STOCKHOLM --- Dagens Industri can today reveal that Sweden has received an offer for French air defence systems which is significantly lower than the SEK 10-12 billion that the Swedish government plans to spend on initial procurement of the Patriot system. The competing French package would cost SEK 8.5 billion and covers the entire need of the Armed Forces.
SEK 8.5 billion for a full arsenal of French weapons or SEK 10-12 billion for a smaller number of American missiles that are not enough to protect Sweden - these are two cost options available when the Swedish Armed Forces procure a new medium-range air defence system.
If, or when, a second instalment of Patriot is eventually decided, the figures could increase to SEK 8.5 billion against SEK 25 billion, 30 billion or perhaps 40 billion. Nobody knows, today, how much the Patriot system will cost when the contract is signed, while the French have already committed to a so-called target price.
These figures are set out in classified documents from negotiations between the FMV and the French company Eurosam. Dagens Industri (DI) has also viewed other documents relating to FMV's talks with the French.
The price indications for the alternative French offer are being kept so secret that not even the opposition parties in the Parliament are aware of the figures. The question is how many people in the government are?
According to DI sources, FMV and Eurosam/OCCAR were, as late as April, preparing a deal, and were planning to sign contracts before the end of the year. But three weeks ago, the government instead decided to acquire Patriot, and instructed FMV (the Swedish defense materiel administration) to open negotiations with the United States.
As DI has previously reported, the FMV was left to implement the decision. In its November 7 press release, FMV said that the Patriot purchase "is estimated at just over SEK 10 billion."
What is little known is that FMV had already obtained a significantly lower cost for the Patriot’s direct competitor, the SAMP/T from Eurosam. France also guaranteed that the fire units would be delivered to Sweden in 2019, thereby allowing the Armed Forces to reach an initial operational capability in accordance with the 2015 defence agreement.
One of the documents that DI has obtained is a Eurosam presentation that was distributed at a meeting on April 6th. The document describes what will be delivered and when, the cost as well as a number of other commitments to Sweden. It also showed how the French have adjusted their offer in 2015, 2016 and 2017 to meet the requirements of FMV and the budget of the Armed Forces.
At the April 6 meeting, Joakim Lewin and Magnus Astell from FMV, Thorbjörn Johannesson and Jan Ohlsson from the Armed Forces met with Eurosam's CEO Michel Vigneras. The aim was to allow Eurosam to introduce a so-called ROM price, that is, "rough order of magnitude", an estimate of costs.
In the type of negotiations between Eurosam and FMV, ROM is an indicative price or target price for a quotation. The price in the contract can differ by +/- 10 percent. In this deal there was a clear chance that the price would be pushed down further in the final negotiations.
When the meeting began, the Swedes were excited about the cost of the French offer. In its evaluation, FMV had already found that SAMP/T met the Armed Force's requirements of performance and potential.
The French side said its ROM price was 850 million euros, corresponding to SEK 8.5 billion kronor. It concerned both deliveries for Sweden's Initial Operational Capability (IOC) as well as its Full Operational Capability (FOC).
According to DI sources, the price indication was in line with FMV's expectations. Eurosam also said the target price could come down to 800 million euros, or 8 billion kronor. According to DI sources, the meeting continued in a positive atmosphere, even with representatives of the Armed Forces.
Sweden also got the opportunity to make a smaller part-purchase at a favourable price. The document from the meeting of April 6 states that Eurosam announced in 2016 an indicative fixed price of EUR 400 million, corresponding to SEK 4 billion, for an initial delivery of two fire units and missiles - the same type of smaller part-purchase that is estimated to cost 10-12 billion kroner for the Patriot system.
Since SAMP/T is launched vertically, and its radar has 360-degree coverage, each fire unit with only two missile launchers is able to cover a larger area than an entire Patriot battery.
A single SAMP/T fire unit and one other lorry would be enough to engage simultaneous incoming targets from all directions around the F7 in Såtenäs, one of Sweden's most important air bases.
The April 6 meeting was the final negotiation between FMV and Eurosam, and FMV was later forced to announce that it had no mandate to negotiate further.
French President Emmanuel Macron personally tried to break the deadlock during his meeting with Swedish prime minister Stefan Löfven, government sources state sources to DI. But on Thursday (Nov 23) it was clear that the Parliament’s Defense Committee forces the Government to inform the Parliament about an acquisition of the Patriot before taking a final decision.
(EDITOR’S NOTE: The Patriot offer is not only about 50% more expensive than Eurosam’s, as DI reports here, but despite this higher price it can only deliver three of the four fire units that Sweden needs to protect all of its territory.
Furthermore, the cost of further Patriot follow-on deliveries and upgrades cannot be estimated in advance, and conclusion of an FMS sale as Sweden intends will commit it to keeping its Patriots at the same standard as the US Army’s, whatever the cost.
Finally, Patriot deliveries can begin in 2020 at the earliest, while Sweden’s requirement is for 2019 deliveries – which Eurosam has guaranteed.
The original Nov 6 statements by FMV and the Swedish Ministry of Defence are available here.)