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Royal Navy to Induct the Crowsnet New AEW Helicopter by 2020

The British Defence Minister Harriett Baldwin announced a £269M (US$327 million) deal for the procurement of 10 aerial surveillance systems to operate on the Royal Navy new Queen Elizabeth Class aircraft carriers. Initial deliveries are expected in 2018 with initial operational capability in 2020.

Spy’Ranger – a New Mini-Drone for the French Army

Ghost Ships Gather in Scotland for Naval Robotic Wargames

Almost 50 unmanned systems from the UK, USA, Sweden, Germany, France, Italy, and Austria participated in a month-long war game for robots, organized by the Royal Navy. Spanning air, surface and the undersea domain, ‘Unmanned Warrior 2016’ (UW16), has been in the making for almost two years, with dozens of players from different nations invited to take part in this unique operational demonstration, held as part of NATO’s Joint Warrior exercise.

New C-IED Jammer for the French Army

The ECLIPSE C-IED jammer recently completed qualification testing with the French Defense Procurement and Technology Agency (DGA), under the BARAGE program.

France to Upgrade SAMP/T Extended Range Air Defense System

The French Ministry of Defence has launched a modernization program for the country's SAMP/T ground based air defense system. The Aster Block 1 NT (New Technology) programme will cover the modernization of the Aster 30 interceptor and associated SAMP/T air defense system that will evolve with missile defense capabilities.

Milipol 2015: Unmanned Vehicles for Homeland Security

A collection of photos taken at Milipol 2015 depicting new unmanned systems, payloads and robotics spotted by Defense Update team at the event.

GDLS, Thales team to offer new wheeled armored vehicles to Australia,

The Eyes of the Future RN Carrier Strike Force

French Defense awards Scorpion development contracts worth €752 million

Thales introduces AESA based maritime surveillance airborne radar

British Watchkeeper drones begin combat ISTAR missions over Afghanistan

French Army could expand UAS choices

Eurosatory 2014 – First Impressions

Thales Develops a New Generation Laser Designation Pod for Rafale, Mirage 2000

Milipol 2013: Thales Unveil an Integrated Command and Control System for Mega Events

U.K. Evaluate French Datalink for Watchkeeper

Thales is due to complete a study that will assess the possibility of integrating its Thales Modem for Air (TMA) 6000 wideband airborne Ku-band datalink terminal on the WK450 Watchkeeper UAV – Digital Battlespace reports. The company is under... Read the whole post... »

Thales Deutchland, Atlas Elektronik to Modernize Three F-124 Frigates for the German Navy

Atlas Elektronik and Thales Deutschland have jointly been commissioned to modernize the combat system of the German Class F124 frigates. The modernization will include the hardware replacement and software upgrades of the vessel's Combat Direction System (CDS). It is scheduled to be completed in 2017.

Integrating European Radars with AEGIS/SM-3 Missile Defenses

Integration of Thales SMART-L radar with AEGIS/SM-3 based missile defense systems was recently demonstrated as part of evaluation of integration of European based sensors into the US European Phased Adaptive Approach (EPAA) missile defense initiative.

Supacat, Thales Deliver prototypes for Australian Testing and Evaluation

Evaluation of new combat vehicles for the Australian Army will sonn begin, with the delivery of the first Hawkei protected vehicle by Thales, for Project LAND 121 Phase 4. Supacat also delivered the first improved Special Operations Vehicles (SOV) developed under Project JP2097 Phase 1B.

Supacat, Thales Deliver prototypes for Australian Testing and Evaluation

Evaluation of new combat vehicles for the Australian Army will sonn begin, with the delivery of the first Hawkei protected vehicle by Thales, for Project LAND 121 Phase 4. Supacat also delivered the first improved Special Operations Vehicles (SOV) developed under Project JP2097 Phase 1B.

