Saturday, February 17, 2007

Defense News: EADS Taking Aim At C-27J in Romania

By Tom Kington, Rome

The Romanian Defense Ministry has blocked talks with Alenia Aeronautica on the purchase of seven C-27J tactical transport aircraft after a legal challenge was issued by EADS, maker of the rival C-295 turboprop that lost out in competition.

EADS filed its complaint to Romania’s National Council for Solving Complaints, which upheld it on Jan. 31, “on the grounds that the contracting authority did not respect the principles of indiscrimination, equal treatment and transparency,” an official at the council said. Alenia has since appealed the decision and the matter has been referred to a Romanian court. The council official said the court would likely use an “emergency procedure” to make a quick ruling on whether to reopen the competition or accept Alenia’s selection.

In a statement, Alenia, a unit of Italy’s Finmeccanica group, said the halt in talks was down to “procedural problems” in the selection process. “The decision of the Romanian Defence Ministry does not absolutely jeopardise the prospect of success of our C-27J aircraft in Romania,” the statement said. “As declared by Romania’s government body supervising public bids, the bid’s cancellation is only due to procedure problems arising during the tender’s preparation, while the technical parameters, which have led to the choice of our aircraft, are totally confirmed.”

EADS’ challenge opens a second front in a fractious battle between the two firms ahead of a U.S. decision this spring to buy either the C-27J or the C-295. In 2004, EADS complained that the Canadian Air Force was pushing for a sole-source purchase of the C-27J. The Canadian requirement for search-and-rescue aircraft is now being finalized.
In Romania, the Defense Ministry announced Dec. 1 that it would hold exclusive talks with Alenia to buy seven C-27Js for about 220 million euros ($286 million). Alenia said it had beaten the EADS CASA C-295 because “it was the only aircraft of its category specifically designed for tactical transport.”

Three days later, EADS said it would challenge the decision, adding it was the lowest price bidder, “which was the parameter defined by the tender procedure as the criteria for decision.” On Dec. 13, the firm added in a second statement that the C-295 also was “the only one of those presented that meets the operational requirements stipulated by the client, being in operation in NATO countries such as Spain and Poland.”
By Jan. 29, EADS said the C-295 had a life-cycle cost 12 percent lower than the competition and “its systems are simpler, (and) as a consequence tougher and more reliable.”

In its statement, Alenia countered, “The C-27J has been chosen in Romania versus the competitor EADS CASA C-295, thanks to its higher performance in terms of interoperability with other transport aircraft in Romania and in NATO countries [and] speed, range, rate of climb and self defence system.”If Alenia’s appeal against EADS’ complaint fails, Romania’s Ministry of Defense would relaunch its competition, a Defense Ministry spokesman said Feb. 7. Italy, Greece, Bulgaria and Lithuania have ordered a total of 35 C-27Js, while EADS has sold 55 C-295s to seven air forces. For the U.S. Joint Cargo Aircraft tender, EADS has teamed with Raytheon to offer the C-295, Alenia with L-3 Communications and Boeing to offer the C-27J.

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