Aiming for QuAlity

special supplement

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Ryszard Kardasz, CEO of PCO S.A. and of PIT-RADWAR S.A., talks to Andrzej Jonas and Witold Żygulski.

Real paRtneRship

needed

● For many years you have been managing major businesses in the Polish defense industry. To what extent are your companies able to handle contracts for equipment needed by the Polish government?

For five years I was president of Huta Stalowa Wola, which produces many components for Polish artillery equipment. For 10 years I have been president of PCO S.A., a company dealing with night vision equipment, thermal imaging equipment, and many other devices used on the modern battlefield. For a year I have also been the president of the PIT-RADWAR company (former Bumar-Elektronika S.A.). We deal with radar, command and air defense systems.

The companies I represent are in a position to indepen-dently carry out orders associated with night vision equip-ment, thermal imaging and radar equipment. In these areas, we have many years of experience and excellent compe-tences. In the communist era, the armaments industry was based primarily on Soviet technology. The Russians supplied documentation and supervised production. But in terms of radar equipment, Polish specialists managed to create their own technologies and designs that were among the best in the world.

The Telecommunications Research Institute (PIT) was es-tablished in 1934 to carry out radar projects and develop related technologies, including Identification Friend or Foe (IFF) systems. Radwar began to operate in the same area 20 years later, in 1954. It was largely linked to industry, but it also maintained extensive R&D facilities. We have developed a

number of designs for short-, medium- and long-range radar systems. Polish radar systems are capable of identifying not only large aircraft. We even have radar sets that are able to identify a flying artillery shell. We are also able to effectively identify small flying objects, such as drones. Generally, Polish radar systems meet average international level. My company carries out projects financed by the National Center for Re-search and Development (NCBiR)—for nearly zl.300 million. These will be the most modern systems in the world today. The company is carrying out contracts for the supply of radar systems for around zl.600 million net. All of them will go to the Polish armed forces. I will be negotiating a contract for the next three years—involving a total of 77 Poprad systems, consisting of radar, command vehicles, and very short-range Grom missiles. We have also sold two such sets abroad—to Indonesia.

● The most important part of the program to modern-ize the Polish armed forces is the so-called anti-missile shield. Will your companies be taking part in the program?

PIT-RADWAR is completing work on the very short-range Poprad system, which is scheduled to be ready by the end of this year. We have also developed a number of command systems. In terms of radar we have all the necessary expertise and experience. We have launched research and develop-ment work to provide our armed forces with state-of-the-art radar—the most modern available today. Perhaps no one else in the world has such a system as of now.

PIT-RADWAR also wants to secure some radar and optoelectronic technologies for missiles.

PCO, in turn, is able to handle all the nec-essary optoelectronic systems, including those for missiles of the future, if such solu-tions are selected. This technology can be developed, implemented and systemati-cally upgraded by PCO if the need arises.

In terms of the future missile shield proj-ect, so-called technical dialog are current-ly in progress. The military is examining its needs and capabilities, and considering cooperation with domestic and foreign partners. The first realistic time frame, in my opinion, is 2019. The Polish Shield in-volves four levels: very short, short, medi-um range, and long range. The long-range level will not be handled on the basis of domestic capacity at all. The Defense Min-istry has prioritized the medium-range level, which means missiles with a range of up to 100 kilometers. We are talking about radar, an integrated system and the mis-sile itself. The very short range Poprad sys-tem is ready; no further work is needed in this area. Mesko SA is working to upgrade the Grom-missile interceptor system into the Piorun version—with a longer range and perhaps greater accuracy. Most likely these missiles will feature a proximity fuse, something that is not yet available in the Grom system.

In addition to the missile shield project, PCO has a wide range of night vision equipment for the individual soldier as well as for military vehicles and aircraft. The company also offers thermal imaging equipment. From all this, inte-grated systems are created for the modern battlefield.

Finally, PCO today is also the leader of the Future Soldier Program consortium focusing on equipment for the sol-dier of the future. For this system it will primarily supply all the optoelectronic sensors and integrate the entire sys-tem. Negotiations on the definitive contract are in prog-ress; I think the first units of the Future Soldier Program may appear at the end of 2016 or in early 2017.

● Huge funds have been set aside for the program for the modernization of the Polish armed forces...

There is no single path to modernizing the army. Some-times Polish companies are able to carry out orders from

the army in full, but at other times it hap-pens that specific components need to be purchased abroad, and then Polish companies do not expand their own production capacity and research com-petence. Certain types of equipment are simply too expensive and require too long a wait for the end result. There is no point in trying to domestically produce something for which the army would have to wait 20 years. We must buy such weaponry and equipment from our partners.

It is therefore difficult to protest against the purchase of multi-role aircraft for the Polish air force, for example, because we will not manufacture such a jet on our own in a timely fashion.

However, when making all these big purchases for the military, it is necessary to give Polish industry a chance to profit from this as well. I’m talking about issues such as the supply of new technologies or after-sales service. After all, equipment needs to be serviced and repaired, and we should have also the chance to modernize it as far as that’s possible.

We have many areas in which Polish arms plants are very competent. In such a situation, orders from the armed forces should go to these domestic companies.