Britain’s Next Search-and-Rescue Helicopters: Civilian Contractors

The UK Ministry of Defence (MoD) and Maritime and Coastguard Agency (MCA) provide a 24-hour military and civil helicopter Search and Rescue (SAR) service for the UK and local regions from 12 bases, typically at 15 minutes notice. At present, this SAR helicopter service is provided by about 40 Royal Navy and Royal Air Force Mk 5 Sea Kings and civilian helicopters under contract to the MCA, though other British forces are equipped for these tasks in emergencies. These machines must cover 11,000 km of coastline, and 3.6 million square km of ocean.

There has been a global trend toward public-private partnerships to perform some Coast Guard and SAR functions, including Australia’s billion-dollar Coastwatch program. Now Great Britain is jumping into the fray with a related approach.

Britain’s Helicopter Search and Rescue: SAR-H and Beyond

The Current Fleet

Britain’s Mk 5 Sea Kings are 40-50 years old. They’ve been upgraded several times, and the Sea King is renowned for its extreme stability and precision. To demonstrate, a TV show once had a SAR rescuer lowered down to a man holding a champagne glass in place, whereupon the rescuer successfully poured a glass of champagne while the Sea King hovered. Nothing lasts forever, though, and Britain’s entire Sea King fleet is set to retire by 2016.

The Royal Air Force currently operates 6 of Britain’s 12 search and rescue bases (Chivenor, Wattisham, Valley, Boulmer, Leconfield and Lossiemouth), and the Royal Navy operates 2 more (771 Sqn at Culdrose and HMS Gannet at Prestwick). All use Sea Kings. The year 2005 saw 441 callouts, and 370 people rescued via the Royal Navy’s SAR groups alone. Those figures aren’t unusual.

The UK Maritime and Coastguard Agency (MCA) runs the remaining 4 bases (Lee-on Solent and Portland in the south, Sumburgh and Stornoway in the north), where Canadian-based CHC Helicopters began operating in July 2007 under a 5-year contract worth GBP 20 million per year. CHC’s AW139s will continue operating in the south until SAR-H is fielded, but their S-92s in the north will be replaced by Bristow’s S-92s.

SAR-H

In line with its extensive public/private partnering background and penchant for long term deals, The UK’s Ministry of Defence and Department for Transport initially envisioned the Joint Search and Rescue – Helicopter (SAR-H) Project as a GBP 1 billion ($1.89 billion at current conversion) joint MOD/MCA Private Finance Initiative competition in cooperation with the MCA, though some reports placed its value as high as GBP 6 billion.

Faced with these recapitalization costs, the decision to examine a public/ private partnership approach is understandable. A joint MCA and MOD Integrated Project Team (SAR-H IPT) based at DPA Abbey Wood, was charged with implementing it, even as the UK government began a debate about the proper role of the rescue services. Including the hot topic of whether they should be given a direct role to help deal with inland emergencies, when rescue workers need rapid access.

Issues were sorted, and by February 2009, the UK MoD had a preferred bidder, with a preferred helicopter. Before Sikorsky’s S-92 could become Britain’s future SAR mainstay out to 2037, however, the incoming coalition government suspended the program in June 2010, pending review. Then, a bombshell struck, as the winning bidder reported that it had discovered a conflict of interest within its team. SAR-H was canceled in February 2011.

The idea was reborn at the end of November 2011, as a 10-year service contract open to competition from across Europe, and beyond. This would be a fully privatized service, similar to that run by the Maritime and coastguard Agency (MCA). The total value is GBP 2.0 – 3.1 billion, and there will be 2 coverage zones to bid on, singly or together – so a firm or consortium could offer a combined bid, plus 2 individual bids for evaluation.

The Lot 1 area will include the vicinity of MCA Sumburgh, MCA Stornoway, RN Culdrose, RAF Leconfield and RAF Valley. Minimum rescue capacity per aircraft is 8 casualties/survivors (2 of which could be stretchered) and minimum radius of action is 200 nm/ 370 km, and 250 nm/ 463 km at MCA Stornoway. The Lot 1 contract would run for up to 13 years, including including an implementation phase of up to 2 years, a 10-year operational delivery phase, plus an additional 24-month option at each base [DID: we know, that doesn’t necessarily add]. Estimated value range is GBP 1.2 – 1.8 billion.

