Thales, Dassault Sign India Mirage Upgrade Deal

PARIS - Thales and Dassault signed July 29 a modernization contract for Indian Air Force's Mirage 2000 fighter jet fleet, the electronics company said in a statement.

The deal was worth about 1 billion euros ($1.42 billion) for Thales, a company spokeswoman said.

Thales will supply the RDY-3 radar, navigation and attack equipment, and electronic countermeasures for India's 51 Mirage 2000 fighter aircraft. Dassault will supply a new onboard computer.

"The extensive involvement of Indian industry within the program will consolidate existing ties with the French aerospace industry and will reinforce long-term cooperation based on cutting edge technologies and the sharing of technical know-how and expertise," Thales said.

Separately, Dassault's Rafale has been shortlisted with the Eurofighter Typhoon for India's contract for 126 medium-range combat aircraft in a deal estimated to be worth $10 billion.

USMC to Test Communications-jamming Device

A U.S. Marine Corps AV-8B Harrier jump jet squadron is set to conduct trials on the services' new Intrepid Tiger II communications intelligence and jamming pod next month.

The device is an open-architecture, commercially derived unit built by the service to quickly and effectively field state-of-the-art electronic attack capabilities on a limited budget. This will be the second iteration of the pod.

Each pod - which is integrated by the service itself, not a contractor - costs less than $600,000 and can be upgraded by simply replacing off-the-shelf internal components without exhaustive integration work or testing, said U.S. Marine Lt. Col. Jason Schuette, who serves in the U.S. Navy's N88 office as the EA-6B and Marine Air Ground Taskforce (MAGTF) electronic warfare requirements officer. Schuette was speaking at the Lexington Institute's Electronic Attack Capitol Hill Conference on July 28.

"In fact, in two years, when I get ready to upgrade whatever is inside this pod, I will just pullout the part and put in the new one," Schuette said of upgrading the device to it's future Intrepid Tiger II configuration. "I will [not] rely on industry to continue to make a part that is old and obsolete; I'll put in the new one."

Eventually the pod will not only collect communications intelligence and jam those transmissions, but also it will be upgraded to provide electronic support.

Schuette said the service was able to build the cheap and flexible pod by leveraging commercial development of the electronic hardware. New civilian hardware can produce very clean signals, he said.

The challenge, said Schuette, is the bureaucracy - the Marines have to convince the test community that the new part will not have to undergo an exhaustive test process from scratch.

"The challenge will be convincing the testing powers-that-be that we shouldn't have to go back and do all sorts integration testing to field this pod that we continue upgrade," Schuette said.

Timely fielding of new technology is critical in the fast moving electronic attack field because technology and threats change rapidly, he said. Fielding upgrades quickly is vital.

The pod will be tested next month with a Harrier squadron and will deploy in the fall if everything goes according to plan, Schuette said. But eventually the pod will also be carried on the F/A-18 Hornet fighter and AH-1 attack helicopters.

In keeping with Marine doctrine, the pod will be used to support Marine ground forces, whose radio battalions will control the pod from the surface. The pilot will be able to control the pod, but the idea is that Marines on the ground control the pod, eventually with a handheld device.

U.S., North Korea Hold Nuclear Talks

UNITED NATIONS - The United States opened discussions July 28 with North Korea, in a move testing Pyongyang's willingness to negotiate giving up its nuclear arsenal.

The U.S. special envoy on North Korea, Stephen Bosworth, greeted North Korea's first vice foreign minister Kim Kye Gwan at the entrance to the U.S. mission to the United Nations in New York before they set the talks underway.

Neither side many any comment before the meetings, which were expected to go on into July 29. The United States has stressed however that these are "exploratory talks" to see if the Pyongyang regime is serious about living up to past commitments on its nuclear program.

The United States considers progress on disarmament to be key to any hopes of improving six decades of hostile U.S.-North Korea ties.

It is the first talks since Bosworth visited Pyongyang in December 2009.

The invitation to New York was made after a meeting between nuclear envoys from North and South Korea at an Asian security forum in Indonesia last week.

The international community is anxious to see North Korea return to six-nation talks on its nuclear weapons, which broke down in late 2008.

