Kraków 2008-03-18
SAAB JAS-39 Gripen multi-role combat aircraft for Poland.
SAAB JAS-39 Gripen multi-role combat aircraft for Poland.
Introduction
To avoid any doubt, we supported Poland’s purchase of the SAAB JAS-39 Gripen multi-role combat aircraft. We considered this aircraft a successful design that well-suited to our defense needs. Future cooperation in developing subsequent versions of the aircraft would be significant for Poland. The Swedes have decades of experience in producing turbojet-powered combat aircraft. Already in the 1960s, SAAB’s J-35 Draken fighter captured the aviation markets of several countries. Its successor, the JA-37 Viggen, was a similarly successful design. This small, populous country belongs to an elite club of countries that develop modern fighters and other aircraft on their own. The latest product of the joint efforts of SAAB Avionics and BAe Systems (formerly British Aerospace) is the SAAB JAS-39 Gripen.
The JAS-39 Gripen is an interesting aircraft by European standards. It was the first fourth-generation fighter in active service. Constructed largely of composite materials, it poses a difficult threat to enemy radar stations. As for the accusation of a lack of experience in armed conflict, where did European NATO members get their Hunter, Canberra, Lightning, G.91, F-104, Draken, Harrier, Jaguar, Tornado, Etendard, AMX, Rafale, Typhoon, and other combat aircraft that were not tested in any war at the time of purchase?
The JAS-39 Gripen also has short takeoff and landing capabilities, making it an attractive aircraft for the Polish Air Force. Short takeoff (DOL) is one of the basic maneuvers Polish pilots have been learning for years. Since 1964, they have successfully taken off and landed MiG-21 fighters on highways. A JAS-39 Gripen aircraft is sufficient for a 400-500 meter runway.
We’re not discussing political issues, which are extremely important, but the goal is a new fighter jet for the Polish Army, and we reject the nonsense uttered by some politicians that “Polish pilots will fly on barn doors.”
The early 1990s.
Already at the dawn of the 1990s, it became clear that the Polish Army would sooner or later be equipped with military aircraft from the West. Among the aircraft manufacturers hoping to capture the Polish market was the Swedish company SAAB. Having learned from numerous sales failures, SAAB had already gained considerable experience and was well prepared to present its products. Just to mention the unsuccessful contract for a new fighter jet for Western European countries, in which the SAAB JA-37 Viggen lost out to the F-16 and Mirage F-1. This happened at the end of the 1970s. Since Sweden is theoretically a neutral country, it partnered with the British company BAe Systems to increase its chances.
In 1996, the “Inter Arms 96” military exhibition was held at the Gdynia-Babie Doły airport. The star of the show was the JAS-39 Gripen, three of which were flown at the same time. The aircraft arrived in Poland from Kecskemet Air Force Base in Hungary and departed for the demonstration in the Czech Republic, where the contract was also being sought. The Swedes prepared meticulously for their demonstration on September 27, 1996. Many officials were brought aboard the Swedish Herkules, including John Weston, CEO of British Aerospace. Representatives of the Swedish-British company made no secret of their high hopes of securing the contract for these aircraft.
One of the problems with the Gripen aircraft was that its avionics were fully integrated with the Swedish system (understandably) and were awaiting unification with NATO systems. Work on this had already begun, and it was only a matter of time before we saw the results. Importantly, steps were also taken to expand the range of weapons carried by the Gripen aircraft.
The Gripen aircraft was well-received by the Polish military; it was light, agile, and, above all, well-suited to our armed forces. The Polish side was given complete freedom to choose the armament. The Swedish side was also flexible regarding the form of transfer of the machines: sale, leasing, or rent. Extensive cooperation with PZL Mielec was also announced.
On July 15, 1999, the British and Swedish partners once again announced the possibility of supplying the Polish Air Force with JAS-39 Gripen multi-role aircraft. SAAB-BAe’s offer was in response to a request for information (RFI) submitted by the Polish Ministry of Economy to foreign companies on June 1, 1999. As an interim solution, the SAAB-BAe consortium proposed to Poland the five-year loan of 16 Gripen A aircraft and two Gripen B aircraft, which were currently in service with the Swedish Air Force. The aircraft would be in service with the Polish Army 21 months after the contract was signed. After five years, the aircraft would be returned to Sweden. The main contract would cover the delivery of 60 new aircraft, starting in 2012. The contract was valued at $2 billion. The Swedes discussed possible investments in the Polish Arms Industry, which would generate savings of up to $1 billion over a period of approximately 15 years. The offer did not mention armament, leaving that matter solely to the Polish side. The consortium also hoped for Poland to purchase another 90 fighters, a possibility that was never considered by Poland.