The Lot 2 area will include the vicinity of MCA Lee-on-Solent, RAF Chivenor, RN Prestwick, RAF Lossiemouth and RAF Wattisham. Minimum rescue capacity per aircraft is just 4 casualties/survivors (2 of which could be stretchered), and minimum radius of action is just 170 nm/ 315 km. The Lot 2 contract would run for up to 11 years, including an implementation phase of up to 2 years, an 8-year operational delivery phase, plus an additional 24-month option at each base [DID: we know, that doesn’t necessarily add]. Estimated value range is GBP 800 million – 1.3 billion.

The MCA’s original information page regarding the initial SAR-H solicitation noted that Falkland Islands SAR capability remained a potential option for inclusion within the harmonized program. As one might expect, the Falklands are not mentioned at all in the new civilian framework.

Contracts & Key Events:

June 12/12: New direction confirmed. Minister for the Armed Forces Nick Harvey enters the following statement into the UK House of Commons Hansard:

“The Defence Rotary Wing Capability Study… is now complete… the findings include no major changes to our previously announced plans… The study confirmed the following plans:

…to move the MOD’s rotary wing capability to four core fleets, the [CH-47] Chinook, [AW159] Wildcat, [AW101] Merlin and [WAH-64D] Apache helicopters… confirmed the end of MOD provision of Rotary Wing Search and Rescue at the remaining eight military bases upon withdrawal of the Sea King in April 2016. This will then be performed by a contractor through the Department for Transport, as the Secretary of State for Transport announced to Parliament on 28 November 2011, Official Report, columns 52-53WS.”

July 12/11: Waypoint AirMed and Rescue reports that the UK aims to maintain coverage from its 4 existing SAR bases for up to 5 more years as a stopgap, after the 2007 contract expires in 2012:

“The existing MCA helicopter fleet, operated by CHC, is set to transfer to the Republic of Ireland in 2012… Philip Hammond, UK secretary of state for transport, announced to parliament on 11 July that to ensure the continuity of services from Portland, Lee on Solent, Shetland and the Isle of Lewis, the Department for Transport will run a competition to procure an interim service for a period of up to five years.”

May 4/11: Long rescue. A CHC S-92 based at Stornoway flies a 9:21 SAR mission with 2 refuelings, covering a total distance of 971.6 nautical miles. The SAR crew were sent to a medical incident on board MV Stena Perros, and evacuated the patient to medical care in Sligo, Ireland. CHC.

Jan 13/11: Lobbying. Turns out that Prime Minister Cameron has been lobbied by an unusual source, who wants to keep the search and rescue services within the military. That would be Prince William, who is currently flying as a SAR pilot from RAF Valley, on Anglesey, north Wales. The Telegraph.

June 17/10: Suspended. The SAR-H initiative is suspended by Britain’s incoming coalition government, following a review into spending decisions made by the previous Labour administration. UK Treasury Chief Secretary, Danny Alexander makes the announcement in Parliament. Shephard Group.

Feb 22/10: Sikorsky announces a new set of upgrades for the S-92, including a Search and Rescue Automatic Flight Control System, and a load-sensing cargo hook that automatically updates aircraft weight and balance readings. Beginning in October, Sikorsky plans to introduce a strengthened main transmission housing developed for the military H-92, after it clears the certification process. The new housing is designed for longer life, and is intended to “reduce unscheduled maintenance by eliminating such possibilities as the foot-mount cracks recently experienced by some operators.”

March 23/09: S-92. Sikorsky announces that it had furnished replacement studs and tools to all S-92 operators, and that 50 of 91 aircraft had been reworked already.

