| Story Views | |
| Now: | |
| Last Hour: | |
| Last 24 Hours: | |
| Total: | |
Fearing Wartime Embargo Defense Ministry wants only Israeli-made
Defense Ministry wants only Israeli-made artillery
31 Jan, 2017 17:37 Yuval Azulai
http://www.globes.co.il/en/article-defense-ministry-wants-israeli-made-artillery-1001174668
Elbit Systems is competing against a partnership of IAI, IMI, and German
manufacturers for the IDF’s latest artillery procurement.
Concern about a weapons embargo or restrictions on Israel in a future war
are among the reasons why the Ministry of Defense has decided to procure
Israeli-made self-propelled artillery for the IDF.
It is believed that Ministry of Defense director general Maj. Gen. (res.)
Udi Adam will make a decison in the coming weeks about the procedure for
procurement of the new artillery. The first stage will consist of dozens of
the new guns at an estimated cost of $800 million. A source involved in the
matter said that procurement of the new artillery would eventually total
over $1.5 billion over 15-20 years.
Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) is offering the Ministry of
Defense a self-propelled cannon made by its Soltam Systems subsidiary, while
Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1), Israel Military
Industries Ltd. (IMI), and German companies KMW and Rheinmetall have joined
forces for this program, and are trying to persuade the Ministry of Defense
to procure the artillery they are offering, which they say has proven
capabilities.
The Israeli and foreign companies in this consortium have felt ill at ease
in recent months, feeling that the Ministry of Defense is likely to select
Elbit Systems, controlled by Michael (Mickey) Federmann, as a sole supplier
of the new mobile artillery.
The Ministry of Defense Administration for the Development of Weapons and
Technological Infrastructure is conducting the entire procedure under a veil
of secrecy. Elbit’s Systems’ competitors are afraid that its artillery will
be preferred, based on statements by senior Administration for the
Development of Weapons and Technological Infrastructure sources that in
addition to meeting the IDF’s operational requirements, the IDF’s next
artillery system will have to be Israeli-made, so that the IDF will be
completely independent in using it at time of war.
A senior Ministry of Defense source involved in planning the procurement of
the future mobile artillery made it clear in a closed forum that the demand
that the system be 100% Israeli-made is due to the need for future revisions
of the system to adapt it to the army’s operational requirements, and to
intellectual property aspects. Production of the cannon in Israel can also
avoid possible restrictions on its use in various battle theaters, including
the types of shells that can be used. According to this source, the need for
a completely Israeli-made system, which became clear as a result of the
lessons from Operation Protective Edge in the summer of 2014, is an
“important requirement.”
In view of this requirement, some of the Israeli defense industries are
increasingly concerned that the Ministry of Defense will prefer to declare
Elbit Systems the sole supplier in the program, without publishing a tender
soliciting bids from other companies in Israel and overseas. Elbit Systems
is promising that production of the artillery will take place at the Soltam
plant in Yokneam, which has extensive and unique experience with artillery.
The artillery being offered by Elbit Systems, based on a system that the
company has already sold to six foreign armies, including the Indian army,
is called ATMOS. Defense sources said that this system has already fired
hundreds of thousands of shells in India. The version being offered to the
IDF, however, which includes adjustments that meet the specifications set by
the Ministry of Defense, has yet to fire a single shell.
This fact is being cited by some of the parties interested in the artillery
plan, who are complaining that the Ministry of Defense is likely to prefer
an untried and not-yet built artillery system to one that is already
shooting and has proven capabilities, such as that being offered by German
company KMW in the framework of its partnership with IAI, IMI, and
Rheinmetall.
The Ministry of Defense has already sent people to inspect the Germany
artillery system, called AGM. Ministry of Defense and IDF representatives
previously visited KMW’s facilities in Germany, and attended a demonstration
of the proposed cannon’s capabilities.
