Paris – The public got a glimpse of the tough industry talks on the industrial organization for a European next generation fighter, with two televised hearings of senior executives of Airbus and Dassault Aviation appearing before the defense committee of the French senate.
The upper house called in the executives following media reports of deep dispute over work share and program management of a technology demonstrator for the fighter jet, the key element, or pillar, in a future combat air system backed by France, Germany and Spain.
Airbus strategy director Antoine Bouvier and Airbus Defence and Space chief executive Dirk Hoke appeared March 17 before the committee, a week after Dassault executive chairman Eric Trappier told March 10 senators his side of the problems holding up contracts for phase 1B and 2 to build the demonstrator.
Airbus and Dassault are essentially divided over whether there should be a prime or lead contractor – which is what Dassault seeks; or a joint approach with partners of equal rank – as sought by Airbus.
There is also disagreement on the French share of work packages classed as sensitive and of strategic importance.
France is the lead nation on the FCAS project, with Dassault lead manager on the fighter.
Each of the partner nations is due to inject a further €1 billion into the next FCAS phases, with most earmarked for the fighter. But first, the contracts must be agreed and signed.
The stakes are high, Bouvier said. There were three European fighter programs in the 1980s, with total sales of 1,500 units, while the US had the F-16, with sales of 4,500. Now there is the F-35, sales of 3,500 and eight European clients.
FCAS is a chance for Europe to catch up and “mobilize our strengths,” he said.
The two issues which need to be resolved are governance – how decisions are taken on the work packages even where there is a lead contractor; and agreement on who leads on six strategic work packages, said Hoke.
The senate committee will call in the head of the Direction Générale de l’Armement procurement office to speak on the planned fighter jet, the committee chairman said.
The view in Germany is the French want to lead the project while expecting Germany to fund it, and the view in France is talk of Germany wanting to steal French technology, Bouvier said.
Time is pressing, as Germany goes to the polls in September, and France follows in April next year. Without the contract, incoming administrations will review the project, further slowing down the project, which has already slipped back flight of the demonstrator by a year to 2026.
Agreement needs to be reached by May, or June at the latest, Hoke said, as any deal needs German parliamentary approval. After June, any arms deal worth more than €25 million ($30 million) requires detailed parliamentary approval.
German state elections on March 14 in Baden-Württemberg and Rhineland-Palatinate saw the conservative Christian Democratic Union, led by the outgoing chancellor Angel Merkel, lose respectively to the environmentalist Green party and center-left Social Democrats. Those states had long been strongholds of the CDU.
There are two competing business models vying for control of FCAS.
The business model for Airbus is the Eurofighter, with joint prime contractors in the four-nation consortium, Bouvier said.
Trappier told senators the business model of Neuron, a demonstrator for an unmanned combat air vehicle. France paid half the €450 million budget, and Dassault led as prime contractor, working with companies from the five country partners: Greece, Italy, Spain, Sweden, and Switzerland.
How Airbus Sees It
Airbus and Dassault agree on two basic principles, Hoke said, namely an effective organization allowing partners to take the right decisions and meet targets on time and on budget, and there should be a prime contractor with the “levers” needed to deliver on the tasks.
However, Airbus does not agree that the prime should have full control and take program decisions on its own, Hoke said. The prime was the first along equals, and there should be partners rather than subcontractors.
Intellectual property rights on critical domains would be respected.
Airbus was ready to accept that Dassault, as lead on a work package, should act as arbitrator, to ensure timetable, cost and performance targets were met.
Airbus would also accept sharing of responsibilities critical for maiden flight, with Dassault taking lead on systems integration, flight control, and test flights.
Airbus, meanwhile, would work as partner on key systems which would be integrated into the aircraft, with Dassault as the prime.