Practically speaking, average defense spending in Poland is lower than the 1.95 percent of GDP enshrined under law. There were years when the figure was only 1.6 percent. Of the zl.30 billion we are theoretically supposed to spend on the army a year, roughly 20-25 percent is designated for ar-maments.

As a man who has been dealing with arms and military equipment for years, I always expected that long-term plans to modernize the army would be drawn up and that these plans would be consistently implemented, regardless of what political party happens to be in power. In recent times, there have been changes for the better when it comes to planning the development of the Polish armed forces. A set of priorities has been identified; and we know in which di-rection the changes should be heading.

In my opinion, the Defense Ministry should have its own R&D budget without intermediation from institu-tions such as the Scientific Research Committee in the past or the NCBiR today.

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In terms of the future Missile

Shield project, (...) the military is examining its needs and capabilities,

and considering cooperation with

domestic and foreign partners.

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● What are the main problems for the defense indus-try when dealing with the military?

When in 1997-2002 I was president of Huta Stalowa Wola I worked hard to secure a government order for designing a Polish armored personnel carrier. At the time, we were devel-oping many modern wheeled chassis systems, often with far more complicated mechanisms than those used in military vehicles. Unfortunately, the procedure at the time involved a quick invitation to tender, and the need for almost immedi-ate presentation of a fully developed or—better yet—already implemented prototype. There was no time for research and development work. So we were not given a chance.

In most cases, such an approach eliminates Polish pro-ducers from the race for orders from the Defense Ministry. Polish science also loses out because new designs are de-veloped in close cooperation with research institutes. In this way, we are deprived of the chance to create our own, valuable technology.

I also remember another example from when I worked at Huta Stalowa Wola; I got the opportunity to develop the

Krab artillery system. A deadline was set, I got some money and could conduct research and go about building the sys-tem. I was even able to choose a foreign partner.

Unfortunately, in many cases, projects ordered by the Defense Ministry were suddenly interrupted when, for example, new people took over at the ministry. This is what happened with the Krab; a new minister came in from another political party who did not want to benefit from the experience of his predecessors and had other ideas. The Krab project was shelved for five years. It’s hard to describe that as anything other than lamentable. We had built at HSW SA a team of excellent professionals, experts on electronics, computers, aiming systems, and experts in other fields, without whom modern artillery cannot exist. All for nothing. And it is no secret that if you shelve a project, even a very good one, for several years and then try to get it going again, you’ll encounter all kinds of problems: the experts will be working on other projects; the plant will have to organize everything from scratch; the consequences of bad decisions will be severe and long lasting.

Over my decade of work at PCO I could—at my own risk—carry out some of my own projects, because they were quicker in terms of the time frame involved and required less financing than projects such as the Krab system.

As an industry we are not in a comfortable situation. Every year we have to fight for survival on the market. To do that we need to have excellent contact with custom-ers (which means the armed forces) who determine their needs precisely and on an ongoing basis. I would put this permanent dialogue very high on our list of needs.

It should also be pointed out that military technologies can be used for civilian products. We have one such tangi-ble example at PIT-RADWAR, where we are now launching production of equipment for non-invasive measurement of human blood glucose level. This glucose meter is based on microlocation technology used in radar systems.

We expect a partner-like approach of the kind that I con-stantly observe in defense sector practice in countries such as Germany, France or Italy. These countries’ good arms plants operate in an incredibly comfortable environment by our standards. Often, they not only have a five-year pack-age of government orders, but also a 10-year time frame for research based on a well-defined projection of what the army will be needing in the next decade. The CEO of such a company has no problems at all when communicating with military partners and customers.

What the defense industry expects from the military is cooperation based on partnership and mutual trust.

PCO today is also the leader of the Future Soldier Program consortium focusing on equipment for

the soldier of the future. For this system it will primarily supply all the optoelectronic sensors

and integrate the entire system.

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In 1994 it was transformed into Przemysłowe Centrum Optyki Spółka Akcyjna, a company wholly owned by

the Treasury. In September 2002, 80 percent of the com-pany’s share capital was transferred to Przedsiębiorstwo Handlu Zagranicznego Bumar Sp. z o.o. (now Polski Holding Obronny Sp. z o.o.) and a process of transferring some of the shares to the company’s employees began. In 2011-2012, the company led the Dywizja Żołnierz divi-sion of the Bumar group. Today PCO S.A. is the leader of Dywizja Elektronika, one of the main groups in Poland’s defense industry. On Dec. 4, 2013, the company’s name was changed from Bumar PCO S.A. to PCO S.A.

PCO S.A.’s first projects involved the development of the Merida fire control system (together with the Military University of Technology in Warsaw), the Bobrawa laser warning system, and the Portland artillery rangefinder. In the early 1980s, the company launched mass production of its Ceryt range of products. In 1983-1994, it followed up with full-scale manufacture of the Radomka and Liswarta sighting devices. In 1985-1988, the company exported its first military products. The first foreign buyer was Roma-nia, which purchased 78 Bobrawa sets. In the following years, intensive work was conducted on new products, including those for new types of combat vehicles for the Polish armed forces, chiefly the T-72 tank. Especially for this tank, a new fire control system called Drawa was de-veloped. The company also developed the Obra vehicle self-protection system, which was first used in the T-72 tank, and is currently installed—in the Obra-3 version—in the Rosomak wheeled armored vehicle. PCO S.A. also branched out into new areas of design and manufactur-ing. It developed and began producing a range of sight-

ing and targeting devices as well as night vision binocu-lars. In 1988, work started on the Dobrzyca night vision goggles, the first such product in Poland. Over the next several years, the company specialized primarily in night vision technology and steadily developed its thermal im-aging systems.

