The spatial organization of defense MRO: Challenges and opportunities in Europe

The proposed paper deals with the challenge of supporting costly modem defense systems (e.g. aircraft, tank, ship) and asks whether the European level could provide the adequate framework. In a technology-centric paradigm, in-service support (ISS) costs of such systems tend to rise. Indeed, technological breakthroughs increase weapons capabilities, but they are also characterized by higher costs and especially fixed costs. This trend results in two dimensions: a need to co-locate fleets and ISS means, since systems spend a lot of time in ISS, and a reduction of fleet size due to the rising unit cost of systems, which challenges the existing spatial organization of armed forces. In a difficult budgetary context and under constraint of military capabilities, nations both aim to develop modern defense systems and search for minimizing ISS costs. One solution might consist in sharing a number of costs between countries and ensuring economies of scale (pooling and sharing strategy). This option supposes shared ISS activities to be separable from the rest of military activities and raises the following question: can we separate Maintenance Repair and Overhaul (MRO) from core military activities? If so, for a given defense system such logics leads to consider ISS cost as a decreasing function of the number of countries involved in the pooling and sharing strategy. However, this strategy necessarily leads to increase the number of partner countries, which in turn multiplies "distances" (e.g. geographical distance, cultural distance, operational distance). Such distances in managing defense systems generate other costs, potentially increasing with the number of partner countries. Then, for a given system, considering distance in the pooling and sharing strategy introduces ambivalence in the relation between average cost of support and the number of partner countries. Distance complicates the management of defense systems and raises a question, though not new, which is important today: What is the optimal number of countries to involve in a pooling and sharing strategy for the support of modern defense systems? Is it possible to design an optimal scheme when EDA and NATO have raised the question, thus questioning the traditional suggestions of the alliance theory in terms of alliance size or production technology? Should the pooling and sharing strategy be bilateral or multi-national?