Dassault would lead on four of the six strategic work packages, with two packages for Airbus – one in Germany and one in Spain. The client nations were asking for share of work in return for their funding the fighter project, reflecting a principle seen in the other FCAS pillars led by Germany and Spain, Hoke said. The French Direction Générale de l’Armement procurement office has asked for a strategic role for Thales in the combat cloud pillar, in which Airbus is the lead contractor.
FCAS was an historic event, Hoke said. “We are close to an agreement.”
Bouvier said there really was no plan B. There were alternatives, such as updating fighters, buying a US fighter, or launching a program with subcontractors rather than joint partners.
But these alternatives would fail to deliver the principle of European “strategic autonomy” which underpinned the FCAS project, he said.
And industrial cooperation was rather like Winston Churchill said of democracy – the worst form of government except for all those other forms that have been tried.
And How Dassault Sees It
Christian Cambon, chairman of the senate defense committee, gently interrupted Trappier’s opening remarks and asked for a minute’s silence for the death of Olivier Dassault, who died March 7 in a helicopter crash near Deauville, north of France. Dassault, son of the late Serge Dassault, had been a senator.
Trappier said he had hoped for an agreement by the end of 2020 but talks have since dragged on in search of a deal.
The situation was difficult, but the patient was not on the death bed, he said.
Dassault seeks to reach an acceptable deal, but if that failed, there was a plan B, he said, on which he gave the briefest of outline under questioning by a senator.
“My plan B is to find a system of governance which will allow bringing in European partners, but not under the rules agreed today, because “that will not work,” he said.
Trappier did not say which European companies would be approached under plan B, but did speak of the Neuron UCAV demonstrator, in which Dassault worked with partners Airbus DS in Spain, HAI in Greece, Leonardo in Italy, Saab in Sweden, and Ruag in Switzerland. Rolls-Royce Turbomeca supplied an Adour engine. That project has been concluded.
The sharing out of one third of the work to each of the three client nations means Dassault will get one third of the work, while Airbus will get two thirds, he said.
There are 92 work packages proposed, or 46 percent of the project, which are joint work shares, shared evenly between the industrial partners, without a prime contractor.
Then there is 54 percent of packages with sensitive technology, with the prime and a partner, he said. Of these packages with a prime, Dassault would get 40 percent, while Airbus would get 60 percent.
Dassault had accepted that work organization as there had been pressure to reach agreement.
Then at the start of 2021, Dassault saw the 40/60 work split was not acceptable, as it was now seen as important to have a prime.
There needed to be a lead partner “to pull the levers,” he said.
The rule of thirds was seen as undermining the interests of France and Dassault, he said.
“We are in a three-way marriage,” he said.” If I give something to Germany, I have to give one to Spain. If there were a dispute, the case would go to the procurement offices of the three client nations, where there would two against one, and “I will be in the wrong,” he said.
“How do we protect our leadership in that type of organization?”
Dassault has talked to the French administration and has the support of the armed forces minister on a recasting of the industrial organization, he said.
“These are political decisions,” he said, adding that he needed the support of parliamentarians to point up the “lack of balance.”
Trappier ruled out the prospect of working with the British, which are forging ahead on the Tempest project to fly a new fighter jet in 2035.
What the Defense Minister Says
The armed forces minister, Florence Parly, told March 17 the senate defense committee that she and her German counterpart, Annegret Kramp-Karrenbauer, had asked the companies to find an agreement on the fighter demonstrator.
“It is an essential phase and a phase which must absolutely adhere to the basic principle that we agreed in 2017: appointment of leaders in each phase of the program, as well the principle of “best athlete,” she said.
This is a principle which would not be abandoned, as “performance” should guide the choices to be made, and the forces should be equipped with the best weapons possible, she said.
Parly told March 11 the afternoon daily Le Monde that she and Kramp-Karrenbauer had asked the companies to find a solution, based on two principles: there should be a lead company running the packages, and the most qualified company should take leadership, rather than political selection.
Parly evoked the problems of the A400M military transport plane as a case in point.