As in Finland, other countries also have precise regulations on where defense equipment can be exported. These domestic regulations of the different HX providers also affect the conduct of the HX project tender.
Finland has asked the bidders for a complete solution, which includes, in addition to aircraft, weapons and sensors, task support systems, the training required for commissioning and the necessary maintenance solution. This total solution aims to reduce the risk of coordination and effective interoperability between different systems.
The aircraft supplier is responsible for the selection of the best weapons, sensors and special systems, system integration and the functionality of the task support systems required for efficient operation, but also for their export licenses to Finland. For some providers, this also requires co-operation with the country’s administration. Some of these systems may come from a third country, in which case not only the efforts of the administration of the provider country are sufficient to build the whole, but also cooperation between the administrations of the different countries.
Defense equipment of American origin can be purchased either directly from the manufacturer of the product, i.e., an American company, or through the Foreign Military Sales (FMS) procedure from the U.S. Federal Government. Some of the defense equipment of American origin can only be purchased through the FMS procedure. The FMS is a special procedure based on U.S. law.
Under this procedure, the seller of defense equipment is the US Federal Government, i.e. US industry first sells the product to the US Defense Department, which in turn resells it to the buyer state, taking an intermediate fee to cover the costs of the proceedings. The FMS procedure for defense equipment may involve several Purchasing States at the same time, in which case the costs of the FMS procedure will be shared among the Purchasing States.
Part of the FMS sales process is the Congressional Notification procedure, which seeks congressional approval for the sale. As part of this process, there is a public announcement on the website of the Defense Security Cooperation Agency (FMS) stating that Congress has approved the export of a particular defense equipment to a buyer state at a specified maximum quantity and price. However, the notification does not imply that a decision has been made in the buyer country to purchase U.S. products.
The Congressional Notification procedure does not provide precise information on the possible object of the procurement, because in the procedure e.g. amounts and amounts are generally accepted in excess of those indicated by the buyer country in its own request. This is to avoid a situation where the buyer country increases its procurement volume and therefore a new notification to Congress would be required. The FMS procedure is transparent precisely because of the publicity of price information.
Regarding the HX project, Finland's request was sent to the US administration at the end of last month. The request seeks permission from Congress to sell the products and services contained in the final offer to be submitted to Finland at a later date. The Congressional Notification procedure therefore approves the possible sale of both US fighter jets and related systems and services to Finland.
My assessment is that the decision of the Congress will come already this summer and, as I have just written, the information on the marketing authorization is not a Finnish procurement decision. The quantities of multipurpose fighters and weapons included in the permit also will not indicate the content of our acquisition.
In other HX candidate countries, administrations have also dealt with the sale of multi-purpose fighters to Finland in accordance with the country's legislation and system. In France, approvals for sales have been sought in advance so that the industry is free to negotiate the best contract and enter into a deal. In Sweden, Parliament gives its ex-post approval, which delays the formal entry into force of the agreement. The Eurofighter consortium has agreed in advance that BAE Systems and the UK administration will represent the consortium in the HX tender.
Procedurally, therefore, the United States informs in advance of the possible object of the acquisition and the maximum scope of the acquisition. From a competitive and timetable perspective, we have sought to take into account the specificities of the different procedures and candidate countries in such a way that the timetables are compatible and that candidates are treated as equally as possible.
All candidates are aware of the differences in procedures and have accepted it by participating in the tender. It is important that the different timetables are coordinated so that we can make a procurement decision and sign the contract in 2021.
Lauri Puranen has been the Program Director of Strategic Projects at the Ministry of Defense since the beginning of 2016. Prior to that, Puranen chaired the Hornet Performance Replacement Preliminary Study Group. Major General (evp) Puranen served as the Commander of the Air Force in 2012-2014.