s partners — each of whom independently chose the F-16. Terma has developed the F-16 Tactical Reconnaissance System (TRS) for the Royal Danish Air Force (RDAF). The system has been operational since 2006 at Fighter Wing Skrydstrup. It consists of Terma's F-16 centerline mounted Modular Reconnaissance Pod (MRP) equipped with an advanced RECCE suite as well as associated Ground Station and Integrated Logistic Support (ILS) equipment. Due to an update performed by Terma, the F-16 Modular Reconnaissance Pod (MRP) have been certified for increased operational airspeeds with simultaneous carriage of a targeting pod, so the F-16s can now perform RECCE, Close Air Support (CAS), and precision bombing in one and the same mission - greatly increasing the flexibility during missions.