Israel Aircraft Industries (IAI)has told Raytheon, its airborne early warning (AEW) programmes partner, that a high price on its proposal for Turkey could mean an end to their teaming agreement.
An IAI/Raytheon team was one of the losers in the Australian Wedgetail AEW competition, won by Boeing offering 737-700s fitted with Northrop-Grumman's multirole electronically scanned array radar. Boeing's price was A$300 million ($195 million) cheaper than rival bids from Raytheon and Lockheed Martin (Flight International, 28 July-3 August).
IAI and Raytheon are offering three Phalcon AEW systems, mounted on Airbus A310 platforms, to the Turkish air force. The Phalcon is made by Elta, an IAI subsidiary. The date for submitting the proposals for the Turkish competition is approaching.
Senior IAI officials recently met Raytheon's management and made it clear that the offer to Turkey should be in the "expected range" of between $900 million and $1.4 billion, according to the selected configuration - the number of operator consoles and the ancillary equipment specification.
The IAI officials told Raytheon that other teaming arrangements will be considered if the price is not adjusted to "market conditions".
Boeing's win in Australia is seen as giving it an advantage in the Turkish competition, particularly as the latter delayed making a decision until completion of the Wedgetail assessment. Potentially, the only difference between the two nations' aircraft will be the number of operator consoles.
Turkey is an important market for Israeli defence companies. There are close industrial links between the two countries' aerospace and defence industries. Turkey wants 15% of the programme by value to be sourced locally and an offset of 50% against the non-Turkish work.
Losing the Australian contract was a blow to the Raytheon/IAI team. IAI was surprised by the high price of the proposal submitted by Raytheon as prime contractor.
Source: Flight International
