Official Statistics

Defence export figures for 2020: methodology

Published 26 October 2021

This document explains the methodology and quality of the defence export statistics released on 26 October 2021.

Background

The Market Analysis Cell in the operations team, Department for International Trade (DIT), UK Defence & Security Exports (UK DSE), monitors global defence and security exports. This information is fundamental to UK DSE’s exports analysis and understanding of trends in the global defence and security export market. Statistics help us identify the defence and security industry’s strengths and weaknesses and how we compare to our competitors. We can then provide advice to ministers about the UK’s performance in the market and where resources should be channelled for future exports.

Defence figures are collected by UK DSEDSE via a survey. However, due to the complexities and fragmentation of the sector security data is provided to us by contractors following open competition. Frost & Sullivan provided this year’s data, and a separate methodology paper from the company is provided with this release.

It is not advisable to combine the defence and security export figures as they are recorded via a different methodology and metrics (orders / contracts vs exports / sales).

UK DSE publishes figures annually and includes figures for the previous calendar year.

Defence figures

There is no internationally agreed definition of defence exports or how they should best be measured. Since 1984, figures for UK exports have been based on an annual survey of defence export orders won by known UK companies operating in the defence sector.

For the rest of the world (ROW), we do not have the same level of information or access. Our figures are therefore based on open-sources and best judgement about when a contract has been signed (not when the contract is won).

We do not monitor the value of deliveries, as is the case with some other organisations. Deliveries might take place several years after contract signature, whereas new orders or contracts offer a current assessment of the health of the market.

UK defence exports

Overview

Data about UK defence exports is collected via a survey of UK defence companies. The list of companies who take part in the survey is constantly revised to ensure that we include the maximum number of defence exporters. However, because the survey is voluntary and provided at no cost to UK DSE, some companies may choose not to participate. We sent the 2019 survey to over 2000 companies and estimate that we capture around 90% of defence exports by value. Annex A shows the response rate to this year’s survey and provides additional detail.

The survey covers orders for defence services, support and equipment.

The statistics relate to sales to overseas Ministries of Defence and associated armed services. This makes them customer-based, rather than product-based.

The survey is sent out to companies on a basis and our figures refer to a calendar year rather than a financial year.

Although we do request details of individual orders (for example product, value, country, destination), some companies only provide us with aggregated figures.

Where a company has not provided a survey return, we sometimes use other data received by UK DSE from companies (which verify specific exports). We also use official published data on other countries imports from the UK (for example foreign government tender websites).

Inclusions

‘New orders’ covers both legally binding contracts and routine or small orders (for example spares) - which though not legally binding are regarded as firm.

Orders where the customer is defence related. We may also include exports from a UK non-defence supplier if the customer is a Ministry of Defence (MOD) or defence manufacturer.

Additions to existing orders. These are identified as separate entries in the database and will be included in the year in which they fall.

Government-to-government (G2G) programmes: a figure is included annually for exports achieved under the G2G programmes (Salam Project and the Saudi British Defence Co-operation Programme). These are based on customer-approved claims submitted against budgetary provisions included within various underlying agreements for goods and services and fixed priced purchase orders. This information is provided by the MOD Saudi Armed Forces Projects Office.

Orders from companies with dual ownership. For example. UK/French, but note that only the UK value of the export is included.

In a change to previous years (since 2019), we now count all exports derived from collaborative projects including between partner nations. For example we now count UK Eurofighter Typhoon exports to Germany, Italy and Spain.

Orders covering international collaborative ventures, where the sale is not to one of the partners. We count only the UK value-added.

Joint ventures. Only the UK value-added part of the venture is counted.

Orders received by a UK-based subsidiary of a foreign company.

Contracts covering the provision of defence services overseas (consultancy, training), that benefit the UK defence industrial base.

We only record the UK work content of new business.

Revisions policy

We will update the figures during the course of the year, with any information that has substantial impact on the meaning of the statistics. However, we do not make adjustments for subsequent cancelled orders, unless it is cancelled before the figures are published.

Rest of the World (ROW)

Similar principles apply as to those above, except that information is derived from a range of reliable open sources covering contracts that have been signed.

It is not always possible to be definite about the signing of a ROW contract. In uncertain cases we make a judgement and estimation based on collateral reporting.

We count the total value of a contract published at the time of announcement and make no attempt to spread the value over the length of the contract.

Sometimes, when the value of a contract is not published, we make an estimate of its value based on historical sales and other factors.

Where there is a contract with several supplying nations but no indication of workshare, we divide the value equally between the suppliers. Likewise, where there is an export to several nations and no percentage split, we again divide equally.

Amalgamation of figures

The UK and ROW figures are combined to create league tables of the top exporters and importers. It shows where our competitors are winning business and the UK ‘s share of the global defence export market.

Quality Assurance

There is no definitive method of counting UK and rest of the world defence exports.

The method UK DSE employs provides UK stakeholders with an indication of trends and health of the defence export market that they require. UK DSE data is from first-hand or credible published sources. It measures the full remit of the global defence export market and the place of UK exporters within it.

Other defence export data sources

HM Revenue and Customs (HMRC)

HMRC publish data on exports and imports by commodity in overseas trade statistics (OTS). However, these are commodity based, rather than customer based. They record transactions at the point in time when the commodities cross borders, not when initial orders are placed. It is not possible to specify which commodities are for defence use or which are for civil use. This data is therefore not useful in assessing defence industry specific exports and imports.

Export Control Joint Unit (ECJU)

The DIT ECJU publishes official data on the number of licences granted for export in the strategic export controls annual and quarterly reports. Some of are categorised as military or dual-use. This data relates to numbers of licences and the value under each licence. The actual value of exports made under the licences is likely to be less than reported because some of these licences will not be used. For this reason this data is not useful for assessing the health of the UK defence exports sector.

Stockholm International Peace Research Institute (SIPRI)

A major provider of defence export delivery data is SIPRI. It only reports on global arms deliveries, and not new orders/contracts that we require for our business purposes.

Congressional Research Service (CRS)

Another provider of defence export (arms transfer) data is the USA’s CRS. The CRS, a component of the Library of Congress, conducts research and analysis for Congress on a broad range of national policy issues. It essentially tracks and reports on agreement and delivery data for US G2G foreign military sales (FMS) transactions, in addition to global arms transfer deliveries. Most reports can be retrieved from the Federation of American Scientists (FAS) website.

Survey return

Survey return statistics - figures 2020

Company / HMG	Number sent	Number received
Key account managed companies (KAM)	17	14
MOD	2	2
Other companies	561	156

Source: UK DSE

UK DSE Market Analysis Cell sent survey returns to around 580 companies ranging between SME’s to Prime status. In total, we received replies from 171 companies which works out to an overall return rate of 29%.

UK DSE maintains that the KAM companies account for a very high percentage of the export figures on a yearly basis. We managed to retrieve 14 replies out of the 17 listed companies held within its database, accounting for 82% return rate. (We estimate that these companies account for around 90% of all UK defence exports.)

Definitions

Aerospace

This covers:

• aircraft (including naval aircraft)
• aircraft related equipment such as aircraft simulators and air launched weapons

Land

This includes:

• ground based platforms, for example tanks, armoured vehicles
• equipment
• ground based weapons

Prime contractor

The principal contractor responsible for the delivery of goods and services to the customer. The contractor is typically the original equipment manufacturer. In some the cases, a prime contractor may outsource part of the production process to a sub-contractor.