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Loan and offsets key as Poland opts for 48 F-16s

GRAHAM WARWICK /WASHINGTON DC & RYZSARD JAXA-MALACHOWSKI /WARSAW

Unprecedented finance package vital factor in deal as Gripen and Mirage 2000 miss out

Poland has selected the Lockheed Martin F-16 as its next fighter, in a 48-aircraft, $3.5 billion deal that owes much to the promise of offsets valued at $8 billion and an unprecedented $3.8 billion US government low-interest loan to finance the purchase. The Pratt & Whitney F100-229-powered Block 52 F-16C/D was selected over the Dassault Mirage 2000-5 MkII and the Saab/BAE Systems Gripen.

Deliveries of the 36 single-seat F-16Cs and 12 two-seat Ds will begin in late 2006 and continue until 2008 at a rate of 16 a year. The aircraft will be equipped with the improved Northrop Grumman APG-68(V)9 radar, Lockheed Martin Pantera targeting pod, ITT ALQ-214(V)4 integrated electronic-countermeasures system, and Boeing-led Joint Helmet-Mounted Cueing System. Polish-unique equipment includes a digital moving map.

The armament package includes Raytheon AIM-9X short-range and AIM-120C medium-range air-to-air missiles, AGM-65G Maverick air-to-surface missile, AGM-154A/C Joint Stand-Off Weapon and GBU-10/16 Paveway II laser-guided bombs, Boeing GBU-31 Joint Direct Attack Munition, Lockheed Martin Wind-Corrected Munitions Dispenser, Textron CBU-97 sensor-fuzed weapon, unguided bombs and rockets.

Poland says Lockheed Martin's was the best technical offer and won the offset portion of competition. The US manufacturer and its suppliers have guaranteed to offset 100% of the $3.5 billion contract value and its proposals would be worth about $8 billion, claims Lockheed Martin. Agreements have been signed with aircraft manufacturer PZL Mielec and helicopter producer PZL Swidnik, as well as the Institute of Aviation, Radwar and WZL-2.

Dassault chief executive Charles Edelstenne says the "political element" was the deciding factor, echoing the French manufacturer's position after it lost last year's South Korean F-X competition to Boeing.

The F-16 lost contests in Austria, the Czech Republic and Hungary, prompting the financing package allowing for interest-only payments from 2003-10, and interest and principal payments from 2010-15.

The main contract covering the delivery of aircraft, spare parts, weaponry and training should be signed by the end of March and offset contracts by the end of May. Failing this, Poland would re-open talks with Saab/BAE.

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