North Korea agreed in principle at the six-nation talks in 2005 to scrap its weapons program, but staged nuclear tests in 2006 and 2009.

The North's disclosure in November that it had a uranium enrichment plant, adding a new means to produce atomic weapons, has become a new complicating factor in the talks the North has held with the United States, China, South Korea, Japan and Russia.

U.S. Secretary of State Hillary Clinton invited the North Korea minister for what she called "exploratory talks."

State Department spokesman Mark Toner said July 27 that the Indonesia meeting had been "constructive" but that the communist state needs to do more.

"What we're looking for is in our mind a clear indication that North Korea is serious about moving forward," Toner told reporters.

The United States will be watching to see if the North will recommit to the 2005 agreement "as well as take concrete and irreversible steps towards denuclearization," Toner said.

The North highlighted its mistrust of U.S. motives ahead of the talks.

At a U.N. debate on disarmament on Wednesday, the North's U.N. ambassador said a proposed U.S. missile defense shield in Europe would spark a "new nuclear arms race."

The ambassador, Sin Son Ho, said the United States was seeking "absolute nuclear superiority" and had no "moral justifications" to lecture other countries about proliferation.

North Korea's official news agency said in a commentary July 27, however, that an agreement with the United States formally ending the 1950-53 Korean War could become a "first step" to peace on the Korean peninsula and "denuclearization."

Diplomats have warned that the North is unlikely to make concessions in the talks.

"North Korea is in trouble again. It needs food supplies and its economy is falling deeper and deeper into crisis," an Asian diplomat said on condition of anonymity.

"But it cannot afford to give up the nuclear weapons, which are its main bargaining point."

In a sign of the diplomatic minefield that the United States has been going through in its dealings with North Korea in the past six decades, an aide accompanying Bosworth was seen carrying a copy of "How Enemies Become Friends," a recent book by Charles Kupchan, a former adviser to President Bill Clinton, into the meeting.

Kupchan champions the cause of U.S. engagement with its enemies in the book.

Exchange Rate Behind UAE Rafale Balk: Dassault

PARIS - The price resistance from the United Arab Emirates on the Rafale fighter jet stems from an unfavorable euro-dollar exchange rate, but talks on the French aircraft continue, Dassault Aviation executive chairman Charles Edelstenne said July 28.

The UAE's discussion with Lockheed Martin about a potential purchase of additional F-16 fighters was "not a negative sign," Edelstenne told a press conference on the company's results for the first half of the year.

"Talks are going on," he said.

But with the euro at $1.40, the Rafale's sale price was boosted by the currency exchange rate, Edelstenne said. Dassault could not cut prices by 40 percent to offset the weaker dollar.

"I make Mirages, not miracles," he said.

The euro was trading at $1.43 in early afternoon, with the dollar under severe pressure from the U.S. government impasse on raising the debt-ceiling limit ahead of the Aug. 2 deadline.

Edelstenne refused to disclose the unit price of a Rafale, but he said an export purchase generally involves a political decision to pay a "price premium" that granted "independence of action." As the Rafale is built in France, reflecting a strategic decision on sovereignty, its costs are in euros, making it more expensive than an American fighter aircraft sold in dollars.

On the French government's July 20 decision to start negotiations with Dassault on a supply of the Heron TP medium-altitude long-endurance (MALE) UAV, Edelstenne said this meant sustaining a French design capability in military aircraft instead of paying for the "Messerschmitt design office" in EADS.

Edelstenne said in picking OHB over EADS, Germany made similar national selections in its space procurement.

Asked what the significance was in selecting Dassault as supplier of an interim MALE UAV, Edelstenne said the choice showed a determination to maintain a French national capability in building combat aircraft, as the next manned fighter jet would not enter service for another 30 to 40 years.

The negotiations would determine what sensors and communications payloads would go on the Israeli Aerospace Industries' UAV air vehicle, which is intended to provide an interim solution until the planned Anglo-French new generation MALE UAV enters service, expected in 2020.

IAI has agreed to disclose technical information on the Heron TP, which will be adapted to French requirements, including the ability to carry weapons, Edelstenne said.

The interim MALE UAV could have a service life of around 10 years and could overlap with the new Anglo-French air system, a company executive said.

