Israel's aircraft replenishment tenders have always attracted world attention. This time, though, the competition between Boeing and Lockheed Martin, the two US manufacturers supplying us with aircraft, burst all known bounds. The tug-of-war lasted for ten months. Boeing offered an existing plane, the F15I, supplied to Israel in the past, while Lockheed-Martin offered a plane that exists only on paper, the F16I. Initially, this considerably dimmed its prospects, yet it ultimately prevailed. The plane’s range was upgraded to that of the F15I. It was also helped by the fact that different versions of the F16 are already operative in Israel and it is known as being reliable, and possessing proven operational capability.
This is Israel's biggest ever weapons deal. Its ultimate volume will reach $4.5 billion. At the initial stage, Israel will purchase 50 F16s for $2.5 billion. The manufacturers have given Israel a two-year option to purchase another 60 aircraft of this model, at the "reduced" price of $2 billion.
The first planes will be supplied to Israel Air Force at the beginning of 2003, two years as of the signing of the agreement. The US Air Force, which is actually selling the planes, set August 20, 2001 as the target date for the further purchase option. If Israel exercises the option, then the remaining aircraft will be supplied in 2005, over a 24-month term.
Prime Minister Ehud Barak could not contain himself. The professional evaluation process commenced, matured and was concluded under the Likud government, and outgoing Minister of Defence Moshe Arens set a date for a concluding discussion and a press conference in which he wanted to announce his decision to adopt the IAF’s recommendation and purchase the F16s. But then the telephone rang, and Barak was on the line.
He chose to publish his decision during his first visit to the United States, and told Defence Secretary William Cohen of his decision. Cohen gave Lockheed-Martin the good news, and although the concern hastened to announce that no official decision had yet come from Israel, it appears that the deal will be signed in a month’s time, on August 20.
Why did Lockheed-Martin win? It’s a simple equation. According to analysts and security experts, the F16 has 75% of the capability of the F15I, and is supplied at half the price. Even though the price of the F15I this time tumbled to $70 million per plane, compared to $83 million in the previous deal, this was still significantly more costly than the offer of the competition, which was for $50 million per aircraft.
This time, in contrast to previous deals, the IAF was mainly concerned with figures. Israel currently deploys four outdated fighter plane squadrons which will play no significant role in any future war.
The decision to purchase F16Is means that most of the aircraft used by IAF in the coming decades will be of Lockheed-Martin manufacture.
Apart from its large volume, the current aircraft transaction also incorporates the most extensive co-operation ever undertaken in terms of Israel's defence industries. Most principal manufacturers in Israel will supply products for the new planes, and for other aircraft of the same manufacture. Setoff procurement will amount to $900 million, less than 50% of the deal.
Despite attempts by the Ministry of Defence and the IAI to have Elta radar, originally developed for the Lavi project, fitted into the F16s, the planes will not have Israeli radar, and the original Northrop Grumman system will again be supplied. However, the plane’s avionics systems will be all-Israeli, very much like in the previous deal in which the F15I was purchased.
Lockheed-Martin singed a series of co-operation agreements with Israeli industries, which will find expression, for the first time, in this deal. Part of the plane’s fuselage will be built by IAI, the Weapons Development Authority will supply Python 4 air-to-air missiles, and possibly an upgraded version of it; it will also supply Popeye 2 air-to ground missiles, a lighter version of the original missile that is too heavy for the F-16 to carry. Elbit Systems will supply state-of-the-art pilot helmets, enabling the pilots to obtain flight data in the helmet visor without having to look at the instrument panel, and other industries will supply means of communication and friendly aircraft identification systems.
Apart from the fact that the planes will be sold to Israel at the lowest ever price, IAF will also receive a gift from the happy winner. Lockheed-Martin will evidently supply two planes free of charge, as a reward for Israel's making the right choice.
Published by Israel's Business Arena July 18, 1999