“Defense News”: Turkey changed procurement rules
Israeli and European companies are the main beneficiaries of the change.
Ran Dagoni, Washington 4 Jan 06 15:13
“Defense News” reports that Turkey, for decade a lucrative market for large US defense contractors, became a problematic customer last year. US defense contractors are complaining that Ankara has changed its military procurement rules in a way that makes it difficult for US companies to participate in tenders against non-US companies. Israeli and European companies are the main beneficiaries.
“Defense News” reports that US companies were recently blocked from participating in Turkish Undersecretariat for Defense Industries (SSM) tenders because they did not meet new Turkish standards. US defense contractors claim that is now “almost impossible” for US companies to win the right to sell arms to Turkey.
Defense industry analysts and executives cite three possible reasons for the obstacles Turkey is placing before US defense contractors:
Turkey is worried by US administration’s strict conditions for arms exports, and by US reluctance to share sensitive military technologies.
US manufacturers are no longer the only makers of critical weapons systems.
The Turkish government wants to establish closer ties with European manufacturers, as part of its goal of joining the EU.
SSM officials strongly deny allegations of discrimination against US companies in Turkish arms tenders.
Last year, US defense contractors lost two large tenders for the supply of arms systems to the Turkish Army. In April, Turkey bought three unmanned aerial vehicle (UAV) systems for $183 million from Israel Aircraft Industries Ltd. (IAI) and Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), which collaborated in the tender. Follow-on orders might greatly boost the value of this contract. San Diego-based General Atomics Aeronautical Systems lost the tender.
In the second case, Boeing (NYSE:BA) and Bell Helicopters were blocked from submitting bids in a tender to supply 50 attack helicopters for the Turkish Air Force.
Matters could become more complicated this year. Although Turkey is participating in the F-35 Joint Strike Fighter (JSF) program, and promised to invest $175 million in it, the Turkish government recently announced that it might ultimately decide to buy the Eurofighter-Typhoon instead. Turkey plans to buy $10 billion worth of F-35s, and its abandonment of the F-35 program would be a severe blow to the plane’s chief contractor, Lockheed Martin (NYSE:LMT).
Turkey has spent over $3 billion a year on arms procurements since the 1990s. Half of this amount usually goes to US defense contractors, but no US arms maker has won a Turkish tender since 2003.
Published by Globes [online], Israel business news - www.globes.co.il - on January 4, 2006
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