The Program Leader's Blog
(Source: Finnish Ministry of Defence; posted Nov 16, 2018)
By Lauri Puranen
Finland’s defense ministry has completed week-long briefing sessions with all five companies invited to compete for the renewal of its F-18 Hornet fighters, and expects to receive their initial offers by end January. (USAFE photo)
Both strategic projects are gathering pace. The focus of the Squadron 2020 project has been the negotiation, since the spring, of the shipbuilding agreement. At the same time, the negotiation of the combat system has proceeded to the final tender procedure.

A round of HX project negotiations has taken place with all five suppliers. In addition, during the autumn we have traveled to the assembly lines of all five aircraft manufacturers under the direction of Permanent Secretary of the Ministry of Defense Jukka Juustti.

Squadron 2020: From the point of view of defense, operational performance is decisive

The Finnish Defense Forces Logistics Department and Rauma Marine Constructions Oy signed a Letter of Intent on the four principles and conditions for the construction of four Squadron 2020 corvettes during the last week of October. The Letter of Intent allows the construction contract to be signed in the coming months. This is very good news and an important intermediary step, as long negotiations will take place before the actual shipbuilding agreement.

Here are some points about the Squadron 2020 project schedule. According to a preliminary plan, the construction contract and the Combat System Contract Agreement should have been concluded during 2018. Now, the signatures of the contracts will slide to the beginning of next year. Any delay is more or less complicated, but sometimes it can take more time than anticipated to make responsible and mutually agreeable contracts, as has happened in this case. All the issues that have already been negotiated will clarify future cooperation.

Ships in Rauma and Hämeenmaa classes are approaching the end of their service life in the 2020s. Replacement on schedule of these ships with new, high-performance corvettes is very important for Finland's defense capability. There are also security and economic aspects involved, but the question of completing the fleet is not a matter of weeks or even months. An aging fleet of naval vessels will be deactivated only after the introduction of a new fleet.

Various dates between 2019 and 2027 have been reported in connection with shipbuilding schedules. In addition to the different years, the matters reported are not always comparable. It is possible to talk about the construction of a ship that starts with cutting first steel and ends with conventional fitting out. Or you can talk about when a ready warship is introduced into service. Steps between shipbuilding and operational use include ships' handing over and the launch and testing of a combat system that roughly lasts two years. When talking about military equipment, years can also include Initial Operational Capability (IOC) or Full Operational Capability (FOC).

From the point of view of defense, operational performance is decisive. With regard to availability, the entire fleet is almost on schedule according to the original timetable. According to the current plan, the first ship will be transferred from the shipyard to the Finnish Defense Forces in 2023 and the last 2025.

The deployment of the combat system takes approximately one year, after which the ship can be deployed through test runs and dives. The full operational capability of the four-ship fleet is expected to be achieved in 2028.

HX project: The challenge of the offer has been taken seriously

A round of HX project negotiation has taken place with all five prospective suppliers. These negotiations are a pre-bid dialogue. A week per company was reserved for these negotiations and, like most HX negotiations, they were held in Finland.

The purpose of these negotiations was to identify the responsible main actor, the prime supplier, and to get a picture of the system package and contract structure to be provided. In addition, it was ensured that the negotiations of industrial co-operation of each tenderer have started and are in line with the objectives of the HX project. The negotiations also covered a whole range of technical issues, such as schedules and the ability to technically receive each bidder's offer.

The Finnish tendering process and the call for tender have been considered exemplary and one of the best by manufacturers involved. The call for tenders and project implementation have been considered fair, clear and consistent, but also very challenging. The above points have come to light when we are on the assembly lines of all five aircraft manufacturers, under the direction of Permanent Secretary Cheustin.

On the other hand, from a Finnish point of view, I can say that all manufacturers have taken the challenge seriously and strive ambitiously to provide Finland with the best possible overall package. This has been a pleasure to see, and of course thanks to all five machine manufacturers. Smooth and high-quality bidding is the best possible situation from the buyer's point of view.

In this context, I would like to emphasize once again that defense management does not have any favorites, and none of the candidates have a better or worse status. We are committed to an open, fair and non-discriminatory tender. The competition process has barely begun and no initial offer has been received, so the time for comparing candidates is not now, and it is not wise to voice any guesswork.

Preliminary offers are expected by the end of January 2019. Subsequently, tenders will be analyzed, but no far-reaching conclusions regarding the final purchase decision can be made in 2019. Instead of comparison, the aim is for each candidate to make the most competitive bid on a more detailed tender based on preliminary tenders.

Program Director Lauri Puranen has worked as the Program Director for Strategic Projects of the Finnish Ministry of Defense since the beginning of 2016. Prior to that, Puranen acted as chairman of the Hornet Performance Replacement Group. Major General (EVP) Puranen served as Commander of the Air Force in 2012-2014.


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