Procurement covers everything from small local purchases of office equipment to multi-million dollar contracts for ships, aircraft and weapon systems as well as a range of major building and construction projects.

Even though most defence contracts are placed with Norwegian suppliers, a substantial amount of defence procurement involves foreign defence contractors. Norway does not have the necessary resources to maintain a national defence industry capable of meeting all its defence requirements. If the Armed Forces are to be able to fulfil their commitments, it is not on its own sufficient to ensure that the organisation is adapted to match current defence and security policy requirements. The Armed Forces themselves must also be equipped with materiel capable of meeting tomorrow's challenges.

Norway must have at its disposal the military skills and capability needed not only for the direct defence of Norwegian territory but also to participate effectively in joint crisis management and in multinational peace-keeping or other peace-related operations. This again means that the Armed Forces need to be provided with suitable materiel. The dialogue between the Defence authorities and the Norwegian defence industry plays a central role in the successful conduct of the defence procurement programme.

In its Long-Term Report on the future development and restructuring of the Armed Forces over the period 1999-2002, the Government proposes maintaining the budgeted rate of expenditure in real terms for the initial two years. In subsequent years an annual growth rate of 0.5 percent in real terms is envisaged. More information on the breakdown of the defence budget can be found in the MOD brochure on the Defence Budget for 1998.

Much of the materiel procured for the Armed Forces Defence procurement will in future years continue to be purchased from foreign suppliers. Norwegian industry has neither the capacity nor the requisite degree of expertise to cover fully the needs of the Armed Forces in all areas. Again, our own requirements are often so limited in terms of quantity that to set up production facilities to supply our national needs alone would not make commercial sense. This means that the development and production of materiel for Norway's Armed Forces must be viewed in an international context.