It is worth mentioning that in September 1999, the Swedish Minister of National Defence visited Poland, demonstrating the very seriousness of the Polish side. Representatives of the Swedish industry presented their offer under the slogan “Not Just Gripen.” The Gripen aircraft was on display for the second time. Its manufacturer, SAAB, produces not only aircraft but also avionics, missiles, and optronic equipment. SAAB Dynamics produces RBS-15 remotely controlled anti-ship missiles (offered for Polish Orkan-class corvettes) and electronic systems for the land, navy, and air forces. SAAB Training Systems develops simulators and other equipment for pilot training. SAAB’s close collaboration with Ericcson Microwave Systems AB provides access to modern radar technologies, telecommunications and electronic warfare systems, avionics, and airborne early warning and control systems. The company also develops defense software for computer networks. A contract with SAAB-BAe for the purchase of Gripen aircraft would provide Poland with significant incentives for purchasing additional equipment for the Polish Army.
2000
In 2000, it seemed that the Polish government would soon decide to acquire F-16 aircraft. It should be noted that at that time, Poland planned to acquire one squadron (16 aircraft) as soon as possible to fulfill its obligations to NATO, which it joined in 1999. Translated into Polish, the first batch would be used aircraft, followed by new ones. The Americans were slightly ahead of other bidders in their proposals. They could afford it.
In October 2000, the J. Steinhoff Commission was tasked with deciding whether to accept the US Administration’s offer to loan 18 F-16 aircraft, worth $220 million. A letter with additional questions was sent.
However, the Polish-language press generated hysteria, claiming it was a letter of intent. The US Congress began negotiations on the free loan of 16 F-16 aircraft to Poland. To level the playing field with other bidders, on November 17, 2000, the J. Steinhoff Commission, through Bronisław Komorowski, sent further RFIs requesting information on economic cooperation to the UK, Sweden, and France. The US was not sent, as the necessary information had already been obtained. In response, we received: France – loan of 12 Mirage 2000-5 Mk.2 aircraft; the US – free loan of 14 F-16A Block 15 ADF and 2 F-16B Block 10 OCU aircraft; and Sweden – 16 Gripen Bakht 1 aircraft.
2001.
At the turn of the century, SAAB-BAe’s partners realized they were close to conquering the Polish market. On March 14, 2001, the Gripen aircraft issue was brought to the Polish Parliament for consideration. SAAB-BAe presented a financing plan for the purchase of the Gripen fighter, in its latest, fourth-generation version. At that time, given our low budget, the Americans were offering the F-16 A/B, a second-generation fighter. During the Sejm (lower house of parliament), it was revealed that purchasing the Gripen would cost Poland between $40 and $170 million per year for 15 years. Representatives of the manufacturer also presented the members with the possibility of leasing 18 aircraft (one squadron) for five years, with the option of extending it for another five years. However, they did not disclose the price of such an offer, only stating that it was competitive with the American offer.
Mr. Ray Lomas of BAe Systems added, “The loan costs would be 100% offset by offset orders from Polish defense plants. Because the fighter has a 30-year service life, we are not demanding a lump sum payment for the delivered aircraft. We have prepared a financing program for the purchase, 85% guaranteed by the Swedish and British governments. Assuming the aircraft purchase cost is $1 billion and payment is spread over 15 years, annual installments would range from $40 to $170 million. For the first five years, installments would total approximately $40 million. Additionally, we are proposing a 4- or 5-year grace period. Therefore, the Polish government would incur very small expenses during the first years of the contract. This is important considering the budget burden in the near future due to high installments related to foreign debt repayment. Of course, 100% offset is guaranteed.”
The industrial group General Electric, one of SAAB-BAe Systems’ American partners, which is responsible for 40% of the Gripen’s production (GE produces engines for Swedish fighter jets, among other things), even offered cooperation.
In April 2001, BAe Systems signed a preliminary conditional agreement with PZL Mielec, stipulating that final assembly of Gripen aircraft could take place in Poland. Similar agreements were concluded with the Americans and the French. BAe Systems planned to establish production of wings for RJ/RJX regional passenger aircraft in Mielec. On April 19, 2001, a contract worth £6 million was signed, providing for the production of airfoils for 18 aircraft per year. Technology and machinery transfers began in April 2001, with the first airfoils expected to be delivered by the end of 2001. PZL Mielec has been cooperating with BAe Systems since 1999, producing approximately 5,000 parts for various aircraft types. These include the Hawk trainer aircraft, the Raytheon XP Corporate Jet, the U125A maritime patrol aircraft, and the Gripen. The British have made no secret of the fact that Mielec and other aircraft factories in Poland could see a flood of orders for parts and components if the Swedish-British Gripen wins the tender for a new fighter for the Polish army.
