The Swedish Defence and Security Export Agency (Försvarsexportmyndigheten - FXM) was formed in 2010 to promote Swedish defence exports. FXM coordinates for defence authorities' export support and represents the Swedish state in the sale of Swedish Armed Forces' surplus stock. On behalf of the government, Statskontoret (the Swedish Agency for Public Management) has analysed and reviewed FXM's activities.
Statskontoret believes that the purposes stated by the government in connection with the formation of FXM - overview by the state, transparent processes, better priorities and more efficient operations - have been achieved to a large extent. However, FXM needs to improve reporting results and effects of its operations.
Raising the ambition level of state support for export
FXM has contributed to state support for export having an increased focus on analysis, direction, priorities and export promotion, i.e. activities to promote Swedish defence exports in the broad sense. This means an increase in the ambition level, which is connected with an increase in demand for Swedish systems and products, and thus an increased need of support. In addition, there was a need for clearer role division between the defence authorities.
Role division became clearer
One of the reasons for establishing FXM was to avoid the conflict of interest and objectives that can occur when an authority represents the state during procurement and then provides export support to the same company. By giving one authority the responsibility for promotion and sales, the role division within Swedish defence materiel export became more clearly defined.
The establishment of FXM has contributed to an improved overview by the state
Since FXM was established, one authority has had a clearly defined responsibility for export support. FXM also has export support as part of its core activities, while it was previously a small task for the responsible authorities. Through the process of direction and priorities, FXM has an overview of the needs of the defence industry and the Swedish Armed Forces, as well as defence authorities' resources. Previously each authority made their own separate priorities, but none of them had a defined responsibility to compile an overall picture of such priorities.
FXM has developed a process for setting priorities
The direction and priorities process started by FXM creates conditions for better prioritisation within state export support. The authority maintains a dialogue with the defence authorities and the defence industry, and analyses the potential defence benefits of the export of a particular product. The authority also analyses the consequences of a possible export deal in terms of defence and security policy, as well as the likelihood of a certain campaign leading to an export deal.
The process for export support is more transparent
Operations are more visible than previously because export support is currently carried out by a separate agency, with its own funds and a separate annual report. The direction and prioritisation process produces information that FXM uses to prioritise operations and assess which applications should be granted support. The application process for export support is now uniform and traceable. All in all, this contributes to a more transparent process.
Improved conditions for efficient operations
Before FXM was established there was no uniform prioritisation of export support or standard application procedure. The application process is now uniform and more structured, and the examination process is based on broader analyses. In addition, FXM checks at the marketing stage that an export permit has been granted. Export incentives are given priority and coordinated to a greater extent. This has created better conditions for ensuring that state resources are used efficiently.
Operational capability is not a suitable measure
FXM operations contribute to the operational capability of the Swedish Armed Forces, but only indirectly because it is only the Armed Forces who can influence how resources are translated into such a capability. This means that operational capability is not a suitable measure for reporting FXM's performance. The authority's performance should primarily be measured in a way that reflects results that the authority can influence directly.
FXM makes a broad interpretation of its contribution to the operational capacity
FXM reports not only direct and indirect financial benefits, but also its contribution to defence and security policy. The authority thus makes a wider interpretation than the Armed Forces regarding its contribution to operational capability. FXM's interpretation of operational capability does not correspond to what the government describes as the purpose of state export support.
It is unclear what export support costs the state
Financial flows between the defence authorities obscure transparency and overview by the state, and it is still difficult to see what export support costs the state in total. The costs for FXM's operations have become more visible, but since the Armed Forces do not invoice their own salary costs, for example, these are not visible in the total cost.
Risk of financial budgets not controlling the scale of operations
FXM operations are currently financed mainly through grants, but the authority may make charges for its activities. The government has not clearly stated for what activities or to what extent such charges may be levied. This leads to a risk that the financial budgets set by parliament do not control the scale of FMX operations. Comprehensive funding through charges could also lead to demands by the industry having too much influence on priorities.
There are deficiencies in FXM's accounting
FXM's accounting has improved, but Statskontoret believes that there are still relatively large deficiencies when it comes to accounting for operations and results. The open annual report that the authority submits to the government is kept at a general level. The confidential accounts are also relatively sparse in terms of information. Nor has the authority, despite repeated demands for this in the appropriations document, produced any performance indicators or key ratios to show that operations are carried out efficiently and with good management of resources.
Statskontoret also considers that there are deficiencies in FXM's accounting that make it difficult to obtain a comprehensive picture of the authority's total funding and the financial flows that the authority handles.
Statskontoret's commission includes proposing measures that can clarify and develop government's steering of the authority. Statskontoret proposes that the government:
- Reviews the instruction and appropriations document to clarify the objectives for operations and, in connection with this, clarify what defence and security benefits defence export support are expected to contribute to.
- Clarifies for what operations and to what extent FXM may make charges.
- Reviews FXM operations with other measurements than its contribution to the operational capability of the Armed Forces.
- Takes measures to increase transparency in FXM financial accounting, as well as tightening requirements on FXM to follow up and report on the income from the authority's operations.
- Ensure that defence export support is reported in a way that makes it clear to see what the support costs the state in total.
- In terms of governance, respect transparency in operations regardless of how they are organised.