Czech fighter contest reduced to one bidder

Czech fighter contest reduced to one bidder

1 June 2001


The Czech procurement programme for aircraft to replace its ageing Soviet era MiG 21s and Sukhoi aircraft has been reduced to a one horse race as the tender deadline passed yesterday with only the BAE SYSTEMS/ Saab bid remaining on the table.

BAE SYSTEMS/Saab are offering the JAS 39 Gripen fourth generation aircraft for the 24-36 aircraft requirement and have offered to spread repayment over 15 years to keep the cost down for the cash-strapped Czech government.

Originally, five aircraft manufacturers had been in the race but four, Boeing with their F-18 Hornet, Lockheed Martin with its F-16, Eurofighter and Dassault's Mirage 2000-5, pulled out last week. Analysts believe the withdrawals were because the tender conditions, including the requirement for offset deals for up to 150% of the total cost, were too onerous.

Despite being the only bidder, and being assured the tender process will continue, with a decision due in the autumn, the Gripen bid is by no means certain since there is considerable opposition within the Czech Republic to the deal, both on cost grounds and because of claimed irregularities in the whole procurement process.

Although the Czech government has said the procurement is to modernise its Armed Forces as a result of the country's accession to NATO in 1999, NATO has suggested it would prefer the effort to be put into enhancing the nation's ground forces


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Gripen Team details Czech fighter tender

7 June 2001

SAAB-BAE SYSTEMS Gripen has announced details of its fully compliant response to the Czech Goverment's tender for the modernisation of its air force to meet national, NATO and European defense needs. The Gripen is the only aircraft left in the tender process after its competitors withdrew last month.

In accordance with the requirements of the Czech Government, the Gripen team's bid documentation was delivered in the Czech language. It provided comprehensive details of a 150% offset program, a 100% long-term structured finance package, full technical specifications of the Gripen fighter, with a delivery schedule starting in 2004 for either 24 or 36 aircraft.

SAAB-BAE SYSTEMS Gripen has had a team working on the Gripen project for the Czech Republic continuously since the government first expressed interest in purchasing new aircraft in 1997.

The benefits to the Czech Republic of the Gripen solution are:


Delivery of 150% offset programme over a 10 year period
Offset programme targeted to meet the strategic objectives of the Czech government
Offset benefits amounting to 50% of total contract value committed within two years of contract signature
Economic benefits from offset generated ahead of finance repayments
Significant repayments for long-term finance package deferred until 2006
85% of financing provided by a consortium of international banks under an export credit loan supported by both the United Kingdom and Swedish governments
15% of financing funded by a local currency loan through consortium of Czech banks
Financing repayments made will be less than five per cent of total at time of first aircraft delivery in 2004
Payments spread over 15 years, to minimize impact on national economy
Provision for foreign exchange risk protection
Finance package tailored to assist the Czech Republic's ambitions to secure European Union accession in 2004-2005
Optional parallel commercial loan for amount equivalent to 15% of contract value at attractive interest rates, to reduce debt and deficit levels by replacing more expensive loan facilities
The specific benefits of the Gripen solution for the Czech Air Force are:


A fully NATO compatible and interoperable fighter which supports all NATO priorities for standardisation of doctrines and procedures, including datalink communications and an air-to-air refueling system
Deliveries to commence 2004 with first fully operational Gripen squadron in 2005
Delivery of all aircraft completed by end 2008
Greatly reduced cost of operating Gripen will enable higher levels of operational training without the need for increased expenditure
Opportunity for Czech Republic to be involved in future enhancement programmes
Comprehensive support and training solution in place before Gripen operations begin
Maximum weapons and support commonality with Czech Air Force L-159 fleet
Customised logistics support solution, capable of utilising existing facilities
Maintenance and ground support system which includes an option for expansion to manage and track aircraft and component maintenance across the whole Czech Air Force
An option for fixed price per flying hour depot level maintenance<
"Gripen is a truly international weapon system, containing the latest technology from a team of major European and American defense suppliers," said Julian Scopes, regional managing director Europe with Gripen partner BAE SYSTEMS. "Supported by the governments of the United Kingdom and Sweden, the offset and financial solutions of our proposal make the Gripen new-generation fighter an affordable choice for the multi-role supersonic fighter aircraft requirement of the Czech Republic."


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Czech Cabinet approves Gripen acquisition proposal

23 April 2002



A draft proposal to purchase 24 supersonic jet fighters JAS 39 Gripen from BAE SYSTEMS/SAAB consortium has received universal backing in the Czech Cabinet. Defence Minister Jaroslav Tvrdik has said that the purchase, which includes scope for local industrial co-operation, is approximately CZK 60.2 billion.

CZK 49.9 billion is to be spent on the fighters themselves, a further CZK 1.7 billion will cover equipment and services, and the remaining CZK 0.9 billion will pay for training in Sweden and the UK. However, the project is yet to be ratified by Parliament and with an election due in June, a different Government could take a different view of the project.

It seems no fighter acquisition programme can reach the light of day without the usual calls of inappropriate goings-on. Boeing, Lockheed Martin, Dassault Aviation of France and Eurofighter all pulled out of the tender process grumbling that it was biased in favour of the Gripen consortium.

The US Ambassador to the Czech Republic even went so far as to send a letter to the Czech Ministry of Defence saying that the Gripen had an inadequate combat range, and "some unresolved problems with its air -to-air refuelling capability". The accusations were swiftly rebutted by Tvrdik on the same radio station that had aired them, saying "We have no doubts that the Gripens will meet all necessary NATO standards."

The planes should be financed from privatisation revenues, Tvrdik said, adding that the deal might require some changes to existing legislation, in addition to a bill on loans submitted to Parliament. In a bid to sway the Czechs, BAE SYSTEMS offered to buy a stake in state-owned Aero Vodochody to which it could then use as a sub-contractor. Furthermore, UK Prime Minister Tony Blair has attracted flak for lobbying the Czech government on behalf of the Gripen bid, as BAE SYSTEMS is a contributor to his Labour party.

The Gripen consortium is benefiting from European nations looking to fulfil their responsibilities to NATO. Export contracts have been secured in South Africa and Hungary and the consortium awaits decisions from Poland, Austria and Malaysia. If the Czech contract goes ahead, the first aircraft could be delivered as early as 2004.


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