31 July 2018

I'm Think that Politics is Trumping Normal Defense Procurement

The IAF is is negotiating contract with Boeing for their KC-46 tanker in a non-competitive process, despite the fact that the Airbus alternative looks to be about 20% less, and a domestic conversion of surplus 767 would be about 50% less.

Assuming that Binyamin Netanyahu hasn't found a way to profit personally from the deal, (he's currently the target of multiple corruption investigations) it is pretty clear that politics, and not military exigencies is driving this deal:
The Israel Air Force and the Ministry of Defense are planning to procure 4-6 new planes for airborne refueling from US company Boeing without asking Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) or Airbus for a price bid or asking them to take part in a tender. These are the only three companies in the world that manufacture an air refueling aircraft or convert passenger and cargo planes to a refueling configuration.

The air force's refueling missions are currently based on outdated Boeing passenger 707s manufactured over 50 years ago and converted to refueling configuration. These planes, called Ram by the air force, receive regular maintenance from IAI.

The IDF has been preparing for years for a huge deal to procure new planes for airborne refueling missions, but the process has been repeatedly postponed, primarily due to more urgent procurement programs. The Ministry of Defense is now saying that there is no avoiding a procurement deal because of the very advanced age of the existing refueling aircraft and the possible expansion in the volume of the air force's refueling missions, with an emphasis on remote theaters, such as Iran.

Israel is casting eyes at Boeings new KC-46 airborne refueling aircraft, which are in use by the US air force. Sources in the sector say that these planes cost $250-300 million. An Airbus 330 converted for aerial refueling missions costs $200-250 million, while an IAI refueling aircraft based on the Boeing 767 and converted from passenger or cargo configurations costs $100-130 million, half the price of the new plane to be sold to Israel by Boeing.


Defense sources have found it difficult in recent days to conceal their alarm about the emerging deal between the Ministry of Defense and Boeing without a tender proceeding or transparency and without consideration of the long-term effect on IAI. Conversion of planes is done at IAI's Bedek Aviation Group's facilities and hundreds of its employees are involved. Defense sources warned that giving preference for a new and very expensive like that of Boeing over an "as good as new" and cheaper aircraft from IAI would deal the Israeli company a severe blow. "It is not just the money and the livelihood of many hundreds of employees," a local industry source said. "Procurement of planes from IAI by the Israeli air force has great global marketing significance, because the IDF is regarded as an advanced, very professional, and esteemed army. If it procures a system, it validates it and gives it something like a quality standard, followed by additional deals that are usually larger."
This really is profoundly odd.


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