On April 12, 2001, the ambassadors of France, Sweden, the UK, and the US received tender documentation in Warsaw for the delivery of new multi-role fighter aircraft for the Polish Air Force and Air Defense. The tender covers the purchase, lease, or loan of 16 WSB aircraft by the end of 2003, and the purchase of 44 aircraft in the following years.
The Ministry of National Defense expected that, starting in early June 2001, we would be choosing between Swedish-British, French, and US proposals. If the Polish Parliament passed the act on military equipment and financing the multi-role purchase, the first leased, used aircraft would, in accordance with the goals agreed with NATO, land in Poland in 2002. By 2006, we were to acquire 60 new fighters. The loan will be repaid by 2015. According to unofficial estimates, the “largest military contract in the Third Polish Republic” is worth $2.5-3.5 billion.
By June 2001, it was already clear that three offers had made it to the final round, the so-called shortlist: the Mirage 2000, the Gripen, and the F-16.
However, the final decision began to be delayed due to important offset negotiations, and it was already clear that Poland would not resolve this issue before the upcoming parliamentary elections.
At the end of June 2001, the Sejm (lower house of parliament) debated the issue of the WSB aircraft. The Sejm passed the bill. By 2003, 16 modern aircraft were to be produced, and by 2006, 60. 369 MPs voted in favor, 9 against, and 4 abstained. Equipment purchased under the multi-role aircraft program will be duty-free. The Ministry of National Defense will also train personnel as part of the project.
According to the plan, two Ministry of National Defense teams were to conduct a technical and financial evaluation of the offers by July 13, 2001. Discussions with company representatives were to be held between July 2 and 26, 2001, to specify the terms and conditions of the contract. The final specifications were to be ready by August 13, 2001, and received by the Ministry of National Defense – in their final form – by August 27, 2001. The envelopes containing the final specifications were to be opened on August 28, 2001. The selected offer was to be selected by September 10, 2001, and the contract was to be signed by September 14, 2001.
At this point, we must write about the scandal surrounding the hiring of a consulting firm to select an aircraft. The firm was supposed to receive a fee of 2-3% of the contract value. Calculate this from $3.5 billion. It’s a scandal. We haven’t been able to find the person behind it. Fortunately, it never came to that.
In June 2001, information reached Poland that the Czechs would buy 36 Gripen aircraft and had an offset worth 150% of their order. This is significant for us because we know that the Czechs had already made their choice, and SAAB BAe Systems’ position had strengthened. It’s worth highlighting the views of the Americans, who, like the French, had previously withdrawn their offers, citing the unfairness of the Czech conditions.
In turn, under the amended Polish law, offsets can be invested not only in the defense industry. In Poland, expenditure on fighter aircraft must, by law, be balanced against purchases, investments, and service contracts across the entire Polish industry.
Talks began in early September 2001 with representatives of SAAB, BAE Systems, Lockheed Martin, and Dassault Aviation. The situation remained bleak. Despite the relevant laws in force, the final number of aircraft and the scope of the offset were unknown.
In September 2001, Hungary decided to lease 14 Gripen aircraft (12 single-seaters and 2 two-seaters). The lease agreement stipulated that the aircraft would remain in the country after its expiration, and the government would pay the Swedes $428 million for them, 70% of which would be returned through offset agreements.
It should be noted that several months earlier, the Hungarians were dissatisfied and claimed that the Gripen aircraft they had been offered only flew beautifully but had no leverage. They then demanded aircraft similar to those offered to Poland.
Therefore, information reached Poland from the United States that the Americans were angry that their identical offer had been rejected. The US Congressional debates were dominated by the issue of aircraft sales to Central European countries, and manufacturers began to exert increasing pressure on the White House and the US Congress. Furthermore, experts on both sides of the pond agreed that European companies had a better chance than the Americans. As a result, rumors have circulated in the Polish Senate about a significant decline in support for the second wave of NATO enlargement. Poland is now in the spotlight, as the Swedish-British offer is very attractive. It includes the leasing of 16 aircraft and the sale of another 16. Interestingly, there is no cash payment. The Swedes would receive their payment in the form of parts manufactured for them by Polish Industry.
