The French ministry of defence (DGA) and Dassault Aviation are near to a landmark agreement under which the price of the Rafale fighter would be cut by 10% in return for a multi-year procurement of up to 48 aircraft.
This will be the first time such an agreement, commonplace in the USA, has been reached between a French weapons manufacturer and the Government.
The DGA called in Dassault president Serge Dassault for last-minute talks on 15 January, which are said by one source to have been "partially successful", although Dassault is still holding out for a lower cut in the price of the multi-role aircraft.
Once signed, the deal will effectively kick off Rafale series production, giving the programme a boost at a time when Dassault is campaigning hard to win its first export order, from the United Arab Emirates (UAE). The UAE is expected to divide its fighter purchase between the Lockheed Martin F-16 Block 60 and a smaller number of Rafales.
The DGA is now undergoing a major restructuring programme as part of an effort to improve procurement efficiency and reduce costs. The Rafale agreement is expected to clear the way for similar procurement methods on other major programmes, such as the Tiger attack helicopter and its Trigat missile.
The French Government has made it clear that it expects the cost of defence programmes to be cut by 30% overall in the next five years, but the negotiations with Dassault, which have lasted three months, have been hard-fought, with the manufacturer claiming that it could cut prices by just 2.5%. The Government - Dassault's main customer - responded by threatening to cut its total planned order for 220 aircraft. According to one source, "-the Government began to make things very difficult for us".
Dassault also needs to secure a deal as soon as possible to ensure that the privately owned company can obtain the highest possible valuation before the Government-required merger with Aerospatiale - it is on the basis of this that the Dassault family's stake in the eventual group will be negotiated.
The agreement will also mean that Dassault can go ahead with early delivery of ten aircraft to the French air force, seen as necessary for the programme is to have sufficient national credibility to support export sales.
Source: Flight International
