HARRIS CORP WINS BRUNEI COMBAT RADIO NET CONTRACT

C O N F I D E N T I A L BANDAR SERI BEGAWAN 000027

SIPDIS

SIPDIS

DEPARTMENT FOR EAP/MTS
SINGAPORE FOR ODC, DAO, AND FCS

E.O. 12958: DECL: 01/18/2018
TAGS: MASS PREL ETRD BX
SUBJECT: HARRIS CORP WINS BRUNEI COMBAT RADIO NET CONTRACT

REF: A. 07 BANDAR SERI BEGAWAN 160

B. 07 BANDAR SERI BEGAWAN 317

Classified By: DCM Justin Friedman, reasons 1.4 (b) & (d)

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SUMMARY
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1. (C) Harris Corporation has won a USD 25 million contract
to provide a combat radio network to the Royal Brunei Armed
Forces (RBAF). In beating French and German competitors,
Harris has secured an important deal that could lead to
significant follow on sales for itself and other U.S. defense
firms. Brunei officials ran a scrupulously fair and clean,
if very slow tender process that sets an important precedent
for future defense and public procurements. END SUMMARY.

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Harris: Slow and Steady Wins the Race
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2. (SBU) After seven years of tendering, bidding, and
negotiating, on January 18 Harris Corporation signed a USD 25
million contract with the Ministry of Defense of Brunei for a
combat radio network. The contract calls for a four year
implementation plan to equip RBAF land forces with digital
combat radios and provides five years of follow-on warrantee
service on the equipment. Harris representatives told us
that they see this deal as just the first step in a long term
relationship to provide the RBAF with associated equipment
and add-on packages.


3. (SBU) To land the deal, Harris beat out strong competition
from the French firm Thales and the German firm Rhode &
Schwarz (R&S). R&S was awarded the initial contract in 2005
but was unable to finalize the deal because it could not meet
its promises to satisfy Brunei's requirements for offsets.
MinDef then re-ran a revised tender, stripping out offset
requirements, which Harris then won.


4. (SBU) Post worked closely with Harris and advocated with
the GoB on its behalf. We also worked with Washington to
secure export licenses for Harris to make a strong showing at
BRIDEX, Brunei's first defense trade show in May 2007 (ref
A),with the Ambassador helping to steer Sultan Hassanal
Bolkiah to Harris's booth at the show.

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Clean and Fair Competition
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4. (C) Deputy Minister of Defense, Pehin Yasmin Umar, assured
the Ambassador on several occasions that his major objective
was to run this tender openly, fairly, and cleanly. By all
accounts, he achieved his objective. Singapore-based
super-lawyer Davinder Singh, a consultant to Brunei on this
contract who has a regional reputation as a scrupulously
honest and tough negotiator, told the Ambassador that this
was a fair process. Other sources involved in the
negotiations tell us that even the loser, R&S, said it was a
fair fight.

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COMMENT: Precedent Setting Process
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5. (C) This deal is the result of Brunei's first publicly run
defense procurement and sets a good precedent for future
defense procurements. This follows on the flawed, closed
process that led Brunei to become involved in an
embarrassing, eventually losing arbitration with British
contractors over offshore patrol vessels that Brunei was
forced to accept and is now trying to sell. As Pehin Yasmin's
comments to us imply, one motivation for the GoB to do this
right was that they knew we were watching to ensure a level
playing field for U.S. firms to compete.
SKODON