Norway Picking F-35 over Gripen NG [Military.com, 2008-11-20]

Publication: Military.com Issued: Date: 2008-11-20 Reporter: Robert Wall Reporter: Graham Warwick

Norway Picking F-35 over Gripen NG

Publication	Military.com
Issued	Robert Wall, Graham Warwick
Date	2008-11-20
Reporter	www.military.com

Norway's defense ministry has opted for the Lockheed Martin-led F-35 as its future fighter over the Saab Gripen Next Generation.

The F-35 Joint Strike Fighter was the front runner in many respects with Norway having spent money on the fighter's development phase, but the country also made a smaller investment in the competitor. Saab, backed by the Swedish government, was mounting a big challenge and offered generous workshare. In fact, a group of Norwegian industrialists indicated they preferred the Gripen NG *1. The Eurofighter Typhoon withdrew from the competition some time ago,

The government statement Nov. 20 announcing the ministry's recommendation suggests the F-35 won soundly. "The Joint Strike Fighter is considered to be the better of the two candidates regarding intelligence and surveillance, counter-air, air interdict and anti-surface warfare," defense minister Anne-Grete Strýým-Erichsen says. Both candidates would have been acceptable, the government adds.

The decision is a setback for Saab, which was hoping to make Norway the launch customer for the Gripen NG. The next big test comes next year in Brazil where its competitors are the Dassault Rafale and Boeing F/A-18E/F.

"I'm disappointed and surprised about the Norwegian Governments decision, because Gripen fulfills all the operational requirements, to a fixed and known price. In addition to this, we have offered a wide and strong industrial cooperation package," says Saab chief executive Ake Svensson.

For Lockheed Martin it's a big win, in part because Norway is replacing its F-16s. But it also gives the F-35 the first win in a hotly contested international competition.

Norway is looking to buy 48 aircraft *3 and hopes to start fielding them around 2014 *4.

In a roundtable discussion this week with Aviation Week, U.S. Air Force Maj. Gen. Charles Davis, Joint Strike Fighter program executive officer, predicted Norway and Denmark would both eventually side with the JSF. He cited the aircraft's expected capabilities and unique cohesion that it is supposed to foster with other western allies as major selling points for the JSF. "All of them will say yes in the long run," Davis said.

This article first appeared at AviationWeek.com

With acknowledgements to Robert Wall, Graham Warwick and Military.com.

*1        Just like a group of South African "industrialists" *2 indicated they preferred the Gripen JAS39.

*2      Read Bumiputerians.

*3      The SAAF purchased 28 Gripen JAS39s, 19 single-seaters for operational use and 9 dual-seaters for training and certain tasks such as the delivery of special ordnance (especially those where one doesn't want to make any mistake whatsoever with the setdown point). Originally on the shopping list was a quantity of 38 Light Fighter Aircraft (ALFA) to replace the 38 Cheetah C medium fight aircraft that the SAAF had taken into service in 1997.

The Cheetah Cs had a planned initial operational life of 15 years with a pre-planned life extension of another 5 to 10 years.

So the Cheetah Cs were good until at least 2012 and with a very modest expenditure until 2017, even until 2022 with reduce flying time and extra maintenance.

*4      .As I have expounded upon many times the time duration from purchase decision until initial deployment is no longer than 5 years. Here it is 5 years for the newest fighter aircraft in the world. It is less for existing aircraft such as the F16, about 2 to 3 years in that case.

I'm not sure whether the US would sell F35s to the SAAF, but I don't see why not. They certainly wanted to sell F16s to the SAAF in the late 1990s, but were precluded from doing so by a South African Government policy decision which said buy European (it's there in the draft reports). This makes sense because the US had by then a very strict Bribery of Foreign Officials Act while the Europeans had none in place by then. So the SA Government concocted some nonsense about Armscor's problems with the US, which were true but could easily have been resolved by the time the acquisition process commenced.

In any case, the SA Government could have delayed any process to replace the Cheetah Cs until 2007 at the earliest, even later.

By then the SAAF would have finalised its technical requirements (with which is was busy, but far from complete in the 1994 to 1997 timeframe) and once and for all decided on whether it was going to opt for a two-tier or three-tier system of aircraft.

Indeed it was the formal DoD's recommendation to the SA Government to delay any acquisition of new mainstream jet fighters because the SAAF had no money, it was still busy planning and it had 38 Cheetah Cs in service.

But the unholy triumverate of Modise and his motley crew, British aerospace (who had purchased 30% of Saab) and Saab itself (who were desperate for foreign sales, especially after the Swedish Air Force reduced its Gripen requirement by half) decided otherwise.

A £10 million sweetener quickly got the SAAF to change its newly adopted two-tier system to a three-tier system which opened the way for BAe's Hawk jet trainer and BAe/Saab's Gripen JAS39, both of which had been rejected as unsuitable by the SAAF.

It also persuade the SAAF (reluctantly, at least at first) to abandon cost as a criterion for selection of the Lead-In Fighter Trainer (LIFT).

The £10 million sweetener soon gave way to a full-blown scheme of £115 million of commissions, £103 million of which were covert and just £12 million were overt, paid mainly by BAe, but also with healthy contributions by Saab.

And there we have it : R5 billion (1999 Rands) worth of jet trainers which the SAAF actually does not need at all and R7 billion (1999 Rands) worth of jet fighters which the SAAF doesn't need until 2012 at the very earliest.

Couple with a further R70 billion worth of throughlife costs *7, this larceny is grand indeed.

So R1,5 billion in bribes *5 cost the country about R90 billion (in 2008 Rands) over 30 years.

*5      The Head of British Aerospace's IMSO (International Marketing and Sales Organisation), Allan McDonald, has admitted that he himself got a backhander of £5 million for the sale.

The day and date of the contract signature was Friday, 3rd December 1999.

It was a day of great excitement and festivities.

So the next two days were weekend.

And two business days later British Aerospace, using its secret Bahamas-based trading company, transferred £2,5 million into the secret Bahamas-based bank account of one of its agents, Richard Charter.

The very agent who, along with BAe's Allan McDonald, who was alleged in late 2000 by an informer to the Joint Investigating Team, as having "indicated who were to be paid bribes", the same informer having alleged that "British AeroSpace (sic) paid bribes in the amount of £10 million".

*7 Prices

It looks as if Norway got its 48 fifth generation F35 Lightning II jet fighters at about US$52 million each.

The SAAF got its 29 fourth generation Gripen JAS39 jet fighters at about US$60 million each (but in 1998 time value for money).

Typically there is a 2,5% escalation in the US and such a foreign escalation was factored into the Arms Deal acquisitions. This would bring the current purchase price of the Gripen JAS39s to US$77 million each.

But the F35 Lightning II is a fifth generation jet fighter whereas the Gripen JAS39 is a fourth generation jet fighter.

The F35's competition was Saab's Gripen NG (New Generation) with a price of about US$69 million each.

*7 Throughlife costs for Norway's F35 are expected to be about US$20 billion (factor of 8).

Throughlife costs for the SAAF's Gripen JAS are expected to be about R110 billion (factor of 10).

It is no wonder that the International Offers Negotiating Team (IONT) concluded that : "From a financial perspective, it is risky to procure the equipment in advance due to the currency risk implications, as well as the possibility that there may be better -priced suitable alternatives available, should the equipment be procured at the appropriate time." [Page 157] "This was seen In such a serious light that the IONT made a recommendation in this regard to either defer the procurement or stop the I tender for the present moment." [Page 158]

Quote, unquote from the draft Investigation Report to the Auditor General dated 2001-10-18.