Gerard P. Craughwell: Avoiding single-supplier defence risk

Go raibh maith agat, Minister, welcome to the House. Public procurement is one of the most powerful instruments of public policy in Ireland. Nowhere is it more evident than in the field of defence. The choice we make about where we source our equipment, our technology and our support systems shape not only our economic landscape, but also our national security and our ability to act within confidence in an increasingly uncertain world. So it'll be no surprise to you that I'll be focusing mainly on defence today. For a country like Ireland, militarily non-aligned, yet carrying growing responsibility in maritime security, cyber security and EU mission defence procurement, it's not simply a matter of buying equipment. It's about ensuring that what we buy remains reliable, sustainable and under Irish control throughout its entire life cycle. One of the greatest risks we face is over-reliance on a single supplier country. Such reliance can arise for understandable reasons, efficiencies in training, maintenance and interoperability, long-standing diplomatic relationships or the convenience of dealing with a familiar partner. But when too much of our capability comes from one external source, we expose ourselves to vulnerabilities that are strategic, political and economic. The first vulnerability, the strategic dependency, is if our crucial capability depends on one country, then our operational readiness becomes tied, whether we like it or not, to that country's political decisions and priorities. That's not just a technical risk, it's a political one. Across Europe, governments have had to rethink their resilience on single suppliers because political change, even in friendly countries, has already altered export policies and delivery priorities. This is why so many European states are now diversifying procurement and rebuilding sovereign production capacity. The second vulnerability is the risk of political change within the supplier state. Governments change, policies shift, export controls tighten. A country that is a reliable partner today may, after an election or a geopolitical realignment, impose restrictions, delivery delays or prioritize its own domestic needs. Even without hostility, such changes can disrupt supply chains that we expect to remain stable for decades. Third concentration, sourcing exposed us to supply chain disruption. Defence systems rely on continuous access to parts, software and technical expertise. Any interruption, whether caused by politics, industrial action or global events, can have an immediate consequence on our ability to operate. And the evidence is clear, Deloitte has warned that global defence supply chains, after decades of optimization, have become fragile, opaque and vulnerable to shocks ranging from pandemics to global political pressure. PwC describes global defence supply chains as in turmoil, with the nations now competing for limited industrial capacity. And in Sweden, major manufacturers like Saab and BAE Systems report severe production bottlenecks and long lead times because supply chains cannot keep up with demand. In the case of France, a well-known case involves shortage of strategic raw material, especially titanium, aluminium and nickel, some of which historically came from Russia. After the invasion of Ukraine, sanctions and counter-sanctions disrupted these supplies. French manufacturers, including Dassault Aviation and Safran, report that several SMEs in their supply chain were in serious difficulty because these disruptions threatened production rates for military equipment, such as aircraft engines and airframe components. Two factors made the problem worse. Three, just dependence on subcontractors, Safran, for example, received 65% of its parts from LEAP engines for external suppliers, making any disruption critical. Longer lead times and industrial situations, the surge in orders linked to the war in Ukraine have stretched French industrial capacity so that any supply chain shock becomes an even more problematic. For an Ireland nation with unique maritime and airspace responsibilities, these are not theoretical concerns, they're practical ones. And the fourth, there is a question of our own industrial and technological base. Ireland may not be a major defence manufacturer, but we have real strengths in engineering, technology and advanced services. If procurement is focused entirely abroad, we underuse those strengths, we miss opportunities for innovation and we fail to build the domestic capacity that strengthens national resilience. We already see examples of what Ireland can do in Shannon. Irish companies are developing advanced drone technology with global applications, proof that we have the talent and industrial capability to contribute meaningfully to national security. The Irish Defence and Security Association, representing firms across cybersecurity, aerospace engineering and advanced manufacturing, has repeatedly highlighted the potential for Irish industry to play a larger role in supporting national capability. These are assets we should be leveraging, not overlooking. This is especially important now that Ireland moves to double its defence budget to 3 billion euros, with plans for 12 naval ships in the fleet, new armoured vehicles, a military intelligence school, a 300 person cyber corps and even a future fighter aircraft capability. These investments demand secure, reliable supply chains. And we must be honest with ourselves. Ireland has seen the consequence of weak procurement governance in other sectors. The National Children's Hospital, originally costed under 1 billion, has become the most expensive healthcare project in the world. The costs are escalating far beyond initial estimates. The search and rescue aviation contract has also faced significant scrutiny, with legal challenges, delays and questions over process and oversight. These examples are not about defence, but they demonstrate the simple truth. When procurement goes wrong, it goes wrong for years, and the state pays the price. Defence procurement cannot afford these mistakes. That's why it is essential that defence procurement supports Irish industry and Irish jobs. Irish should be required to maintain some level of manufacturing, assembly or high-valuable industrial activity within the state. This is not protectionism. It's prudent policy that ensures public spending contributes to our own economic resilience, anchors key capabilities at home and builds a sustainable industrial ecosystem that can support our defence needs over the long term. And Europe is moving in the same direction. Under the Rearm Europe Readiness 2030 initiative, more than 800 billion has been mobilised to rebuild Europe's defence industrial base and reduce resilience on external suppliers. Countries across the continent are onshoring production, especially in ammunition and critical components, because they have learnt the hard way that relying entirely on foreign production is no longer viable. So how do we respond to these challenges? First, making diversification a core strategic objective. We do not abandon key partners, but we avoid excessive concentration, working with multiple suppliers, reducing risks and increasing flexibility. Second, by structuring procurement contracts to protect national autonomy. This means securing access to maintenance, ensuring we have the right to adopt upgrade systems and embedded domestic industrial participation wherever feasible. Industrial manufacturing and long-term maintenance capacity are not luxuries, they are safeguards. Third, by aligning our procurement strategy with broader European frameworks, EU collaboration offers opportunities to diversify, supply, strengthen partnerships and operate within a stable political and regulatory environment. Fourth, by maintaining strong governance and oversight, defence investment lasts decades. They must be evaluated regularly with explicit consideration to geopolitical risks, including the risk of political change in supplier states. And finally, by adopting a full lifecycle approach, the real vulnerabilities often emerge not at the moment of purchase, but years later, when systems need to be upgraded. Parts or technical support, domestic industrial capacity is one of the best tools we have to ensure continuity throughout that lifecycle. International partnerships will always be essential to Ireland's defence, but over-reliance on any single supplier introduces avoidable risks that are magnified in a world where political change can alter the terms of engagement overnight. A diversified, strategically governed procurement system, one that supports Irish industry, protects Irish jobs and strengthens Irish autonomy, is not just good policy, it's an expression of our sovereignty and our responsibility to the future generations. Having said all that, Minister, I would say that your department has played a crucial role in Ireland since the financial crash, which I know that you were elected soon after that yourself. And it does play an important role. But I do think that the oversight is sometimes too, if you want, micro-managing and should be more macro-management, particularly in the areas where we're about to spend massive amounts of funds. So I thank you for your time, and I thank you, this is my first time to address you since you got promoted, and I'm delighted to see you here as a former member of this House. Thank you, Minister. Senator Gerry Crawford talked about strategic dependency and talked about defence, and rethink resilience about single suppliers, and governments change and over-reliance on single suppliers, and he's right. And I think that, again, across Europe, we need to consider these ever-changing geopolitical events. Aidan Davies, you talked about the EU countries, and they are beginning to look at evaluating public procurement directives, and to modernise and simplify procurement rules. But also, we have to have a sustainable strategic autonomy now, and to sustain European countries. And I think that certainly is happening.