10052018 TetterDefense Express suggest own readers the interview with a famous person - Anthony J. Tether - Director of the Defense Advanced Research Projects Agency (DARPA) (2001-2009) in the USA and now Supervisory Board member in SC «Ukroboronprom» (UOP) in Ukraine. He helps in implementing the UOP development strategy, implementation of reforms, corporatization, and international audit.

 

Anthony Tether, how do you assess the latest initiatives of UOP on 40% staff reduction of the concern, as well as clusterization, corporatization and privatization of defense industry process?

A 40% reduction is a large reduction. But, when new heads come into an organization, they basically try to become more efficient and that usually requires restructuring the organization. I believe that what is going on.

 

However there is always a worry that this is a way to remove people loyal to the previous Director and then replace them with people loyal to the current Director. I have not seen anything that indicates this is the case but we will over time determine if this is the case.

 

The number and type of Companies in UOP are there based upon historical reasons. There are many companies which basically perform the same service where none of them are very healthy. One way to overcome this is to “cluster” these companies where it is believe that the “sum of the parts” will result in a single company comprised of those parts which is stronger and more financially viable.

 

There are also companies whose growth is being hindered being part of a State organization due to the beauraticacies that come with them. It is believed that allowing these companies to be on their own will enhance their capability to obtain larger markets and growth.

 

Now all of the above is based on theoretical assumptions and therefore as this happens, care needs to be taken that the right decisions were made. This will be done by continually checking how this experiment is going in time to make change if the early decisions were premature.

 

What do you think about the initiative of UOP to create in Ukraine the agency GARDA? Is it really necessary for Ukraine? What is your view of GARDA in Ukraine? Is it correct step of UOP to create GARDA on the base of The National Technical University of Ukraine "Igor Sikorsky Kyiv Polytechnic Institute" (NTUU "KPI")?

Yes I know this fact and in fact was involved with its creation.

 

As you know in the USA we have DARPA. It was created because of Ukraine. In October 4, 1957 the world changed. The Soviet Union launched the first artificial satellite designed and built in Ukraine. The President Dwight D. Eisenhower was surprised and asked –“How could it is happen?” He found that the US had a Space Program but it wasn’t on a top priority. As a result, President Eisenhower wanted to create an organization whose job it was to never let the US be technologically surprised again.

 

President Eisenhower formed DARPA as part of the US DoD and had it report to the Secretary of Defense since its main purpose was National Security. DARPA over the past 60 years did more than Military National Security and generated technology which substantially enhanced the Economy of the US like the Internet and many others.

 

Since then many countries in the world have structures like DARPA, with the same purpose, but deferent names. Russia has one, Japan, etc

 

Ukraine has a wealth of people who are great engineers and scientists who need an organization like a DARPA to which they can bring their ideas. The organization needs to be one which reports to the highest levels of Ukraine and which people with ideas will feel comfortable approaching.

 

The Ukraine DARPA was purposely named GARDA which stands for Government Advanced Research Development Agency to assure that people knew it was both for Military and Domestic purposes and is the protector on a sword which protects the hand holding the sword.

 

Through many meetings with many organizations in Ukraine and the Ministers, GARDA was to be a separate organization reporting to the Ministry of Ministers. Initially GARDA would be housed in UOP as a Tenant for its first year or two and able to use UOP’s administrative resources.

 

GARDA as part of NTUU “KPI” is a mistake. NTUU is a great University but in my opinion is not a place that people with what may seems like half-baked ideas will feel comfortable approaching.

 

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- On your opinion, what are the main obstacles for foreign investments in Ukrainian defense industry in present time?

I believe that foreign investors or organizations outside of Ukraine would invest money in Ukraine. But in order to do so, they need to see an Independent Accounting of the Companies Financial Balance sheet as well as an accounting of how the company operates.

 

 - So they want to see the future of defense market…

That is important but an investor needs to know the Financial and Operational health of a company. These two items are very important for investors. This need has created what is called a Supervisory Board for UOP whose major initial purpose is to execute a Financial and Operational audit.

 

The potential investor must be sure that he is not investing in a bankrupt enterprise or in company with illegal activities.

 

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- Today in Ukrainian experts discus question about the export/import liberalization of defense products in Ukraine and the right of MoD to by products directly from the foreign defense company (without specexporter). Is it correct? If yes, what is the possibly risks?

The buying of foreign products is the issue. We have the same problem in the USA. Our department of defense has a lot of restrictions - “buy American”, “buy high quality” and others.

 

The US also has a concern buying from foreign companies. Why? If the US becomes dependent on the foreign products and crucial technology, there is a concern that the country where the company is located at anytime can turn off those sales. In the USA we do it on a case by case basis.

 

So, your liberalization is ok but you should have an independent organization like UOP making sure that it doesn’t lead to dependence of something really important with someone you do not trust.

 

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- How do you assess the initiative of Ukrainian Ministry of Interior to provide authorization for import of small arms for Vector-S LTD without the manufacture dealership agreement?

I think it is very unusual for a company not to buy from the dealer since buying from a dealer is where it could get a better price.

 

Now there may be good reasons. One is that the dealer may have contracts with the retailers it sells the arms that they have a guaranteed territory like Ukraine where they have the only right to sell.

 

But this can and should be checked out.

 

- What recommendations you can give to the Ukrainian authority for effective reform in defense industry?

I believe that the creation of GARDA is an excellent step in the right direction.

 

I also believe that the recent creation of a Supervisory Board overseeing UOP is another good step. This is a Board comprised of 5 people 2 of which are US. I am one of these people.

 

 

As I said earlier, having all companies within UOP go through a Financial and Operation audit by an internationally well know company that does this for US companies is a necessary step. This process needs to be extended to other non UOP companies in Ukraine.

 

This step should be done if you want to have US companies invest in Ukraine.

 

It is widely known that Ukraine engineers are among the best in the world. So we want to use them.

 

The Supervisory Board is a good idea.

 

Unfortunately, it is seems to have become quiet with respect to US member involvement. The Supervisory Board and reform should not be allowed to fail.

 

Asked by Anton Mikhnenko,

Defense Express

 

BTR 3DA

 

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