Russian contender holds out in protracted tender negotiations (348 words)

Published: 8/14/2001

MiG's protracted negotiations with Austria over the inclusion of the MiG-29SMT in the tender to replace the Austrian's Drakkens may have had some success. This is despite suggestions that the package comprising 24 MiG-29SMTs and six MiG-29UBTs had been rejected by the Austrian Ministry of Defence on the basis that, while cheaper than other options to buy, the MiG alternative was expensive to operate. According to reports, the Austrian Finance Ministry has demanded clarification from the MoD on the technical requirements of the tender, given the MoD's failure to include the significantly cheaper Russian offer of aircraft to fulfill the $1.6 billion contract. A Russian government source, quoted in Russian daily Vedomosti, has said that RSK MiG may be included in the tender again, in part owing to the offer of offsetting the aircraft deal against Russian debts to Austria, estimated to be $3 billion, discussed with the Austrian President, Thomas Klestil, during a visit in February by President Putin to Vienna. There are rumours that the contract value could reduce the debt by as much as 20%, under EU regulations. The aircraft proposed for the tender, will be provided under the MAP agreement between MiG and EADS, with EADS providing maintenance and overhaul services. This agreement will extended at MAKS, following talks between the Russian and German Defence Minsters, Serguey Ivanov and Rudolf Sharping, in a recent meeting in St Petersburg. EADS' championing of the MiG-29SMT over the Eurofighter, in which it is a consortium member, is on the grounds that the MiG-29SMT is available for the Austrians within a much shorter timescale. Welcoming the possibility of inclusion in the tender, EADS however, did say that it is eager to see the terms of the tender, as they are currently written for the Saab/BAe Systems offering of the Grippen. It also seems that the proposed MiG-110 production deal, suggested as part of the MiG-29 package, remains in play, although it is not clear whether it will be achieved with Libyan funding, as reported earlier.

Article ID: 2707