BRAZIL'S NEXT GENERATION FIGHTER COMPETITION TAKES

C O N F I D E N T I A L BRASILIA 001061 SIPDIS STATE FOR WHA, PM/RSAT, USDOC FOR MAC/ADRISCOLL/LFUSSELL/MCAMERON, FCS/PWILLIAMS E.O. 12958: DECL: 08/01/2018 TAGS: PREL MARR BR ETTC SUBJECT: BRAZIL'S NEXT GENERATION FIGHTER COMPETITION TAKES OFF REF: BRASILIA 847 Classified By: DCM Lisa Kubiske. Reason: 1.5(d) ¶1. (C) SUMMARY. Meeting the July 31, deadline for responses to Brazil's request for information (RFI) on a next generation fighter aircraft (FX2),Boeing and Lockheed Martin submitted their proposals on July 30 and 31 respectively. The Brazilian Air Force (BRAF) is expected to review the proposals of the six competing aircraft and announce a short list by the end of August. As noted in reftel, benefits to the Brazilian economy, particularly its aerospace industry will be decisive in the fighter competition. Both U.S. companies have included substantial packages for industrial cooperation but are taking widely different approaches. Both expect strong competition from the French, Russian and Swedish competitors and will seek appropriate USG advocacy. Post strongly supports providing advocacy for US competitors once approved by Washington agencies. END SUMMARY. ¶2. (C) BOEING. Boeing provided information on its F18 Super Hornet, highlighting the aircraft's performance record and potential for upgrades to keep it among the world's leading combat aircraft for the next several decades. Boeing's proposal included an extensive section on the technology transfer potential and on possibilities for industrial cooperation. While Boeing could not be specific on the cooperative activities it would pursue, it did provide a list of potential Brazilian partners and of possible projects in which they could participate. It also provided examples of how other F18 users contribute to the production of their aircraft. Most importantly, Boeing offers opening for broad cooperation with Embraer, not only on military, but on civilian aircraft as well. As Embraer specializes in regional jets that Boeing does not produce, such a partnership would allow both companies to utilize their respective strengths. As BRAF officials have indicated in the past that benefits to Embraer will be key, Boeing's offer should be attractive. (Note: Embraer is a private sector company, but the only Brazilian aircraft manufacturer and considered a national asset.) After an initial review of the Boeing submission, the BRAF team overseeing the process told the Boeing rep that the submission was "just what we were looking for." 
 ¶3. (C) LOCKHEED. Lockheed Martin faces a more difficult road with its F16. In Brazil's aborted FX1 competition, the F16 was deemed not to meet Brazil's requirements, and many Brazilian Air Force officers believe it is too old an aircraft to compete with the other candidates. Lockheed is offering a newer, more capable F16, but the real appeal of the plane will be that it would establish a relationship with Lockheed that would carry over to eventual purchase of the F35 Joint Strike Fighter. Many Brazilian pilots have said openly that the F35 would be their preferred long term aircraft, but its availability would be after Brazil must replace its aging fleet. The F16 would provide a capable option until the F35 could be available. Lockheed's offer will also be attractive to Brazil because it would lead to construction of a manufacturing and/or assembly facility for the F16 in Brazil, delivering a direct economic benefit over the life of the aircraft in Brazilian service. The BRAF team called the Lockheed proposal "impressive," but noted that because it was a late addition to the competition, they are least familiar with the F16. This could prove a disadvantage among the top level staff who will make final decisions. On the other hand, Lockheed's offers of co-production were well-received as was the potential for Brazil to become a regional service hub for other South American countries operating smaller numbers of F16s. ¶4. (C) OTHER COMPETITORS. Post does not have the details of the proposals of the other competitors, the Russian SU35, the Swedish Gripen and the French Rafale. Brazilian contacts have indicated that the French and Russians have both been active in lobbying for their planes in advance of their formal submissions. BRAF sources have told embassy officers that they would not prefer the Russian plane as they believe it has reliability problems and because the Russians are perceived as suppliers of last resort. Lockheed reps have said that they expect a strong proposal from Saab, to include a substantial offset package, based on the Swedish company's past activity. ¶5. (C) COMMENT. The two U.S. proposals could both provide Brazil with capable aircraft and strong economic benefits. In effect, they offer Brazil a choice between the shorter term advantages of indigenous production of an aircraft with a limited shelflife and a potential long term relationship that would go well beyond the FX2 program. As noted in reftel, how Brazil views the economic advantages will be key in its decision making. U.S. competitors will also have to overcome a presumption that U.S. technology transfer policies are too restrictive and have indicated that they will request USG assistance in this regard. Providing Defense Minister Jobim with familiarization flights on both aircraft during his recent visit to the U.S. and with briefings on tech transfers has been a step in the right direction. With a relatively short period in which to make submission, competitors have put together impressive proposals. It is likely that the BRAF has compressed the normal process for RFIs in order to have its "short list" of aircraft together before the Minister for Planning unrolls the new national defense strategy on September 7 out of concern that the planning document will limit its options in selecting new fighters. SOBEL