The Finnish Defence Forces Logistics Command sent the Request for Best and Final Offer for the HX Fighter Programme on 29 January 2021. The Request for Best and Final Offer concerns the following multi-role fighters and their related systems and weapons: Boeing F/A-18 Super Hornet (United States), Dassault Rafale (France), Eurofighter Typhoon (Great Britain), Lockheed Martin F-35 (United States) and Saab Gripen (Sweden). The deadline for finalised tenders is 30 April 21.
The Request for Best and Final Offer and the expected binding offers from the tenderers is the final phase of tendering in the HX Fighter Programme. The tendering phase began in spring 2018 when the Defence Forces Logistics Command sent a preliminary call for tenders and an invitation to participate in negotiations. In October 2019, a revised Request for Quotation (RFQ) was sent, and responses to it were received in January 2020. The negotiations have taken place between tendering phases.
The Request for Best and Final Offer states uniform requirements. It is, however, tenderer-specific meaning that the quotation of each tenderer is based on a package with specifications offered in the quotation and the negotiations. With the Request for Best and Final Offer, each tenderer is requested to compile the information provided in the previous tenders and negotiations into a final and binding package.
The Parliament has approved an authorisation order of EUR 9.4 billion to procure multi-role fighters to replace the Hornet fleet. The transferable appropriation of EUR 579 million for five years will ensure that the procured system will be introduced as part of Finland’s defence system. EUR 21 million has been granted to cover the costs arising from the preparation of the programme.
The HX options of each tenderer differ as to the costs of introduction into service, construction needs and integration into the defence system. This is why each tenderer will be given a tenderer-specific price limit, and, in addition, a similar option will be included in the Request for Best and Final Offer for each tenderer for later purchases and contractual changes. Therefore, the price ceiling set for each tenderer is about EUR 9 billion.
At its meeting in January 2021, the Government’s Ministerial Committee on Economic Policy supported sending the Request for Best and Final Offer. The grounds and steering for finalising the HX project can be found in the Government Programme and the Government’s Defence Policy Report 2017.
A high-performance procurement to last decades
The goal of the HX programme is to replace the capabilities of the current Hornet fleet with new multi-role fighters to fully meet the requirements of the security environment and technical development.
The package to be procured includes not only the aircraft but also associated technical systems, training systems, necessary maintenance equipment, test equipment and spare parts along with weapons, sensors and other required type-specific support functions. The package must also include the changes in command, control, communications and computers (C4) and information systems required for its integration into the defence system, as well as the construction of security-critical infrastructure.
Considerations in decision-making
The tendering phase is based on four considerations: the multi-role fighter’s military capability, security of supply, industrial participation and costs. Security and defence policy implications will be assessed separately outside of the actual tendering process. A procurement decision also requires contractual readiness with the proposed tenderer.
Since the procurement will have an impact on the Defence Forces’ operational capability and will define the Air Forces’ combat capability into the 2060s, it is important to select a system with the best possible capabilities, including supporting elements and development capacity over the entire life cycle.
The manufacturer must be able to provide industrial participation solutions and a maintenance system that meet the requirements while also ensuring operability in emergencies and sufficient capacity to operate independently in emergencies. It must be possible to cover the operating and maintenance costs of the selected system from the defence budget.
Phases of the procurement procedure from now on
The best and final quotations requested by the end of April will be assessed to make a procurement proposal. When a tenderer passes the requirements regarding security of supply, industrial participation and costs, it will then be subjected to the last phase of capability assessment. A capability assessment will be made in phases taking into account the packages offered and the capability values verified on the basis of testing events. In the last phase, a long-term war game will be simulated to determine the operational efficiency of each candidate’s HX system. The Defence Forces’ proposal on the system to be selected will be based on the outcome of the war game and an assessment of the future development potential.
On proposal by the Ministry of Defence, the Government will decide on the procurement at the end of 2021.
In the meantime Defence Minister Antti Kaikkonen has authorised the Defence Forces to sign an amendment to the Foreign Military Sales (FMS) contract with the United States Navy. The contract concerns spare parts and product support for the legacy Hornet aircraft fleet in 2021-2024.
As a part of a package to develop air defence, the contract on product support secures the usability of the Hornet aircraft. It covers software maintenance, spare parts for the aircraft and equipment, instruction materials, and repair, and transport and training services. The original contract on product support was signed in 2013. This amendment ensures that required services will be available until 2024.