Polish Ministry of Defence is scrutinizing the option of creating the Patriot/IBCS acquisition offset agreement annex, pertaining to phase I of the Wisła programme. Solution as such could bring in the finalization of offset-related industrial memorandums closer.
Back in March 2018, shortly before the Wisła Phase I FMS agreement was signed, the Polish Ministry of Defence signed two offset agreements. One with the Lockheed Martin company (value exceeding PLN 724 million) and one with Raytheon (value exceeding PLN 224 million). Even though Lockheed Martin concluded the offset agreements with PGZ in March 2019, Raytheon did not manage to conclude analogous agreements, with the deadline for conclusion being postponed multiple times already.
Responding to our questions, the Press Department at the Operational Centre of the Polish Ministry of Defence stated: “Polish Ministry of Defence is considering the option of adding an annex to the offset agreement concluded with Raytheon Company on 23rd March 2018. The scope of potential amendments would be defined through a negotiation procedure that will involve the Ministry of Defence, PGZ Group and the Raytheon company. Further steps will be a subject to separate announcements”.
So far we have no knowledge on the potential annex or schedule associated with conclusion thereof. In practical terms though it seems that the MoD’s intention associated with the annex is to stop the impasse and finalize the performance agreements by and between Raytheon and the Polish industry.
The conclusion of offset commitment performance agreements is required to initiate establishment of proper potential at the Polish offset-receiving companies in line with the requirements associated with the offset agreements. This is relevant from the point of view of the effort associated with the Wisła programme, both when it comes to the phase I as well as in case of the subsequent one. It would be better for the MoD’s position in negotiation to fully finalize the memorandums related to phase one, before any specific decisions are made with regards to phase II. Thus, the Ministry assumes that phase I needs to come to a conclusion before the next stage begins.
The offset agreement signed with Raytheon covers 31 commitments, including capabilities that are to be delivered by Northrop Grumman. The latter were to be associated with IBCS C2 capabilities or maintenance and manufacturing of the 30 mm Bushmaster II gun. The agreement also covered ability to manufacture and maintain launchers and loading/cargo platforms, as well as to create a certified facility that would deal with administration of and manage the manufacturing, maintenance and customization processes pertaining to the Wisła system and other air defence measures.
Regardless of the offset agreements Raytheon also concluded business memorandums pertaining to the Wisła program, with the Polish manufacturers. One of the memorandums assumes that HSW S.A. would manufacture sixteen M903 launchers for the Polish Wisła systems. The scope of that memorandum, however, differs from the one contained in the offset agreement and thus it may be implemented before finalization of the performance agreements that regulate the offset commitments. Another memorandum of similar nature, signed with the WZE facility, pertains to the DLTM electronic modules that are a part of the M903 launcher system.
The FMS agreement pertaining to phase I of the Wisła programme was signed in March 2018. Its value is defined as USD 4.6 billion. Apart from the agreement above, memorandums have been concluded with the US government pertaining to training or to the Link 16 system. Some elements of the solution, vehicles for instance, are a subject to contracts involving the Polish industry directly. Total value of the first phase of the Wisła programme is defined as 4.75 billion dollars. Two Patriot/IBCS batteries are to be delivered in 2022, whereas the contract also covers the operational support package and some elements of the whole Wisła system, including ones associated with the IBCS. The second phase’s preliminary assumption is to procure another 6 batteries with fire control radars providing 360-degree coverage, extra batch of missiles (PAC-3 MSE or SkyCeptor missiles were being considered, according to previously released information) and SPL (passive) and P-18PL (active) Polish early warning radars integrated with the IBCS system.