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Purchases and defence industry [BLOG]

Photo: Gary Sheftick/US Army
Photo: Gary Sheftick/US Army

When it comes to purchases, everything is pretty clear. Only our greatest ally counts and nobody else. Well, maybe the one to whom our largest ally will entrust subcontracting, or the lessor of Ubotwaffe, because beyond the great water conventional submarines are not produced.

Suppliers from the Holy Land will possibly supply equipment for wiretapping, surveillance and decryption. I sincerely doubt that Rafael and his Stunner will enter the second phase of Wisła, if it ever happens. In my personal opinion, Raytheon will push its solution, which for our Armed Forces will prove to be two to four times more expensive than the Israeli one. This will not even be an act of hostility towards Rafael, but the usual desire to roar back – you counted on more, but if it will be less, you need to make profit from something else. It will be the same with anti-tank missiles. I don't predict Israel's great success. As for purchases, I see Javelins and something for helicopters. The helicopters will be – Sikorsky, Bell or Apache, and so and the appropriate rocket(s). Maybe suppliers from the Holy Land will catch on to the modernization of Mi24, because they have the best solutions. Other suppliers have little to do in our market, maybe except Panzerwaffe - Leopard producers. I reserve again - these are my personal thoughts.

The winning supplier from beyond the great water is LMC. The largest, most efficient and most dedicated to research and development. I am impressed with the organization, practice and class of this group - especially the practice in selling its products. This one makes a great impression. LMC got F35, Himars, various types of rockets and in my opinion 60-70% of purchases of our Armed Forces from the USA. About 15-25% has Raythenon, as long as the second phase of Wisła is with its main share, 5-10% is for NG. VIP airplanes should not be included in the modernization of the Armed Forces in my opinion. Heavy-lift helicopter remains. We'll see what will turn out here - whether Bell or the manufacturer 737Max.

A discussion swept through the media about the cost of buying a fifth generation fighter. Some have expressed the view that as a close ally of the US, we will get planes quickly and cheaply. Nothing could be more wrong. It will be expensive and even very expensive. The defense24 website describes a Belgian acquisition with a slight suggestion that we might get a similar price - about USD 125 million per item. Unfortunately not. In Belgium, LMC competed with Rafalel, Eurothyphoon and the American F-18. It was forced to present a good, competitive offer and include Belgian companies in the supply chain. In Poland, however, it does not have to compete with anyone. On our knees we are begging the Americans to sell us the F35 and we will pay every price. And we want it fast, preferably a contract before the elections, and if not a contract, at least a letter of intent, necessarily signed in front of the cameras. While experienced players from LMC can agree to provide in the contract a price comparable with the Belgian one - political reasons - we will pay double or triple for the armament, logistics package etc. And in the contract they will introduce an order to buy everything from them, special procedures in the USA, etc. So, if independent (cheaper) manufacturers of bombs etc. for F 35 appear, and they appear with the increase in sales, we will not be able to buy from them the cheaper equipment. The situation will be similar to that of F16. Industrial cooperation will be tiny and probably unfortunately wasteful. It will be good if LMC increases orders from companies they work well with - and there are one or two in the our state defense industry. And it's not even about entering the supply chain of F 35, but about some manufacture for LMC in general. Well, maybe they will increase purchases in their own factories located in Poland, which will not be so bad.

All this aircraft with equipment will cost us well over USD 150 million, and this will result from our wrong purchase strategy - no matter what, but quickly. The answer to this is usually one: you want quickly, you pay a lot. And there is no wonder because this attitude is in accordance with the rules of trade and negotiation. Bonuses in the LMC for the Polish contract will be solid and fair. Before concluding contracts, the corporations promise a lot - cooperation, export from Poland, etc. Administration, for which one of the main priorities is to support American companies, also promises a lot, because that is its role.

And then it turns out that something is missing in the contract, because it was simply not drafted. And it would be enough to read, even on the Internet, tips on how to negotiate with the Americans. But as usual, we throw ourselves around their neck and beg them to sell. And they sell, without sentiments, dictating the price and other conditions so as to earn good money for the next thirty years. The Anglo-Saxon legal practice shows that only what is stated in the contract matters. Agreements and promises made in the negotiations which are not included in the contract shall lose their validity upon signature. Remember that the cost of purchasing weapons for the life cycle costs are as 30 to 70. What's more, if it turns out that the delivered equipment does not meet the requirements set out in the FMS contract, there is no one to sue. American courts have repeatedly dismissed government claims against producers as inadmissible. And to deal with the US government under US law in the US is a very tough task. Amicable negotiations remain in which we are in a very weak position. The only relatively strong "holding" towards the American manufacturer is the offset agreement.

Beyond these considerations, I leave the operational need to purchase the F35, the possibility of integrating it into the Polish Armed Forces, expenditure on the development of infrastructure for its use, costs of use, whether it is easily or hardly detectable for a potential opponent, etc.

Currently, there is little left to the Polish state industry, e.g. modernization of Leopards. It goes slowly, but it is said that it moves forward, especially in Poznań. However, the deadlines set out in the contract cannot be met and the budget will probably also be exceeded.

The T72 modification, widely criticized on the internet and by the opposition media, is not so bad to maintain the ability to repair tanks, jobs and electoral reasons. Of course, compared to the T72B3M our modified vehicle is weak, actually there is nothing to compare, but better one than none. Money stays in the country, people do not lose technical skills. Of course, it would be nice if the modified vehicle had similar characteristics to the T72B3, but maybe we will come to this in the near future, at least in part. Regarding the issue of developing your own "Wilk" tank, unfortunately it can come out just like the export of the state-owned arms industry, which some prominent specialists announced two or three years ago. It was supposed to grow fast, and how it is everyone may see. If it is okay, we will finish the planned production of Rak, Krab, a part of Narew, maybe Tytan and maybe some other small things. But after big US purchases, there won't be much money left and many programs will have to be shortened or frozen.

And lawyers won't benefit much either. You do not need legal advisors to negotiate FMS contracts on both Polish and American side, lawyers from the Ministry, Defense Department and internal departments in corporations are sufficient.