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3 Jan 03. The Polish government on Friday declared Lockheed Martin the victor in a three-cornered fight to win Eastern Europe’s largest ever military procurement contract to supply military jets to the country.

Lockheed’s offer beat competition from Dassault Aviation and a consortium of BAE SYSTEMS and Saab in a $3.5bn deal which included an offset offer of investment in Polish industries estimated at $9.8bn.

The Polish government had been faced with competing offers of American F-16s, Jas-39 Gripens built by BAE Systems and Saab, and French Mirage 2000-5 jets built by Dassault Aviation, in a tender process marked by ferocious lobbying and tinged with delicate geopolitical considerations. The fighters will replace Poland’s ageing Soviet-built fleet, in keeping with its three-year-old Nato membership.

Jerzy Szmajdzinski, Polish defence minister, said the deal would “strengthen our ties with the US”.

But defence ministry officials insisted the decision had been made on the basis of the technical strength of the Lockheed offer as well as the opportunities to defray costs of the jet purchases. Poland hopes the winning bidder’s “offset” offers – investment pledges aimed at defraying the jets’ costs – will breathe new life into its struggling manufacturing industries. Both Lockheed and BAE/Saab had presented packages of potential projects to Poland’s government which had been thought to be worth some EU8bn ($8.24bn) each. The tender has also been seen as a test case for transparent military procurement in a region where public administration is tainted by corruption.

Last year Poland’s former government dismissed a defence ministry official responsible for military tenders after a newspaper report that an aide took bribes in exchange for military contracts.

The Czech Republic chose Gripens – thought to have run a close second in the race to supply Poland – in a tender for 24 jets last year. But rival manufacturers alleged irregularities in the tender, and Prague later postponed the order after last summer’s floods.

“Everyone is watching, because to date no similar tender has been held in central Europe,” said George Standridge, Lockheed’s director for the Polish F-16 campaign.

Many Poles see their government’s decision as a choice between Poland’s loyalties to the European Union, which it was formally invited this month to join in 2004, and a traditionally strong relationship with the US.The nervous bidders had played down the geopolitical angle, pointing out that both F-16s and Gripens include European and US components. So have Polish leaders, who have sought to project impartiality in the tender and squeezed all the bidders to secure better terms. Both Lockheed and BAE/Saab stepped up with generous financial packages to sweeten their offer to a fiscally-squeezed government.

The Americans offered a $3.8bn, 13-year financial package, backed by the US government and the largest military finance offer to a foreign government to date. The offer followed a visit by President Aleksander Kwasniewski to the US last July, where he was treated to a pompous reception offered few other foreign leaders. The F-16’s makers also emphasised the aircraft’s long combat experience and widespread current use in Nato and the world.

The UK/Swedish consortium had lobbied hard for the Polish contract, hosting lavish press events and running, like Lockheed, advertisements in local newspapers and other media. Poland would have proved a prize order for the five-year-old Gripen, which, alongside the postponed Czech order, has won orders in South Africa, Sweden and Hungary. The British-Swedish group had come in with the lowest bid, EU3.15bn.

The other two bidders did not disclose theirs, but both were understood to be somewhat higher, and a government official had confirmed all three lay within 10 per cent of one another.

BAE/Saab also claimed its financing p

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