Hungary has pitched itself into controversy after its defence cabinet recommended leasing 24 used Lockheed Martin F-16s in a forints 160 billion ($560 million) deal agreed without holding a competitive tender.

The move brought an instant response from rival Saab-BAE Systems with an offer to loan 24 almost new Gripen fighters.

Budapest has been deliberating on improvements to its air force for several years and only last December issued a request for information from bidders for the long- term purchase of fighters, with the F-16 and Gripen reckoned to be leading contenders.

The interim deal recommended by the defence cabinet calls for the lease over two five-year periods of 20 F-16As and four F-16Bs currently in US storage. The lease is free but the Hungarians will pay for items like upgrade and training.

A Gripen loan would require spending on issues like NATO compatibility and training but the Anglo/Swedish company says: "We believe the cost is lower than that for our older competitor."

The Gripens would come from the Swedish air force and could be delivered within 24 months of a deal, initially for five years.

The defence cabinet says that the F-16 is the only fighter type to fulfil Hungarian requirements. This is refuted by Saab-BAE, which says its contender is a new-generation, swing-role fighter.

The aircraft will replace a fleet of 27 MiG-29s. An earlier agreement with EADS Germany for an overhaul and upgrade is being replaced by a limited overhaul.

An F-16 lease would virtually rule out the chance of rivals winning a long-term contract to supply new aircraft to Hungary. Along with the Czech Republic and Poland, Hungary is at the centre of a fierce battle by Western fighter companies to tie-up a new market for their products.

Defence minister Janós Szabó has left the door ajar for a change of heart over the F-16 move, saying "this is not a contract, only a decision choosing a particular type".

Source: Flight International