Defense
News
BAE
Challenges Lockheed for F-16 Deals
01/23/2012
By
Wendell Minnick
TAIPEI
— BAE Systems is challenging Lockheed Martin for a $5.3 billion upgrade package
for 145 F-16A/B Block 20 Taiwanese fighters.
Lockheed,
as the F-16 original equipment manufacturer (OEM), was widely assumed to be the
sole bidder for the U.S. government Foreign Military Sales contract, but now BAE is asking the U.S. Defense Security
Cooperation Agency (DSCA) and the Taiwan government for a chance to compete.
BAE
is also challenging Lockheed in South Korea for a $1 billion avionics upgrade
and weapon systems integration deal for 135 KF-16C/D Block 52 fighters, including
installation of the active electronically scanned array (AESA) radar.
Both
companies submitted prime integration proposals Dec. 2 to the South Korean
Defense Acquisition Program Administration (DAPA). Defense industry sources
indicated that BAE and Lockheed have been notified by DAPA that their proposals
have cleared the first phase of reviews and further discussions will begin in
February with a final decision expected by the second quarter of 2012.
While
DAPA’s acceptance of BAE’s proposal clears the first hurdle, the problem will
be persuading the Taiwan military and the DSCA to allow BAE to participate.
Lockheed
is feeling the heat from BAE in Asia. In response to BAE’s challenge in Taiwan,
Lockheed released a document titled “Lockheed Martin’s F-16 Upgrade Value
Proposition for Taiwan.”
Lockheed
argues that the scope of the upgrade includes changes to all elements of the
F-16 weapons system, such as structural, hardware and software of the avionics system,
and possibly propulsion. “Consequently, while other contractors may claim to
have alternative solutions, Lockheed Martin, as the OEM, is the only entity
that has the knowledge, capability, and experience to perform the tasks
required by the ROCAF (Republic of China Air Force [Taiwan Air Force]).
BAE
is challenging the mantra that “we built the aircraft and therefore we have
‘secret knowledge’ and we know all and see all,” a BAE official said.
Local
Taiwan defense industry sources said Lockheed has been in Taiwan “forever” and
it will be difficult to persuade some members of the Taiwan defense
establishment who have long relationships with Lockheed to allow BAE to
compete. “You are threatening rice bowls here,” one source said.
Taiwan
secured the release of the F-16 upgrade package in September from the DSCA
under the Foreign Military Sales program. The release included an arsenal of weapons
that in the past has been considered verboten for sale to Taiwan by U.S.
government officials who favored better relations with China. This includes the
sale of Joint Direct Attack Munitions (JDAM), which Washington has refused to
sell for the last 10 years. The DSCA released the GBU-31, GBU-38 and the GBU-54
laser-guided JDAM in the September notification to the U.S. Congress.
The DSCA release also
consisted of AESA radars, embedded GPS inertial navigation systems and ALQ-213
electronic warfare management systems. Also released was a design study for
replacing existing Pratt & Whitney F100-PW-220 engines with F100- PW-229
engines.
However,
the Legislative Yuan’s budget for the program is about 20 percent less than the
DSCA’s $5.3 billion price tag. This could force Taiwan to reduce the quantities
of weapons, such as the JDAM, and forgo new engines. The U.S. Air Force sent a
team to Taipei to discuss the budget issue during the second week of January.
BAE’s
answer is to drive the price down in a bidding war with Lockheed by providing
an identical, if not better, package, including a proven ethernet design for
the fire control computer, a BAE source said. Lockheed is developing an
ethernet option now being ap- praised by the U.S. Air Force operational test
and evaluation office.
In
its document about the F-16 upgrade for Taiwan, Lockheed argues that competitor
solutions were derived from “niche solutions/configurations for U.S. Air
National Guard and Air Force Reserve.” The result would “incur significant cost
and schedule challenges for this potential solution and would be a ‘dead end’
configuration.”
Despite
the long relationship between Taiwan’s military and Lockheed, Taiwan’s
legislature issued an Oct. 12 directive requiring that a letter of acceptance
for the F-16 upgrade package “shall not specify any specific supplier and that
the Ministry of National Defense shall request a U.S. team to perform an open
competition.”
This
is not the first time Lockheed has been challenged in Taiwan. L-3 Communications
competed with Lockheed for a $1.4 billion contract to refurbish 12 P-3 Orion
maritime patrol aircraft in 2006. Lockheed won the contract despite L-3’s best
efforts and local defense officials, some bitter, said the competition delayed
the delivery of the P-3s by two years.
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