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TIPS TEAM SELECTED FOR NATO AGS REQUIREMENT

16 Apr 04. The TIPS consortium led by EADS (Paris:EADS.PA – News)has won a contract to supply the NATO Alliance Ground Surveillance (AGS) system. The selection includes the Global Hawk UAV of which Northrop is co-developing the EuroHawk with EADS. (See BATTLEESPACE C4ISTART TECHNOLOGIES Vol. 6 – Issue No 6 NOV/DEC 2003).

The deal, said by industry sources to be worth up to €4.0bn ($4.9bn), was approved by national armaments directors of North Atlantic Treaty Organisation (NATO) states. The alliance said in a statement that the aim was to sign a contract by spring 2005.

“This NATO-owned and operated core…will be essential enabling capability for the NATO Response Force and will provide …an invaluable ‘Eye in the Sky’,” it said.

The system would gather information on what was happening on the ground during peacetime, crisis or war, it added.

The EADS group included Northrop Grumman (NYSE:NOC – News), General Dynamics Canada (NYSE:GD – News), French defence firm Thales (Paris:TCFP.PA – News), Spain’s Indra (Madrid:IDR.MC – News) and Italy’s Galileo Avionica (Milan:SIFI.MI – News). AGS, is expected to enter service in 2010.

“We are pleased with this decision,” a spokesman for EADS in Munich said. He declined to give financial details but said further information would be released next week.

Raytheon (NYSE:RTN – News) had led a rival consortium. “We are waiting for a debriefing from NATO,” said a spokeswoman for the U.S. group, declining to comment further on NATO’s announcement.

Raytheon’s partners included Siemens (XETRA:SIEGn.DE – News) and Alenia Marconi Systems (AMS) — a joint venture between Britain’s BAE Systems (London:BA.L – News) and Italy’s Finmeccanica (Milan:SIFI.MI – News). Its bid aimed to use Bombardier’s (Toronto:BBDb.TO – News) Global Express business jet as a platform while the EADS bid would use the larger Airbus A321 planes.

The industry sources had said on Thursday the EADS bid was worth about four billion euros and they expected a deal to be signed in May. NATO said the EADS consortium had offered a mix of manned and unmanned air platforms, with interoperable ground stations.

“This major decision by Alliance nations is a significant step forward on the road towards realising this urgently required, operationally essential capability for NATO,” the alliance added.

John Cronin, president of Raytheon’s UK operations, said on Wednesday that the quick turn-around on the decision – both teams submitted concept studies just four months ago – was a sign that political considerations had trumped capabilities.

He said Astor, which is built around a Bombardier regional jet, would be is significantly less expensive than the Airbus plan, perhaps €1.7bn cheaper during the life of the programme. EADS acknowledged a higher price, but said Raytheon was exaggerating the difference.

“It appears to have been pushed through with undue speed and haste,” Mr Cronin said, insisting neither side has submitted a detailed plan of its platform. “If things move to a more political, silent selection process, the process is not yielding a side-by-side comparison.”

Nato denied making a decision based on political pressure. “Both competitors were given a day to brief their solutions to all national representatives,” said one Nato procurement official. “They presented their papers, they’ve all been lobbying in capitals, they’ve all been doing their thing at air shows for a year.”

Comment: It was always going to be an uphill struggle for the Raytheon team to establish its CTAS stall at NATO as the TIPS team has been beating the way to this requirement for at least 5 years. The AGS requirement started with the U.S. offering J-STARS in a similar deal to the NATO AWACS deal. However European nations decided that AGS required more European content. The TIPS team established an unbeatable industrial solution with the major European companies involved in

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