Swedish aerospace maker Saab won a $5 billion contract to equip the Brazilian air force with 36 new fighter jets, Defense Minister Celso Amorim announced Wednesday.
Saab’s Gripen, a state-of-the-art multi-role fighter jet, beat its two rivals — the Rafale, made by France’s Dassault company, and US aviation giant Boeing’s F/A-18 fighter — for the lucrative contract.
The announcement came after more than 10 years of discussions and repeated delays due to budgetary constraints.
The Gripen, which was said to be the cheapest of the three aircraft, is capable of performing an extensive range of air-to-air, air-to-surface and reconnaissance missions. It is in use in the air forces of Sweden, South Africa, the Czech Republic, Thailand and Hungary.
The Brazilian air force insisted it needed the new fighter aircraft to maintain an adequate air defense as it retires 12 Mirage jets in late December. Brazil bought the refurbished Mirage 2000 C/Bs from France in 2005 for $80 million to fly for five years. Brazil insisted on technology transfers so that the planes can be assembled in this country and give a boost to the domestic defense industry.
Rousseff postponed a decision on the FX-2 replacement contract in early 2011 for budgetary reasons, but air force chiefs have made it clear that it was an urgent matter.
Boeing had hoped to capture the market in order to prolong the life of the F-18 line, currently slated to stop production before the end of the decade. The American company partnered earlier this year with Brazil giant Embraer to market the KC-390, Embraer’s new competitor to Lockheed Martin’s C-130 cargo transport.
That connection, as well as a desire from Brazil for closer ties with the US, made Boeing the tentative front runner. But after National Security Agency (NSA) documents leaked by Edward Snowden revealed that American intelligence was spying on Brazil’s leaders, relations between the two nations soured to the point it likely impacted Boeing’s chances in this competition.
“Boeing is aware of Brazil’s announcement that it did not select the Super Hornet to meet the Brazilian Air Force’s F-X2 requirement,” the company wrote in a public statement. “While the decision is disappointing, it in no way diminishes the company’s ongoing commitment to grow its presence, expand its partnerships and support Brazil’s security needs. Over the next several weeks, we will work with the Brazilian Air Force to better understand its decision. Our participation in the F-X2 competition offered the opportunity to establish significant partnerships and collaboration with Brazilian government and industry, which will continue to expand regardless of the F-X2 decision.”
Incidentally, Saab’s defeat of Boeing comes just 12 days after the two companies announced a teaming effort on the US Air Force’s next-generation trainer.
While politics may have hurt Boeing, cost was the big reason Dassault was unable to stay in the competition, according to Richard Aboulafia, vice president for analysis with the Virginia-based Teal Group.
“The Rafale was always too expensive for most of Dassualt’s typical market, including Brazil,” Aboulafia said. “If you want something that gives you air space sovereignty, air patrol capability, interdiction, all the things Brazil really wants, Gripen’s a good choice. You’re not going to see a Middle Eastern front-line country go for it, but for Brazil it’s arguably just what they need.”
Dassault’s statement on the Brazil decision eschewed the typical language of runners-up in similar competitions, instead taking direct swipes at Saab.
“We regret that the choice has gone in favor of the Gripen, an aircraft provided with many items of equipment of third-party origin, especially US, and that does not belong to the same category as the Rafale,” the company said in a statement. “The Gripen is a lighter, single engine aircraft that does not match the Rafale in terms of performance and therefore does not carry the same price tag. This financial rationale fails to take into account either the Rafale’s cost-effectiveness or the level of technology offered.”
The 36-aircraft deal sets Brazil up as “arguably Saab’s most important export customer,” Aboulafia said.
“They came close to being an orphan aircraft, and instead they’ve had a series of panes that have expanded their export market presence,” he added. “They’re building something. They’re not going to be the next F-16 but they’ve been able to keep the line alive and reinvent the family — that’s a pretty good achievement especially since we’re talking about Sweden here, which isn’t exactly a major military power.”
Earlier this year, Luiz Carlos Aguiar, President and CEO of Embraer Defense & Security, told Defense News that he expected the long-running competition to come to a close soon.
“I think Brazil is going to make this decision. It is time to make this decision,” Aguiar said in March. They have everything in place. All of the contenders have offered their offset programs. It’s more than mature enough to go ahead, in my opinion. I think it’s going to be in the next months, this year, I would say. Our role in that depends — I cannot tell any details — depends on who is going to win.”
Aguiar added that his company had memorandums of understanding with all three of the contenders, ensuring that Brazil’s largest defense company will reap benefits from the finalized agreement.