March 20/09: S-92. Canada’s Transportation Safety Board identifies a broken titanium stud as part of the downed S-92 helicopter’s gearbox oil filter assembly. Sikorsky had previously recommended that this stud be replaced with a steel stud in all serving S-92s, within one year or 1,250 flight hours. CBC News.

March 11/09: S-92 crash. An S-92 operated by Cougar Helicopters goes down in the sea with 18 people aboard, while ferrying workers to one of the offshore oil rigs off of Newfoundland, Canada. In the end, only 1 of the 18 passengers survives. Standard procedures give all passengers immersion suits, but winds were running between 25-35 knots, with a 3m/ 9-10 foot swell, and water temperatures near freezing. The Globe and Mail | See also CBC and Flight International report & photos. re: later Canadian TSB findings.

Nov 29/07: SKIOS & SAR. Another public-private partnership reaches into the SAR sphere, as the SKIOS through-life maintenance contract for the UK’s Sea Kings extends to search and rescue helicopters in Phase 2. See: “SKIOS for Sea Kings: Availability Contract Covers Through-Life Maintenance.”

May 9/06: The UK MoD and UK MCA make the initial announcement concerning the SAR-H project. UK MoD | UK MCA.

Additional Readings:

• UK Department for Transport – UK Search & Rescue Helicopter Service. New solicitation, posted in in the Official Journal of the European Union.

• UK Maritime and Coastguard Agency – Search and Rescue Framework for the United Kingdom of Great Britain and Northern Ireland [PDF].

• CHC Helicopters – Search and Rescue

• Financial Times (May 10/06) – Talks To Begin Over £1bn Contract For Search And Rescue Helicopters

• DID (Feb 9/06) – Britain Prepares to Outsource Royal Marine Auxilliary Service. Helicopter SAR isn’t alone.

Britain’s Next Search-and-Rescue Helicopters: Civilian Contractors

The UK Ministry of Defence (MoD) and Maritime and Coastguard Agency (MCA) provide a 24-hour military and civil helicopter Search and Rescue (SAR) service for the UK and local regions from 12 bases, typically at 15 minutes notice. At present, this SAR helicopter service is provided by about 40 Royal Navy and Royal Air Force Mk 5 Sea Kings and civilian helicopters under contract to the MCA, though other British forces are equipped for these tasks in emergencies. These machines must cover 11,000 km of coastline, and 3.6 million square km of ocean.

There has been a global trend toward public-private partnerships to perform some Coast Guard and SAR functions, including Australia’s billion-dollar Coastwatch program. Now Great Britain is jumping into the fray with a related approach.

Britain’s Helicopter Search and Rescue: SAR-H and Beyond

The Current Fleet

Britain’s Mk 5 Sea Kings are 40-50 years old. They’ve been upgraded several times, and the Sea King is renowned for its extreme stability and precision. To demonstrate, a TV show once had a SAR rescuer lowered down to a man holding a champagne glass in place, whereupon the rescuer successfully poured a glass of champagne while the Sea King hovered. Nothing lasts forever, though, and Britain’s entire Sea King fleet is set to retire by 2016.

The Royal Air Force currently operates 6 of Britain’s 12 search and rescue bases (Chivenor, Wattisham, Valley, Boulmer, Leconfield and Lossiemouth), and the Royal Navy operates 2 more (771 Sqn at Culdrose and HMS Gannet at Prestwick). All use Sea Kings. The year 2005 saw 441 callouts, and 370 people rescued via the Royal Navy’s SAR groups alone. Those figures aren’t unusual.

The UK Maritime and Coastguard Agency (MCA) runs the remaining 4 bases (Lee-on Solent and Portland in the south, Sumburgh and Stornoway in the north), where Canadian-based CHC Helicopters began operating in July 2007 under a 5-year contract worth GBP 20 million per year. CHC’s AW139s will continue operating in the south until SAR-H is fielded, but their S-92s in the north will be replaced by Bristow’s S-92s.

