Final rounds in Danish and Norwegian fighter competitions

The Danish and Norwegian air forces are both approaching the final rounds in their competitions to replace ageing F-16 fighters. In both contests, the Lockheed Martin F-35 Lightning II Joint Strike Fighter (JSF) is pitted against the Swedish Saab JAS-39 Gripen C/D, with Germany’s EADS, on behalf of Eurofighter, having broken off negotiations for the Typhoon in December.

Both air forces want 40-48 new fighters

The Royal Danish Air Force wants 48 new fighters and the Defence Ministry in Copenhagen has budgeted US$3.4 billion for their acquisition, with the selection due in 2009 or 2010.

The Royal Norwegian Air Force is looking for 40-48 new aircraft, for some US$5.4-7.0 billion. The Norwegian Defence Ministry plans to recommend its choice to the Storting (Parliament) by the end of 2008.

EADS broke off its talks with the two Scandinavian countries because, it said, both competitions were biased in favour of the JSF. Denmark and Norway both vehemently deny this.

Saab believes that, at least in Norway, the competition is entirely open. According to Marcus Wallenberg, Saab’s Chairman, “We still have the impression that we have been clearly given by the Norwegian Government that this is an open contest, on equal terms. We want to prove to Norwegian defence that we have the best plane. We are also two neighbours. There is a good foundation for industrial cooperation between Sweden and Norway.”

And Søren Gade, Denmark’s Defence Minister, says that “We are running a fair and open contest that is based on the specific aircraft needs of our Air Force and our national defence.”

Major cost difference

Both Saab and Lockheed Martin are offering 100% offsets to Denmark and Norway, with Saab guaranteeing a fixed delivery price and a life cycle cost which, it says, is less than half that of the JSF. Furthermore, Saab is offering early deliveries from 2013.

Lockheed Martin, for its part, is unable to offer either country any firm assurances on cost or delivery dates. According to JSF Program Manager Major General Charles Davis on April 8, “Average unit procurement cost has risen from US$50.2 million to US$69.3 million, based on 2002 dollar values.”

But neither Denmark nor Norway seems willing to forego the large investment that they have made in the JSF’s development phases. Nor should their strong desire to maintain close relations with the United States be underestimated.

Industrial packages

The key to the choice that is finally made by the Norwegian and Danish defence ministries may well be the quality and content of the industrial packages offered by the two bidders.

In Norway, the main beneficiary is likely to be Kongsberg Defence & Aerospace (KDA). In 2007, the company signed framework agreements with Lockheed Martin and Northrop Grumman for the manufacture of composite systems and materials worth up to US$1 billion over more than eight years, requiring the construction of a new composites factory. The initial framework agreements are worth US$209 million with Lockheed Martin and US$105 million with Northrop Grumman. It is reported that KDA has reached a similarly structured agreement with Saab.

In Denmark, Saab has signed a 15-year cooperation agreement with Terma that is worth US$2 billion. And Lockheed Martin is negotiating spin-off contracts with Danish companies Terma, E. Falck Schmidt, IFAD, Infocom, Systematic and Maersk Data. © DAPSS  S.A., 2008, Switzerland

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