By Pierre Tran
Paris – Dassault Aviation has insisted on protecting intellectual property rights over its fighter jet technology, while Airbus Defence and Space has sought full access to that privileged information, conflicting demands which have weighed on a Franco-German led project for a future combat air system.
French president Emmanuel Macron and German chancellor Angela Merkel called Feb. 5 for a resolution to differences on the FCAS project, pointing up the political significance of the industrial differences.
This was an important milestone, negotiating contracts for phases 1B and 2 of the FCAS project, and it was a “difficult moment to finalize negotiations,” Airbus chief executive Guillaume Faury said Feb. 18 in a video press conference on 2020 financial results.
European sovereignty was at stake, he said, adding that it was “important to get the right structure at the beginning.”
The FCAS is under French leadership, and German partners seek a “satisfactory level” of participation, while holding talks on the sharing of “intellectual property rights, tasks and leadership,” Merkel said at a bilateral defense and security council held by video. Agreement was likely to be reached in the coming weeks, in time for scrutiny by the parliamentary Bundestag budget committee, she added.
Similar differences had to be resolved on the main ground combat system, she said.
The MGCS project consists of a new tank linked up with manned and unmanned vehicles. German industry leads that land project.
Macron said he was confident a deal on FCAS would be reached in 15 days.
It remains to be seen what kind of agreement will be reached, with some French concern political pressure might be brought to bear on French industry to cave in to German demands for access and work share.
What is at stake is a two-phase 1B contract to build a technology demonstrator for a next generation fighter, a key element in the FCAS project. That contract is worth an estimated initial €2 billion ($2.4 billion), rising to a total €4 billion by 2026 when the fighter is due to fly.
In the longer term, there are technology and work on a program estimated to be worth €100 billion over some 20 years, pitched as a political pledge for European sovereignty.
French armed forces minister Florence Parly was holding Feb. 18 a phone meeting with her German counterpart, Annegret Kramp-Karrenbauer.
Dassault and Airbus DS share the FCAS project 50:50 as joint prime contractors, with the French company taking the lead on the fighter, which will replace the Rafale and Eurofighter. Airbus DS is based in Germany, so this is essentially a Franco-German dispute.
The heads of Dassault, Airbus DS, Safran, MTU, and Joël Barre, head of the Direction Générale de l’Armement procurement office, and his German and Spanish counterparts met Feb. 17 in a bid to resolve the dispute, business daily Les Echos reported. That meeting was in the suburbs of the French capital.
Dassault was claiming 34 percent of work share after initially seeking 46 percent, with 20 percent for German, and 23 percent for Spanish partners, the report said. Spain is also an FCAS partner, and as Airbus is the major company there, that boosts the share of the work for the aircraft company.
Dassault seeks that Airbus DS accept that its technology is sealed in “black boxes,” rather than agreeing to full access for the German company.
“This is normal,” said François Lureau, a consultant with EuroFLconsult, and a former procurement chief. In negotiations, a partner will want a little bit more, and the program will be worth billions.
Macron has put on pressure and it will be up to the DGA to broker a deal, he said. That resistance to granting full access is standard practice, as can be seen in the F-35 program where the core technology is “American eyes only.”
The sensitivity over technology transfer could be seen in the denial of UK access to the source code on the F-35, despite that nation’s status as the sole tier one industrial partner. The United Arab Emirates had sought access to source code on the F-16 block 60, when the Gulf state ordered its advanced Desert Falcon version, to no avail.
Deadlines concentrate the mind wonderfully, with budgetary approval by the German parliamentary committee due to meet in April or May, and general election in September.
“When time is tight, a solution has to be found,” Lureau said. “Urgency poses the question: do you want it or not?”
Strong German Industrial Lobby
In France, there is a perception that a powerful German industry lobby has won support from the Bundestag parliament and the chancellor, while it was uncertain the French government would back domestic industry.
“My concern is that there is search for a political solution, and the (French) defense industry will get its arm twisted,” Christian Cambon, chairman of the defense committee of the French senate, told Feb. 16 the defense journalists association in a video briefing. The scale of the FCAS program was some €100 billion, he said.
The stakes are high both in value and in a company’s future know-how.
“Defense programmes like this are all about the development and acquisition of technology – and that is exactly what the Germans are holding out for,” said Sash Tusa, analyst at equity research firm Agency Partners.
“It is clearly important to address these issues as early as possible, but doing so has poisoned the Franco-German relationship at both industrial and political levels, and that is not good for SCAF (Système de Combat Aérien du Futur) as a program.”
To further strain the relations, the French plan to fly a Rafale [fighter jet] as the platform for the technology demonstrator has annoyed the German side, which has countered with a plan for a demonstrator based upon the Eurofighter, he said.
The contract for the demonstrator will set terms for who does what, and also “who knows what,” namely gaining access to the overall technology beyond the work assigned.
There is also the question how to divide the work, which is expected to be based on industrial expertise, rather than ambition to acquire new technology. That reflects the lessons learnt on building the A400M transport plane, which suffered a deadly crash and cost overrun.
In contract negotiations, there will be one subsystem plugging into another, much as there are overlaps in a Venn diagram. The subcontractors will need a certain amount of information, and the amount of information may be part of the contract talks. Airbus is reported to seek the maximum, while Dassault offers the minimum.
The companies must agree the work share on the seven FCAS sectors, or pillars, namely: the new fighter, remote carrier – or drone, combat cloud, engine, sensors, low observability, and simulation.
The Bundestag effectively sets the timetable, as the parliament must vote the budgetary approval for the FCAS contracts.
Editor’s Comment: One might ask the German chancellor to explain how a bargain over a ground platform is in any way similar to working a “system of systems.” FCAS is not an airplane. But this characterization might itself reveal deeper challenges to be met and resolved.
See also, the following:
https://defense.info/featured-story/2021/02/japanese-uk-cooperation-shaping-new-combat-air-systems/