SAR-H

In line with its extensive public/private partnering background and penchant for long term deals, The UK’s Ministry of Defence and Department for Transport initially envisioned the Joint Search and Rescue – Helicopter (SAR-H) Project as a GBP 1 billion ($1.89 billion at current conversion) joint MOD/MCA Private Finance Initiative competition in cooperation with the MCA, though some reports placed its value as high as GBP 6 billion.

Faced with these recapitalization costs, the decision to examine a public/ private partnership approach is understandable. A joint MCA and MOD Integrated Project Team (SAR-H IPT) based at DPA Abbey Wood, was charged with implementing it, even as the UK government began a debate about the proper role of the rescue services. Including the hot topic of whether they should be given a direct role to help deal with inland emergencies, when rescue workers need rapid access.

Issues were sorted, and by February 2009, the UK MoD had a preferred bidder, with a preferred helicopter. Before Sikorsky’s S-92 could become Britain’s future SAR mainstay out to 2037, however, the incoming coalition government suspended the program in June 2010, pending review. Then, a bombshell struck, as the winning bidder reported that it had discovered a conflict of interest within its team. SAR-H was canceled in February 2011.

The idea was reborn at the end of November 2011, as a 10-year service contract open to competition from across Europe, and beyond. This would be a fully privatized service, similar to that run by the Maritime and coastguard Agency (MCA). The total value is GBP 2.0 – 3.1 billion, and there will be 2 coverage zones to bid on, singly or together – so a firm or consortium could offer a combined bid, plus 2 individual bids for evaluation.

The Lot 1 area will include the vicinity of MCA Sumburgh, MCA Stornoway, RN Culdrose, RAF Leconfield and RAF Valley. Minimum rescue capacity per aircraft is 8 casualties/survivors (2 of which could be stretchered) and minimum radius of action is 200 nm/ 370 km, and 250 nm/ 463 km at MCA Stornoway. The Lot 1 contract would run for up to 13 years, including including an implementation phase of up to 2 years, a 10-year operational delivery phase, plus an additional 24-month option at each base [DID: we know, that doesn’t necessarily add]. Estimated value range is GBP 1.2 – 1.8 billion.

The Lot 2 area will include the vicinity of MCA Lee-on-Solent, RAF Chivenor, RN Prestwick, RAF Lossiemouth and RAF Wattisham. Minimum rescue capacity per aircraft is just 4 casualties/survivors (2 of which could be stretchered), and minimum radius of action is just 170 nm/ 315 km. The Lot 2 contract would run for up to 11 years, including an implementation phase of up to 2 years, an 8-year operational delivery phase, plus an additional 24-month option at each base [DID: we know, that doesn’t necessarily add]. Estimated value range is GBP 800 million – 1.3 billion.

The MCA’s original information page regarding the initial SAR-H solicitation noted that Falkland Islands SAR capability remained a potential option for inclusion within the harmonized program. As one might expect, the Falklands are not mentioned at all in the new civilian framework.

Contracts & Key Events:

June 12/12: New direction confirmed. Minister for the Armed Forces Nick Harvey enters the following statement into the UK House of Commons Hansard:

“The Defence Rotary Wing Capability Study… is now complete… the findings include no major changes to our previously announced plans… The study confirmed the following plans:

…to move the MOD’s rotary wing capability to four core fleets, the [CH-47] Chinook, [AW159] Wildcat, [AW101] Merlin and [WAH-64D] Apache helicopters… confirmed the end of MOD provision of Rotary Wing Search and Rescue at the remaining eight military bases upon withdrawal of the Sea King in April 2016. This will then be performed by a contractor through the Department for Transport, as the Secretary of State for Transport announced to Parliament on 28 November 2011, Official Report, columns 52-53WS.”

July 12/11: Waypoint AirMed and Rescue reports that the UK aims to maintain coverage from its 4 existing SAR bases for up to 5 more years as a stopgap, after the 2007 contract expires in 2012:

“The existing MCA helicopter fleet, operated by CHC, is set to transfer to the Republic of Ireland in 2012… Philip Hammond, UK secretary of state for transport, announced to parliament on 11 July that to ensure the continuity of services from Portland, Lee on Solent, Shetland and the Isle of Lewis, the Department for Transport will run a competition to procure an interim service for a period of up to five years.”

