Business Model # 2: Watchkeeper
In the dynamic and fluid conditions of the defense business in the second decade of the 21st century, governments and industry and working through a variety of approaches and business models to shape capabilities for US and allied forces. We will present on an occasional basis some of the models and approaches of interest to our team and our readers. One such example is the Watchkeeper program.
Some years ago Thales won a contract to provide for a significant unmanned vehicle ISTAR (Intelligence, Surveillance, Target Acquisition, and Reconnaissance) capability for the British forces. It is an ISTAR capability, not simply an air vehicle contract. But the program has not yet yielded an operational vehicle, and there are pressing needs for ISTAR capabilities for the UK forces in Afghanistan.
Frequently, urgent requirements are funded to provide for such need, but unfortunately too often the short-term need comes at the expense of the longer-term requirements for the forces. In this case, the MOD and Thales shaped an innovative approach to providing both for short term or urgent needs and building the basis for the long-term requirements.
To meet the short term needs, a service contract was put in place whereby Thales provides a data service to the UK ground forces to provide for ISTAR needs. At the same time, the experience gained with the Hermes 450 air vehicle in the service contract is migrating over to the Watchkeeper system, which will be deployed next year. A similar air vehicle and similar systems to those deployed on the “rental vehicles” will migrate into MOD-owned systems.
And, of course, Thales gains the experience with working the service contract, which, in turn, can allow the company to propose similar arrangements with other clients, in Europe and beyond. In a media briefing at the Farnbourgh Air Show, Nick Miller, Business Director for ISTAR and UAV Systems for Thales, UK provided an overview on Watchkeeper and the H-450 program. Nick Miller started by emphasizing that
The current program is an innovative ISTAR service contract; it is a service provision, we at Thales own these air vehicles, operate in conjunction with the MOD, and we take off and land and the MOD does their operations in ground stations…
We have flown 35,000 hours, over 2,000 sorties that is an extensive amount of operational hours. And we have learned a lot experience with Thales and both the MOD and taking that operational experience forward into the Watchkeeper program.
The second is the Watchkeeper program. Clearly Europe’s largest UAV program, providing accurate battle space information, and getting that information to the people who need it fast at a tactical level.
Nick Miller also underscored that
Our fleet of UAVs is based in Camp Bastion. We’re on 24/7, the service is 24/7 coverage, and we provide a majority share of airborne intelligence.
What have we learned? Three key points; one is its utility for multitasks. Yes, troops in contact, it’s probably what it’s planned for, to deal with IED activity, indirect fire, of course, narcotic production on its way out etc. And these guys have used this system to learn and actually maximize intelligence operations.
The second is the robust and extreme environments. Yes, the temperature’s high, but actually there’s dust, there’s wind, there’s four agonizing conditions. And you will see the impact for the Watchkeeper system, which has been adapted to when it goes to the theatre, so that it will meet these requirements.
And again, this is all a service package, Thales working with the MOD, and we had to take the service forward, but we are fully operational, in theatre now, again, 35,000 hours….
When questioned about the “exportability” of the service contract and the potential advantage for Thales, Nick Miller provided the following responses:
Question: The Company has the experience now with doing this type of service contract, so I would assume that you’re interested in applying it elsewhere.
Nick Miller: Oh absolutely. Absolutely. It’s a model that we are now taking forward.
Question: Presumably the pricing of this is always a challenge, because you need the experience on the actual function of the performance. So that’s a valuable experience.
Nick Miller: Very valuable lesson, yes. But it’s a really good model. People want a leasing aspect; people may not want to own the UAVs. People understanding it’s more about the product, it’s more about the intelligence. And that applies to our service does that.
*** Posted on August 30th, 2010