From the very beginning PCO S.A. enjoyed the status of a company working for national defense and state se-curity. In 1997, the company launched a quality control system meeting the requirements of the ISO 9001:1996 standard. In 2000, PCO S.A. secured a certificate of con-formity with the AQAP-110 quality standard—needed to handle military orders, both domestic and foreign. Since 2003, the company has had an Internal Trading Control System meeting the requirements of the law on foreign trade in goods, technologies and services of strategic importance to national security and the maintenance of international peace and security.

Today, PCO S.A.’s core business is in the production and sale of optoelectronic observation and sighting devices based on laser, night vision and thermal imaging tech-nology for the military and other uniformed services. In addition to production, the company provides repair and maintenance services. PCO S.A. also conducts research and development work. For many years, the company has worked with Polish universities and research centers, such as the Institute of Optoelectronics of the Military University of Technology in Warsaw, the Air Force Insti-tute of Technology in Warsaw, the Military Institute of Armament Technology in Zielonka near Warsaw, and the Military Institute of Armor and Automotive Technology in Sulejówek near Warsaw.

Vision is keyPCO S.A., a company drawing on the tradition of the defunct

Polskie Zakłady Optyczne (PZO), was established in 1976 under

the name Przemysłowe Centrum Optyki w budowie.

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The institute had three departments. In 1938 the institute employed 350 people, including 200 re-

search and technical staff.PIT’s major achievements in those days included the

development of magnetrons (high-powered vacuum tubes), very advanced for their time, and their applica-tion in radio communications, and also the production of quartz generators used by radio stations, eliminating the need to import many costly devices.

Television became an important area in the institute’s operations. Research work began in 1935 and was already well advanced when World War II broke out on Sept. 1, 1939. In 1939 PIT completed work on an experimental transmitter that operated for a few months.

In terms of control and measurement equipment, the institute designed and made many specialist devices that had been purchased abroad until then, including grid dip oscillators, amplifiers and universal cable testing devices. PIT also conducted advanced work involving the production of frequency stabilizers.

In the early years after the war, PIT worked on rebuilding

telecommunications equipment as quickly as possible, ran courses in telecommunications and undertook publishing activity. Television became one of the institute’s main re-search priorities. As a result, the first public presentation of television equipment and television images in Poland took place on Dec. 15, 1951.

Another major research area was telephony, for which the institute developed a number of original devices and ele-ments for control and measurement apparatus.

After a hiatus during the war followed by postwar recon-struction efforts, 1949 saw a joint project by PIT and the War-saw University of Technology’s radar unit that produced the first laboratory model of a radar using U.S. army surplus ele-ments and equipment abandoned by the Germans.

With the economic development of the Polish coastal re-gion and the simultaneous development of the Polish Ocean Lines company and the Polish Navy, demand appeared for research into radio navigation and radio communication technology. A PIT branch in Gdańsk was set up in 1949. From the beginning this branch focused on marine radioelectron-ics, including radio communication and radio navigation.

a pedigRee stRetching Back 80 yeaRsThe State Telecommunications Institute (PIT), later renamed the Industrial Tele-communications Institute, was founded in spring 1934 on the basis of the Radio Engineering Institute, which had been in existence since 1929, and the Telecom-munications Engineering Laboratory.

The Liwiec weapon locating radar

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A turning point in the Institute’s development and in the development of Polish radar technology came with the founding in 1951 of the Design Laboratory at the Kasprzak Radio Factory, to which a team of employees from PIT and the Gdańsk University of Technology’s radio technology unit were seconded, all of them specializing in microwave and impulse technology. The laboratory was tasked with de-signing a prototype of Poland’s first surveillance radar (the task was completed in 1952) and creating a unit capable of adapting Soviet licenses for radar equipment.

As the Cold War intensified, the authorities decided to es-tablish the RAWAR Warsaw Radio Factory, which was to be Poland’s main manufacturer of radar technology. In the 1950s this factory made several types of radar under Soviet licenses. This was followed by a period of close cooperation with PIT, resulting in the implementation of the first wholly Polish radar stations, the most advanced of which was the NYSA-C radar.

The 1960s and 1970s were a time of intensive develop-ment of both large radar stations for the Polish Air Force and smaller marine radar systems. Hundreds of completed op-erational systems were produced.

The 1970s were a significant period in Poland’s postwar economic development. The “opening-up policy” of the time meant that numerous licenses appeared on the market and consequently new products as well.

The rigorously followed rule that military products could not contain parts and materials from non-Eastern bloc coun-tries inevitably meant that Polish systems lagged behind those of the West.