May 4/11: Long rescue. A CHC S-92 based at Stornoway flies a 9:21 SAR mission with 2 refuelings, covering a total distance of 971.6 nautical miles. The SAR crew were sent to a medical incident on board MV Stena Perros, and evacuated the patient to medical care in Sligo, Ireland. CHC.

Jan 13/11: Lobbying. Turns out that Prime Minister Cameron has been lobbied by an unusual source, who wants to keep the search and rescue services within the military. That would be Prince William, who is currently flying as a SAR pilot from RAF Valley, on Anglesey, north Wales. The Telegraph.

June 17/10: Suspended. The SAR-H initiative is suspended by Britain’s incoming coalition government, following a review into spending decisions made by the previous Labour administration. UK Treasury Chief Secretary, Danny Alexander makes the announcement in Parliament. Shephard Group.

Feb 22/10: Sikorsky announces a new set of upgrades for the S-92, including a Search and Rescue Automatic Flight Control System, and a load-sensing cargo hook that automatically updates aircraft weight and balance readings. Beginning in October, Sikorsky plans to introduce a strengthened main transmission housing developed for the military H-92, after it clears the certification process. The new housing is designed for longer life, and is intended to “reduce unscheduled maintenance by eliminating such possibilities as the foot-mount cracks recently experienced by some operators.”

March 23/09: S-92. Sikorsky announces that it had furnished replacement studs and tools to all S-92 operators, and that 50 of 91 aircraft had been reworked already.

March 20/09: S-92. Canada’s Transportation Safety Board identifies a broken titanium stud as part of the downed S-92 helicopter’s gearbox oil filter assembly. Sikorsky had previously recommended that this stud be replaced with a steel stud in all serving S-92s, within one year or 1,250 flight hours. CBC News.

March 11/09: S-92 crash. An S-92 operated by Cougar Helicopters goes down in the sea with 18 people aboard, while ferrying workers to one of the offshore oil rigs off of Newfoundland, Canada. In the end, only 1 of the 18 passengers survives. Standard procedures give all passengers immersion suits, but winds were running between 25-35 knots, with a 3m/ 9-10 foot swell, and water temperatures near freezing. The Globe and Mail | See also CBC and Flight International report & photos. re: later Canadian TSB findings.

Nov 29/07: SKIOS & SAR. Another public-private partnership reaches into the SAR sphere, as the SKIOS through-life maintenance contract for the UK’s Sea Kings extends to search and rescue helicopters in Phase 2. See: “SKIOS for Sea Kings: Availability Contract Covers Through-Life Maintenance.”

May 9/06: The UK MoD and UK MCA make the initial announcement concerning the SAR-H project. UK MoD | UK MCA.

Additional Readings:

• UK Department for Transport – UK Search & Rescue Helicopter Service. New solicitation, posted in in the Official Journal of the European Union.

• UK Maritime and Coastguard Agency – Search and Rescue Framework for the United Kingdom of Great Britain and Northern Ireland [PDF].

• CHC Helicopters – Search and Rescue

• Financial Times (May 10/06) – Talks To Begin Over £1bn Contract For Search And Rescue Helicopters

• DID (Feb 9/06) – Britain Prepares to Outsource Royal Marine Auxilliary Service. Helicopter SAR isn’t alone.

JTRS Man Portable Radios To Complete LRIP

The Joint Tactical Radio System (JTRS) is the next generation of radios for the U.S. armed forces. It is being developed and produced in a variety of form factors and roles to support ships, vehicles, aircraft and man portable systems. The program has had its ups-and-downs but recently has made a decent amount of progress. The man portable Rifleman Radio recently had a Full Rate Production (FRP) decision and was approved to enter that phase of the acquisition cycle.