Sources inform “Globes” that in the framework of the companies’ effort to
promote the sale of the German cannon to Israel, IAI offered to conduct
another demonstration, this time in Israel, and in cooperation with the
authorities in Germany, authorized bringing the artillery system to Israel
for this purpose. The Administration for the Development of Weapons and
Technological Infrastructure turned this offer down, saying that there was
no need for it, because it was already aware of the artillery’s
capabilities.
Other sources involved in the long process of the artillery deal say that
the allegations about Elbit Systems’ product being unready should be taken
with a grain of salt. They explain that the new system will begin a series
of trial firings this May in which all of the system’s elements without
exception will be included. These sources stated that even under an
unfavorable scenario of gaps between the proposed cannon’s capabilities and
the requirements set by the IDF, it will take no more than 18 months to
provide a high-quality, reliable, long-range, and precise product.
In any case, the two bids being brought to the Ministry of Defense involve
155-mm guns with a firing rate of six shells a minute and a 40-kilometer
range. They will gradually replace some of the US M-109 artillery pieces
that the IDF has been using for decades.
In the past, senior Elbit Systems executives asserted that their company’s
acquisition of Soltam in 2010 gave the company unique artillery production
capabilities, enabling it to produce an Israeli-made gun with all of its
parts made in Israel, thereby guaranteeing hundreds of new jobs in northern
Israel.
IAI, IMI, and their two foreign partners are offering to assemble KMW’s
artillery unit in Israel, while components related to the system will be
procured in the US with US military aid. The assembly site proposed by the
group is IAI’s RAMTA plant in Beer Sheva, which makes aircraft and ships,
and will generate hundreds of jobs in southern Israel.
Sources close to the consortium led by IAI solve the dilemma by promising to
procure components relating to the artillery system in advance as inventory
for use in case of need. “Whether the gun is made by Elbit Systems or
assembled by IAI, a large proportion of the components will be bought
overseas. The Merkava tank is made in Israel, but its engine is made in both
Germany and the US. In general, most of the weapons systems used by the IDF
are not made in Israel,” a source familiar with the details says.
In the coming days, Ministry of Defense Production and Procurement
Directorate head Brigadier-General (res.) Shmuel Zucker is due to finish a
six-year term in his position. He told “Globes” yesterday that he had
pointed out that Israel was subject to threats of a wartime weapons embargo.
“Even when relations are good and there is absolute sympathy between
countries, we mustn’t forget that at times of conflict, there are different
situations that expose us to an embargo. We have already had such cases,
some of them public knowledge and some unacknowledged, in which heads of
state blocked shipments,” he told “Globes” early this week.
The Administration for the Development of Weapons and Technological
Infrastructure will recommend
According to Ministry of Defense figures, 40% of its deals are with a sole
supplier, and all the rest are in competitive procedures, such as a tender.
Concerning agreements by the Ministry of Defense with companies receiving
the status of sole suppliers at the expense of competition that can lead to
lower prices, “TheMarker” once quoted Zucker as saying, “I’m in favor of
competition, but it’s not so simple: there is usually some tension between
me and the IDF group asking for the weapon system, which is used to working
with a specific concern.”
The Ministry of Defense did not answer questions from “Globes” about the
procedure taking place in the Administration for the Development of Weapons
and Technological Infrastructure in preparation for the decision about the
structure of the procurement program for the IDF’s future self-propelled
artillery system. The Ministry of Defense said that the Administration for
the Development of Weapons and Technological Infrastructure would submit its
recommendations to the director general, who would consider the matter.
Meanwhile, a former Ministry of Defense official told “Globes,” “In this
case, it is right to hold an open tender procedure. Production in Israel
because of concern about a future embargo? If someone imposes a weapons
embargo against us, self-propelled artillery will be the least of our
problems.”
Published by Globes [online], Israel Business News – www.globes-online.com -
on January 31, 2017
Source: http://www.imra.org.il/story.php3?id=72123