On the other hand, being cut off from Western technology stimulated work on local solutions. In 1977 the successful team-up between PIT and RAWAR resulted in the formation of the UNITRA-RADWAR Professional Electronics Research and Production Center (or CNPEP RADWAR) that combined manufacturing and research under one management team. PIT became a part of the center and handled the develop-ment side of its operations.

The first functional product in terms of new-generation ra-dar was the N-23 shore radar installed at the Polish Navy’s for-tified observation sites. The N-2 radar family was produced until the late 1980s, when production of the N-31 medium-range radar was launched together with the N-41 altimeter that worked with it. This combination gradually became the basic radar equipment system used by the Polish armed forces for many years.

After PIT was separated from CNPEP RADWAR, both units continued their work—PIT concentrated more on the Air Force while CNPEP RADWAR focused on Land Forces.

In the late 1980s PIT developed Poland’s first long-range, three-coordinate radar whose parameters were adjusted to meet NATO requirements, and which was designed to be used at stationary posts that were part of the NATO Back-bone network.

In the new century the Institute developed the TRS-15 mobile medium-range radar for the air force, for monitoring areas not covered by other medium- and long-range radar systems. Meanwhile, CNPEP RADWAR developed short-range anti-aircraft defense systems.

In 2001 PIT began working on the Liwiec project. This mobile radar reconnaissance system is designed to operate within an integrated artillery command system and also with single artillery units. In 2009-2010 three such systems were deployed with army artillery units, and one of them served in Afghanistan.

PIT and RADWAR merged again in 2011, this time under the joint name Bumar Elektronika SA.

Today the company, which employs over 1,300, is one of the most serious contenders for projects that are part of a wide-ranging program to modernize the Polish armed forces, especially the modernization of anti-aircraft and anti-missile defense systems.

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The war years had proved the all-round usefulness of the radar when it first appeared as a practical piece of

equipment. During the Cold War arms race, military radar was a very important area of rivalry, which helped spur the development of the radar industry.

Five production departments were launched in 1955 and the facility employed 1,870 people. The first product to be manufactured here was the SON-4 radar for artillery fire control, made under a Soviet license; it was a copy of the American SCR-584 radar that was reconstructed in the Soviet Union from documentation provided by the United States when the two countries were allies in the war against Germany.

The company’s first export success was the Nysa-B/C radar set. The first harbinger of this success was a contract signed in 1957 for deliveries to Syria, implemented the following year. In 1958 a contract was signed, and imple-mented by the end of the following year, for the first three test sets for Indonesia. The next decade saw the delivery of 12 sets for use in tropical areas of the world.

Next to the main line of development—military ra-dar—as of 1956 work began at WZR on marine naviga-tion radar systems. The first Polish navigation radar, the RLM-61, was built as early as 1958. By the end of the 1950s WZR had produced several dozen radar systems for Polish merchant vessels.

After tests were completed on the RLM-61 radar and necessary improvements made, serial production of the modernized version began in 1959. Production expanded over the next decade. This was also when tests began with the aim of using the RLM-61 series radar in the protection of Poland’s sea border by the Border Protection Forces.

At the same time, design work continued on a new surveillance radar of improved parameters. Analyses were conducted and the L band (approx. 1300 MHz) was cho-sen as being optimal for medium-range radars. This work yielded a prototype of the Jawor radar in 1961. This was a very advanced device compared to its predecessors, with several major technical innovations.

The 1970s were a time when many licenses appeared on the market. The strictly followed rule that military products could not include elements and materials from capitalist countries meant that Polish technology inevita-bly lagged behind Western achievements in this field.

The prototype of the Narew radiolocation station was built in 1975; it was specially designed to detect low-flying objects and involved advanced digital technology systems. Narew radiolocation devices represented many different levels of innovation. They were based on compo-nents from the Nida altimeter. A large part of the receiver elements were made using electron tube technology, but at the same time this equipment included the first attempt

monitoRingsky and sea

The history of CNPEP RADWAR (formerly WZR RAWAR) officially began in May 1954, but the decision to establish the company was made some years

earlier when the Polish authorities decided to build a national industry to supply the Polish armed forces with radar devices. The postwar period was a good time for the

development of radiolocation technology.

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in the history of Polish radar to use digital signal process-ing. The design of an analog-digital signal processing block (AC BOS) was commissioned for this device. Its introduc-tion was a breakthrough event. The block and its elements were used to train many designers and military specialists, leading to a strong expansion of digital technology in ra-diolocation. In its consecutive versions the AC BOS system found application in the early 1980s in improved, export versions of the Jawor and Nida radar stations as well as the new generation of Avia-C/D radar for air traffic control.

The 1980s were a time of rapid development in the production of a new category of military equipment di-rectly related to radar—automated command and con-trol systems. This is the name used to describe IT systems that mediate in radar information processing and transfer to command posts where decisions are reached on how to treat any detected airborne objects.

The Ministry of Defense’s research and development program launched at the time was given the codename Dunajec. Production of the RPT-11 and RPT-21 systems began in 1978. These were sets of stationary devices for installation at radiolocation stations of lower and higher level, respectively. The system received visual data and synchronizing signals from several radars, generalized the information received, traced the routes of objects under observation and transmitted them to a higher level.

Special deliveries based on Soviet licenses formed a separate group of automated command equipment. In the late 1970s the Warsaw Pact countries decided to build an automated field command system as part of a broad international collaboration effort. The system’s name, PA-SUW, was based on the Russian acronym. Under the divi-sion of tasks among Warsaw Pact allies, Poland was tasked with the production of three command and control ve-hicles that were part of a much more extensive system. About 25 sets in all were made, the majority of which were delivered to Warsaw Pact allies.

The disintegration of the communist bloc and the War-saw Pact and Poland joining NATO were all factors that left the entire Polish defense industry in a situation that no one could have predicted in 1988. These changes caused the defense sector serious difficulties but also included elements that promised to stimulate development.

A new economic policy, founded on the real value of the zloty, and rigid financial discipline affected budget spend-ing the quickest in such areas as arms and military equip-ment purchases. The collapse of the Warsaw Pact and the Soviet Union reduced international tensions as well as re-ducing the demand for weapons. The anticipated acces-sion to the powerful NATO alliance had a similar effect.

The Ministry of Defense limited its purchases from the defense industry. This became a trend, contrary to the

The very short-range Poprad system

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expectations of many managers of arms factories who had counted on this being a temporary situation. How-ever, while reducing the budget for buying equipment, the ministry did not reduce spending on research and development. Extra opportunities were provided by the process of integration with NATO. Joining a new alliance required adjusting existing equipment to joint opera-tions, in other words ensuring “interoperability.” Radwar did excellently in taking advantage of this niche, and that was how the production diversification process began.

The 1990s were a time of continually decreasing pro-duction of the company’s earlier flagship products – radar systems – but with optimism stemming from two huge R&D programs that Radwar carried out for the ministry as the main contractor. The first one involved comprehen-sive equipping of the Polish armed forces with an Identifi-cation Friend or Foe (IFF) system compatible with NATO’s, codename Supraśl, while the other was the Loara anti-air-craft artillery system. Besides these two pillars, the com-pany carried out several other programs that enabled it to stay in good financial condition and maintain its leading position in the defense industry.

Radwar was transformed into a joint-stock company in late 1994, incorporating the following facilities: Rawar, Zurad (in Ostrów Mazowiecka), Profel (in Szydłowiec) and Zanten (in Kobyłka).

After 1990 production orders were few. Ideas for the modernization of already manufactured devices emerged, a natural reaction to the drastic cuts in the Ministry of De-fense’s budget. At the same time, the situation was quite good as regards orders for research and development work.

Poland’s accession to NATO gave momentum to the Supraśl project. Naturally the first area of NATO interoper-ability was Poland’s air defense system, which needed to be compatible with the NATO air defense system. That is why a few years before Poland officially joined the orga-nization in 1999, intensive consultations were held under the Partnership for Peace program and the first stages of air space integration were completed. For obvious rea-sons, the most urgent matter involved completely replac-ing the previous Soviet IFF system with a new, NATO-com-patible one. Designing the equipment locally was not an option due to the deadlines for completing consecutive stages of interoperability with NATO forces, so the natural solution was license support from a Western company with the necessary experience in this field. April 1993 saw the signing of the first license contract with France’s Thomson CSF-CNI for Radwar to manufacture interroga-tors and transponders from the IFF Mk XII system.

The Supraśl program is a model example of a well-uti-lized opportunity provided by Poland’s NATO accession. It was one of the pillars of the company’s development in the tough times of economic transformation in the 1990s. Another example of a NATO-related opportunity well used, though on a lesser scale, was the Kosówka project.

In 1997 the Ministry of Defense launched a project to adjust radar stations working in the air space control sys-tem for working with the Air Sovereignty Operation Cen-ter (ASOC). The task was to outfit N-31, N-11M and N-12 radars with digital interfaces enabling data on detected airborne objects to be sent to the information collection center for further use in creating a Recognized Air Picture (RAP) that is made available to all interested allies.

Apart from Supraśl, another project worth mentioning for its contribution to the company’s development is the Loara project involving an anti-aircraft missile/artillery system (PZRA). The company was the main contractor carrying out the project from 1992.

PZRA, comprising a set of anti-aircraft missiles or can-non placed on an armored chassis, was initially treated by the Ministry as a task for a manufacturer of heavy

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equipment. Such a contractor was chosen but encoun-tered serious problems already at the stage of defining the requirements for subcontractors handling electronic systems such as sensors and fire control computers. Suc-cess became possible when the role of main contractor was given to a manufacturer of professional electronic systems, namely Radwar.

The conceptual design was ready in June 1992, which does not mean the work took so little time – the compa-ny had begun work in advance, counting on receiving an official order. The conceptual design was approved and in November a contract was signed for R&D work on the Loara system. The next year was a time of intensive work on the preliminary design and analyses conducted at Rawar and by numerous cooperating partners on individ-ual subsystems and the whole system’s potential capabili-ties. Meanwhile, in February 1994 the ministry suspended the contract and demanded that accounts be settled for work performed and capital goods purchased; the reason was a ministry budget cut.

After many months of efforts, company managers were able to get the government to adopt a strategic program

called “Advanced technologies for developing a system of anti-aircraft defense for armed forces and objects” and encompassing the production of the Loara system and Grom short-range missiles. Thus, after a hiatus of 14 months, in September 1995 the suspended contract was reactivated.

After the construction of a prototype and testing, in February 2003 the Loara artillery system received final certification as equipment suitable for the armed forces.

The Loara project gave rise to many new developments. The first product directly originating from the Loara pro-gram was the S-60 anti-aircraft artillery system, codename Blenda. The idea to build the Blenda system came from the desire to give a new lease of life to 57 mm anti-aircraft guns (the well-known S-60 cannon, widespread not only in Poland) by fitting them with an automatic fire control system that radically improved their effectiveness.

The Blenda project was carried out in 1994-1997. In 1997 a prototype successfully passed government tests conducted by the Anti-Aircraft Defense Training Center in Koszalin and supervised by a state commission appoint-ed by the Ministry of Defense. The first user of the Blenda system was the Navy, which conducted extra operation tests on the prototype in 1999. The Navy also ordered the first manufactured system.

A summary of the 1990s should also mention the de-velopment and production of the Łowcza-3 automated command vehicle. Work on automating the anti-aircraft defense command process had begun back in the 1970s. A tracked version of the Łowcza-3 automated command vehicle was developed as an original project in early 1990, but after positive test results in 1993 its production launch was halted when the ministry decid-ed the system had to be compatible with the new mili-tary radio communications network that was starting to be developed based on the PR4G family of radio sta-tions made by Radmor of Gdańsk under a license from Thomson-CSF. It was not until 1998, at the production launch stage, that the Ministry of Defense presented the new requirements for an anti-aircraft defense auto-mated command vehicle.

The Łowcza-3 prototype passed government tests in 1999. Five vehicles were made by 2003. Apart from the tracked version, there is also a wheeled version of the ve-hicle based on the chassis of the Star-944 truck. Making this equipment available to the land forces led to growing user interest in the modernization of anti-aircraft systems that were in active service.

The Loara project led to further products later on, such as the MMSR, Soła, Poprad and Rega.

The Loara anti-aircraft artillery system

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The top priority in modernization plans is the country’s air defense system. Below, PPO experts present their assessment and opinions on the in-volvement of Polish companies in these efforts.

The operational significance of a modernization pro-gram should determine the level of the PPO’s commit-ment to its implementation, of course accounting for the industry’s capacity in terms of production, technology and design of a given type of armaments. Production re-sults must be guaranteed and any equipment must meet the military’s expectations. The results of such a model of government-military-industry collaboration will bring measurable security benefits.

The program for modernizing Poland’s air defense sys-tem includes new sets of anti-aircraft missiles of medium, short and ultra-short range. Taking advantage of experi-ence acquired during the implementation of numerous programs in cooperation with international industry, the Polish Defense Holding (PHO) has developed a strategy for supplying the armed forces with new anti-aircraft and anti-missile batteries taking into account the ambitions of Polish manufacturers.

Analytical, conceptual and research-and-development work has continued for three years, financed from funds provided by companies from the PHO group themselves and from the National Center for Research and Develop-ment (NCBR). Simultaneously, a search was conducted for a foreign partner, and organizational changes were made in the companies. Modern management systems were put in place and managerial and design staff received training.

The search for an international partner is the result of assessing Polish industry’s capacity for building medium- and short-range anti-aircraft missiles.

The OPL Consortium (or “anti-aircraft defense consor-tium”) was established on March 19, 2013 in consulta-tion with the Defense Ministry. Its aim is to develop and provide an advanced air defense system for Poland by Polish industry and with support from a foreign supplier of missile technology. The technological and HR poten-tial of companies in the consortium guarantee that the key objectives of the Air Defense operational program – building medium-range anti-aircraft missile batteries and then short-range anti-aircraft missile batteries – will be achieved.

How this potential is actually utilized will depend on the choice of international partner to work with Polish industry, and what that partner will offer. This decision will be of key importance to the future of the PPO since it will enable the platform to join a group of manufacturers of advanced weaponry and transform it from a supplier of parts and components into a shareholder and equal partner. It will open the way to many years of cooperation in research and development of new types of weaponry and guarantee the expected technological progress. But it could also minimize the expected benefits and thus erase all the positive aspects for the Polish economy and the defense industry, limiting companies’ capacity to op-erations in maintenance, perhaps assembly, depriving industry of opportunities for development and, in the case of more serious service needs or technical problems,

The Polish Defense Industry (PPO) platform is a component of the national security system and its value is proportional to its role in the modernization of Poland’s armed forces.

aiR defense and the Role of polish industRy

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condemn users to a long and costly process of obtain-ing support. This opinion stems from observations of talks held so far with prospective partners – suppliers of missile technology.

In the PPO’s view, more than 50 percent of the produc-tion of medium-range anti-aircraft and anti-missile bat-teries and over 70 percent of production of short-range anti-aircraft missile batteries, including the missiles for both types of batteries, should be based in Poland. This condition is the key to making rapid technological prog-ress.

The benefits of modernizing the air defense system:• the Polish government’s credibility in terms of fulfilling

its joint security commitments undertaken at the NATO summit in Lisbon and Chicago

• increasing Poland’s military importance in NATO struc-tures• playing a leading role in the development of the NATO

eastern flank’s anti-missile and anti-aircraft defense ca-pability, including by creating regional solutions with the Visegrad Group countries

• gaining defense capabilities in combating ballistic mis-siles and cruise missiles

• creating an air defense system with the capacity to co-operate with NATO’s anti-missile defense system in Eu-rope

• security of supplies and logistic support, especially in situations of conflict

• the appearance of new devices developed under this program for use in other military formations

• keeping key technical, organizational and deadline-re-lated decision-making in Poland

• ensuring cyber-security by developing appropriate soft-ware and cryptography systems

• freedom in deciding on missile and spare part inven-tories

According to PPO experts, the operational safety of equipment is a special requirement that has to be con-sidered when making a decision on how and where to obtain the equipment that will be the foundation of the country’s defense system in times of danger and create conditions for efficient management of the military part of this system. The armed forces must be guaranteed continual deliveries in case of loss or damage of equip-ment. Fulfilling the operational safety requirements requires the state to maintain control over the system, something that can only be guaranteed by a national

business organization controlled and overseen by state/government bodies.

Advantages related to equipment operation:• software modernization and updating• maintenance/repairs in Poland and abroad• shortened overhaul duration• development of Poland’s training base• training cost reduction thanks to training provided in

Poland by Polish instructors• ease of introducing changes and modernization during

a product’s life span• reducing the necessary spare part inventory• shortening the supply chain for parts and components.

It is important for the armed forces to have a direct in-fluence on the timeframe of maintenance inspections, software updates, overhauls and modernization. Having this work done by Polish industry decidedly reduces costs and makes equipment operation more efficient. It enables purchases of missiles and spare parts to be shaped flexibly to accommodate the defense ministry’s financial capaci-ty. The ministry thus has a direct influence on maintaining the production capacity of companies, which guarantees prompt attainment of the system’s full combat capability and quick replenishment of missile inventories.

Benefits for economic development:• stimulating economic activity in areas with high unem-

ployment (most armaments factories are based in such areas)

• benefits from acquiring export capacity in advanced technology, resulting in increased exports

• increased competitiveness of Polish companies on Euro-pean and world markets

• possibilities for promoting Poland’s industry and econ-omy

• developing Poland’s own technologies and acquiring new ones

• obtaining a large return on investment by the govern-ment

Benefits for the Polish budget:• limiting the outflow of funding to other countries.

When building the air defense system according to the PPO’s proposals, about zl.10 billion would have to be spent on foreign supplies, from a total of zl.26.5 billion earmarked for modernization of all of the system’s tiers. If the PPO’s role is reduced to that of a maintenance service provider

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for a foreign supplier and of a manufacturer of the simplest parts, foreign deliveries would claim about zl.21 billion.

By entrusting the leading role in carrying out the pro-gram to a Polish consortium, the aim is to make sure that at least 50 percent of the funds designated for medium-range missile batteries (Wisła) and about 70 percent of those to be spent on short-range batteries (Narew), remain in Poland.• limiting the outflow of funds abroad in product operation

cycles.It takes around 30 years from acquiring a product to

the end of its operation. During this time, the product is subject to overhauling and modernization. The modern-ization cycle for such advanced systems is every three to five years on average, while overhauls are carried out ev-ery eight to 12 years. NATO analytical materials presented at various meetings and conferences define a product’s total life span cost as follows: research and development – 10 percent, equipment purchase costs – 30 percent, technical operation costs throughout the product’s life span – 60 percent. The costs of operation are double the purchase costs. What percentage of these costs flows abroad and to what extent these funds will stimulate the Polish economy depends on the size of PPO involvement in carrying out the program and thus in building opera-tional independence.

If the predominant role is given to the PPO, about 75 percent of the costs of operating the medium-range bat-teries will stay in Poland, and for short-range batteries this will be almost 100 percent. Manufacturing missiles and missile equipment domestically and their logistic security will be of key importance to the financial system.

Analyses of predicted tax reimbursements, ZUS social security payments and other payments made to the na-tional budget and local budgets suggest it will be pos-sible to obtain a tax refund of about 35 percent of the amount spent when the entire program is implemented with a Polish consortium in the leading role and with the participation of domestic capacity.

Obtaining missile batteries with a predominant role for Polish businesses in this process will also result in a lower overall price of manufacturing the system and making it operational, due to lower labor costs in Poland compared with highly advanced countries offering similar products.

Production in Poland of selected components according to the foreign partner’s documentation will be cheaper and at the same time, thanks to cooperation with that partner, all technical and quality parameters will be maintained.

Launching the Polish air defense modernization pro-gram will cause large sums to be spent from the budget over the course of many years or even decades on ob-

taining missile batteries and keeping them efficiently in service. This spending will have an impact on economic development and thus on jobs. The number of new jobs created will depend on where equipment is purchased. The degree of Polish involvement will help increase em-ployment in Poland—or contribute to the creation of new jobs in other countries. Three degrees of Polish in-volvement were considered in the analysis.

First degree: the entire system is purchased abroad apart from chassis/undercarriages, power generation sets and selected communications components. The estimat-ed value of the “Polonization” package is 5 percent.

second degree: “Polonization” of the basic devices of which a missile set is composed does not exceed 20 percent, except communications equipment, which is 90 percent made in Poland. The total estimated value of second-degree “Polonization” is 14 percent.

third degree: proposed by the PPO – most of the basic devices are made by the Polish defense industry. Production involving missile technology is carried out

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in cooperation with a foreign supplier. In this case, it is assumed that medium-range missiles will be 15 per-cent “Polonized” and short-range missiles will be 60 percent “Polonized.” Ultimately, the ambition of the Pol-ish defense industry is to increase this share. The total estimated value of third-degree “Polonization” exceeds 50 percent.

Benefits related to the transfer and commercial-ization of Polish technologies:• commercialization of technologies developed under

the program and adapting them to civilian applications• expansion and modernization of company scientific re-

search facilities and research institutions involved in the program

• increased value of companies and their stronger mar-ket position following the implementation of advanced technologies in terms of manufacturing anti-aircraft de-fense equipment

• the possibility of conquering new markets thanks to the advanced nature of the products and the comprehen-sive nature of the offered range.Due to the program’s magnitude and complexity, its

implementation will not be limited to production compa-nies within the OPL Consortium. It will require the start-up of an entire chain of companies acting as subcontractors. Analyses suggest that the program will involve practically all of the major PPO companies as well as leading univer-sities and scientific institutes.

The PPO platform, currently being consolidated within Polska Grupa Zbrojeniowa (Polish Arms Group, PGZ), reports annual sales of about zl.5 billion. This sum does not reflect the PPO’s full design and production capac-ity. If the anti-aircraft defense modernization program is anchored in Polish industry, a 60-percent “Polonization” package will yield an extra zl.1.5 billion annually over a period of 10 years. This corresponds to 30 percent sales growth and means more effective utilization of the PPO’s available capacity.

The PPO platform boasts technological achievements in all fields except short- and medium-range missiles, namely in areas such as sensors, communications equipment, automated command and control equip-ment, contamination protection, and transport systems. These achievements qualify Poland as a supplier of mis-sile systems. The extent to which these achievements are utilized will determine the program’s benefits for the Polish economy and the defense industry’s devel-opment, while also influencing the costs of the system’s future operation. The program’s implementation will produce results in terms of the development of missile technology and contribute to technological progress in the industry.

Carrying out such a large technical modernization program with funding guaranteed under a law passed by parliament ensures the necessary stability in terms of financing and production continuity. This is another ele-ment that, thanks to such stability and predictability, en-ables orders to be accumulated and production costs to be reduced.

Benefits related to the development of semi-conductor technology for radar needs

Advanced radar systems rely on cutting-edge semi-conductors thanks to which antennae can be composed of a large number of semiconductor amplifiers based on GaN (gallium nitride) technology. This technology is being developed by Polish institutes while manufactur-ers linked with them sell these materials successfully all over the world. Obtaining power transistors based on this technology will enable us to build radar stations of a technological standard comparable to that offered by top global leaders.

Benefits related to building our own command and data transmission systems

Automated command systems have been developed in Poland since the 1970s. This work involves military insti-tutes and civilian universities. A range of original Polish so-lutions was developed even before Poland joined NATO, and after accession cooperation in this area was devel-oped successfully with European institutions and NATO.

Communications systems designed in Poland are of world-class standard and require no technology transfer. Wasting this development will cause the degradation of an important segment of military and civilian communi-cations.

Missile technologies require specialist knowledge from many technological fields. In Poland, we owe the devel-opment of this knowledge to work on an ultra-short-range missile, conducted by both military and civilian universities. The results of this work have been applied in the modernization of short-range anti-aircraft missile batteries. High-energy material technologies purchased or obtained as part of offset agreements are successfully being developed in cooperation with scientific research centers. Cooperation with a foreign partner will help ab-sorb new knowledge in this area and lead to developing our own short-range missile.

The strategy proposed by the Polish Defense Holding and the OPL Consortium for building Poland’s anti-aircraft defense system based on Polish industry means boost-ing Poland’s independence in defense and consolidating Poland’s position on the international arena. Pursuing this strategy will bring measurable benefits to state security, the economy and technological development as well as ensuring the effective functioning of anti-aircraft and an-ti-missile missiles in the Polish armed forces. With support from a foreign partner, the PPO has the potential to fulfill this task within a satisfactory timeframe.

Implementing a program for modernizing the air de-fense system with a leading role for the Polish defense industry will reduce the amount of money flowing out of the country from zl.21 billion to zl.10 billion, where the total cost of the system will be zl.26.5 billion, compared with direct purchases; in the case of the Wisła batteries the reduction will be from zl.14.25 billion to zl.7.5 billion, with the cost of the batteries at zl.15 billion.

The decision on where to obtain anti-aircraft and anti-mis-sile missiles will become a benchmark of the PPO platform’s role in production, but it will also be a decision defining the future of the PPO in terms of technological development and competitive edge. This decision will have a crucial influ-ence on the PPO’s position on arms trade markets.

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