On an asset swap under negotiation between Safran and Thales, Edelstenne said the airplane engine and equipment maker was holding up a deal by saying "no" to each new proposal from the electronics company. That forced Thales into a corner, he said.

"The valuation levels are a bit extraordinary," Edelstenne said.

Dassault signed an agreement with the government on an asset swap when it took its 26 percent stake in Thales, covering inertial navigation, onboard electricity generation and optronics, Edelstenne said.

Safran's sales in optronics are worth around 600 million euros, and if the business were put into Thales, that would make the electronics company second or third in the world market for electro-optics.

At the Paris Air Show in June, French President Nicolas Sarkozy said the government would impose a settlement if industry failed to reach a voluntary agreement.

Edelstenne said he was "very satisfied" with the Thales first-half results, which were released on July 27. The results displayed early effects of the Probasis restructuring plan and improved management of large programs and contract negotiations, he said.

Dassault reported a 35 percent fall in net profit to 129 million euros from 197 million euros a year ago, as sales dropped 34 percent to 1.32 billion euros from 1.99 billion euros.

The sales and profit slide came from lower deliveries of the Falcon business jet, with a delay in shipment of the Falcon 7X into the second half.

Orders declined to 95 million euros from 99 million euros.

On a production rate of one unit per month, Dassault has delivered six Rafale jets so far this year out of 180 total orders to date.

Privately, company executives expect the French government to stretch out future Rafale orders because of expected defense budget cuts, especially if export contracts are won.

Besides the UAE, Dassault hopes to sell the Rafale to India, Brazil and Switzerland. India is holding to its timetable to buy 126 medium-range combat aircraft, and the Swiss government has shown renewed interest in replacing its F-5 fighters.

Pentagon Seeks To Reduce Subcontractor Costs for F-35

The Pentagon is looking to lower subcontractor costs as it attempts to bring down the price tag of the Lockheed Martin F-35 Lightning II, the Pentagon's director of defense pricing said.

THE PENTAGON'S DIRECTOR of defense pricing, Shay Assad, said the agency is trying to lower subcontractor costs for the F-35 Lightning II program. (LOCKHEED MARTIN)

"What we've learned is that a lot of the money that we're spending is at the subcontract level," Shay Assad told reporters July breakfast with reporters in Washington.

"We're following money," Assad said. "We want to make sure we have a complete understanding of what we think a fair and reasonable subcontract price should be, and we do expect Lockheed Martin to develop their own position."

The U.S. Defense Department expects to have a better picture of the Joint Strike Fighter (JSF) program costs in the fall. Prior estimates have pegged the cost of the overall JSF program - which includes more than 2,400 U.S. jets and an expected 700-plus international order - at more than $380 billion.

This comes as the Pentagon prepares to enter negotiations for the fifth batch of low-rate, initial production (LRIP) jets.

Assad said DoD officials are currently evaluating Lockheed Martin and subcontractor proposals for that batch of aircraft.

"We expect that sometime in the fall we'll commence negotiations, and if it goes according to plan, we should have a deal sometime by the end of the year," he said.

Asked if Lockheed's LRIP-5 price shows a downward trend, Assad said: "We're expecting a downward trend."

DoD is "getting a much clearer view each day" of F-35 cost projections, he said.

The Pentagon is also evaluating earned value management, which had been previously "disapproved" by the Defense Contract Management Agency, according to Assad.

"They have a path, and we're satisfied that if they stay on that path, they'll be OK," he said. "One of the problems is just the ability to accurately forecast their work."

"I think that by the end of this year, they'll be in pretty good shape in terms of having reliable projects and forecasts," Assad added.

Lockheed is getting better at determining common features across the three multiservice jets, which will be operated by the Air Force, Navy and Marine Corps, as well as allies.

The Air Force version is a conventional jet that takes off and lands on a runway, but the Navy version is build to operate off aircraft carriers and the Marine Corps version can launch off smaller ships or runways and land vertically.

"What we're finding is that we're getting much more precise about what is the commonality amongst these things and how should we build those common items, because that's where we'll save some money," Assad said.

The current LRIP-4 batch is the first in which all three versions of the JSF are being built at the same time.

"I would say by the end of this year, early next year, we'll have some very good insight into what the production differences are in the aircraft in terms of what they should cost," