When a customer is looking to expand or upgrade an existing fleet, the incumbent supplier ought to be at a distinct advantage.
Assuming the capability is being augmented because it works well and support has proven adequate, the customer would be well advised to stick to the successful script.
Yet in South Korea, battle has been joined, albeit somewhat belatedly, for the contract to supply the second batch of the ROK Navy’s maritime patrol helicopter fleet. A request for proposals in 2017 succeeded in eliciting only one bid – from Leonardo, who already has eight AW159 Wildcats operating in the role. Last August, a second RFP was issued, and this time around, Lockheed Martin is bidding its Sikorsky MH-60R under the USA’s foreign military sales regime.
“We’ve been working on this second-batch sale for a very long time – probably since we won the first-batch competition back at the end of 2012, early 2013,” says Aaron Lewis, Leonardo’s sales manager in South Korea. “It’s basic policy for DAPA [South Korea’s defense procurement agency] to generate a competition. From a company perspective, being in a competition is fine. We welcome competition as long as it’s fair and transparent in the way it’s managed.”
The company is confident that it can make its incumbent position count, so long as wider political questions do not influence the selection process.
“If you judge the two platforms from a capability requirement, a price perspective and a performance perspective, we’re confident the 159 will win the competition,” Lewis says. “The issue comes when factors outside basic military ones come into play. When you’re competing against the U.S. government, they’ve obviously got a few more cards that they can play, and have additional pressures they can put on to a process. The good thing about South Korea and about DAPA is that they have a very well-defined process. As long as they follow that process and stick to the regulations, it should be immune from any sort of political interference.”
This has not always been the case in the country, but, Lewis argues, that very fact that there has been controversy in the past ought to ensure that this time, the process will be concluded by the book.
“In the past, there have been cases where politics has interfered,” he says. “It’s one of the things where the previous Park [Geun-hye] administration was kind of punished for, and the Korean government has stated several times what a priority it is to be fair and transparent in defense procurement. That’s reassuring.”
One of the benefits of having aircraft already in service with the customer – the provision of a smooth and efficient support system – may not be as big as an advantage is it could appear to outsiders. But there are other factors that may favor the Wildcat.
“Fortunately, the aircraft is so reliable you don’t need a local support infrastructure,” Lewis says. “But there is an advantage in terms of established supply chain and ordering procedures. And training: there are instructors trained on the type, and there are courses [already running]. If you introduce a second type, there’s a whole additional set of people that the ROK Navy is going to have to employ, and they’re going to need different classrooms, different training devices. That’s going to be challenging in terms of cost.”
The Wildcat has also successfully integrated the Blue Shark torpedo, a weapon indigenous to South Korea and produced by LIG Nex1.
“It’s also offered outside the country to export customers for the 159,” Lewis says. “It helps us to promote the domestic defense industry.”
Beyond South Korea, Leonardo delivered two AW159s to the Philippines last year, and is actively touting the Wildcat for other requirements in the region.
“There are a number of campaigns we can’t talk about, but there is a published requirement in New Zealand for naval helicopters, and we think the 159 is an ideal fit for that,” says Brian McEachen, the company’s vice president for international government business in the Asia-Pacific region. “That’s at a very, very early stage – it’s three or four years away from anything significant happening – but there’s a lot of discussion going on with the customer.”
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