The current Low Rate Initial Production (LRIP) contract belongs to a team of General Dynamics (GD); French company, Thales SA (HO), and Rockwell COllins (COL) to build the initial lot of over 6,000. This decision allows LRIP to be completed with the buyout of the remaining 13,000 odd systems to get to 10% of the planned production buy of 193,000 units.

The AN/PRC-154 Rifleman Radio provides voice and data simultaneous capability and is carried on the body of a soldier. It is used for intra-squad level communications and is compatible with current smartphone technology.

When the LRIP production is complete the Pentagon will have another contest for the FRP contract. This means that despite their good performance on the current contract there is no guarantee that the GD led team will win this. The final program could provide upwards of $1 billion in revenue for the winner of the larger production contract.

Army Awards GD Low Rate Initial Production Contract for JTRS

The U.S. military has been developing the Joint Tactical Radio System (JTRS) as their new standard radio for almost twenty years now. The program has had its ups-and-downs as it struggled with the level of technology required to meet the requirements of the program. On top of that the number and variations of the radio are quite complex as it will be used in aircraft, ships, vehicles, by ground troops and also be integrated into Unmanned Aerial Vehicles (UAV). The JTRS once it enters full rate production will replace the ubiquitous SINGCARS radio system used since the 1980’s.

In late June the Handheld, Manpack, Small Form Fit (JTRS HMS) Program piece approved approval to go into Low Rate Initial Production (LRIP) after having a successful Milestone C decision. This means that it has completed much of its engineering and development and is considered technically mature enough to begin production. The LRIP will demonstrate that it is possible to produce the system and allow the production to ramp up to meet full rate demands.

This has been followed by an order to General Dynamics (GD) and its partners Thales Communications and Rockwell Collins (ROC) for LRIP production of two versions: the Rifleman version and the Manpack radio. The AN/PRC-154 is meant to be carried by the individual soldier and 6,250 were ordered. The 100 Manpack are larger and will support operational testing and provide two channels.

The SINGCARS program was highly successful and earned its contractors a great deal of revenue due to the large demand. ITT Corporation (ITT) received what is most likely the last production contract for the system earlier this year. It had a value of about $600 million and includes parts and engineering support for existing radios. The JTRS contractors are hoping for the same thing with their programs.

Thales and French Government to Share in Fine for Taiwanese Bribes

A French court ruled this week that the French defense contractor, Thales (HO:PA), along with the French government must pay a fine in relation to charges that bribes had been paid to the Taiwanese government to secure a large naval ship order. The deal was originally signed with Thomson-CSF and the government owned shipyard DCN. Thomson-CSF is now part of Thales.

The fine of 630 million euros, which is almost a billion dollars, will be split roughly 70/30 between the government and Thales. As part of the agreement with the court the government will not appeal the decision allowing Thales to get on with business without facing any more potential penalties or bad publicity. Thales says that the money has already been accounted for in preparation for paying the fine. The money will be returned to Taiwan.

Thales stock price has been little affected by the news.

This is the largest corruption case in French history and rivals the payouts that BAE Systems (BAE:LSE) has had to give to the U.K. and U.S. governments over its deals with Saudi Arabia. These totaled almost $500 million to the U.S. and $450 million in the U.K. The U.S. has especially been harsh on companies that used bribes and corrupt acts to win contracts overseas.

Historically bribes and payments have been a part of the international arms trade. Many countries required these kind of payments or the use of middle men to facilitate deals. This practice has been accepted by governments more interested in winning the contract for their own domestic companies like this deal then in ethical practices. These kind of actions cheat the customer because they may not get the best system or deal for their money as well as the other potential bidders as they do not get a fair selection process.

Thales also illustrates the situation where mergers and acquisitions lead to a company inheriting the problems of another. Even though potentially no Thales employees were involved the company is responsible due to acquiring Thomson-CSF. Hopefully more decisions and cases like this will help eradicate this problem from the defense trade.

Photo from Lordcolus’ Flickr photostream.

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