2002
In January 2002, SAAB-BAe revealed the details of its latest offset and loan offer. This was prepared for Prime Minister Leszek Miller’s visit to Stockholm. The Swedish Gripen was the main topic of discussions with Swedish Prime Minister Göran Persson. The attractiveness of the tender allowed for a high level of specification of its terms. Among the most important conditions was the financing of the purchase, so that Poland could receive the fighters immediately. Payment would be made only when the national budget could support this burden (by default, in 2010). SAAB-BAe fully met this requirement.
The purchase would be carried out in two rounds of loans. The first, an export loan, would be provided by a group of international banks (including KBC, Commerzbank, Hypo Vereinsbank, and ABN-AMRO – all of which SAAB-BAe partners with). The second loan would be provided by Polish banks, specifically those operating in Poland. Thanks to the loan being guaranteed by the British Government Credit Guarantee Agency (ECGD) and its Swedish counterpart:
A 100% guarantee would be possible, along with the cost of purchasing spare parts, as well as training for pilots, technicians, operators, etc.; Repayment would be spread over 15 years (or longer); The loan servicing cost in the first 10 years would not exceed 0.05% of GDP; The loan could be in Polish złoty (protection against exchange rate risk) or euro; Poland’s loan would not affect our credit standing.
Offset: Minimum offset value equal to 100% of the order. 10 years to fulfill the obligations. 50% in the first 5 years. Offset orders would be received before Poland takes delivery of 60 fighter jets. The program is to cover 17 workplaces.
The problem with the 150% offset stems from legal provisions. With the provision stating that 50% of the investment is to go to the arms industry, Poland would not be able to use the USD 3.5 billion investment.
In January 2002, a second round of talks began. It focused on industrial cooperation. The offers were unsatisfactory. Therefore, all governments were required to submit revised offers by February 28, 2002.
In February 2002, the number of aircraft became final. It was set at 48 WSBs, abandoning the plan to acquire 12-16 used aircraft. The used aircraft were replaced by former German MiG-29s. The draft was approved by the Polish Parliament on March 20, 2002, and the President of Poland signed it on March 29, 2002.
In April 2002, the contract was valued at PLN 14 billion, and it was not ruled out that the bidders themselves would provide a loan. It must be admitted that at that time, we were in a comfortable situation. Regarding negotiations, as far as combat air units were concerned, they were gradually being disbanded due to a lack of aircraft. Negotiations with individual bidders were proceeding much more calmly. Less information was leaking to the press at this time, and what was being reported was, to say the least, unreliable. We, as taxpayers, could calmly await the announcement of the tender results, confident that the choice would be the best possible one.
The tender was awarded on December 27, 2002.
On Friday, December 27, 2002, Lockheed Martin was officially announced as the winner of the WSB competition for Poland, scoring 90 points out of a possible 100. The declared offset amounted to over $9.5 billion (277% of the bid price), but after Poland’s calculations, it was $6 billion (170%). The defeated consortiums were: Gripen International (JAS-39 C/D Gripen), which scored approximately 90 points. The offset offer was supposed to be approximately €7.5 billion (233%), but only €4.7 billion (146%) was accepted. The same applies to Dassault Aviation (Mirage 2000-5 EPL/DPL), which was disqualified because the offered offset (€3.8 billion – 105%), after being converted by Poland, was valued at €2.1 billion, which represented only 60% of the contract value (Poland required at least 100%).
According to Deputy Minister of National Defense Janusz Zemke, the American offer was the most comprehensive. The committee awarded it 90 points out of 100. The 23-member committee reached a unanimous decision. In total, 93 specialists evaluated the individual parts of the offers. Negotiations with interested companies lasted 53 days. However, the agreement may not be signed if the orders that US companies have committed to placing in Poland are not placed by the end of May 2003. In such a case, the Polish government will initiate negotiations with the manufacturers of the Gripen, which narrowly lost out to the F-16. This is significant because the Ministry of Economy, through its secretary, Andrzej Szarawarski, has repeatedly emphasized that the offset proposals are far from satisfactory and should be supplemented by the Americans. At the same time, we have not seen the F-16 assembled in Poland.
We haven’t seen the Gripen in Polish skies. Looking back on a few years, it’s difficult and unnecessary to speculate. But looking at our neighbors, the Czechs, the infancy of our Jastrzębie fighters is more peaceful than their JAS-39s.
Written by Karol Placha Hetman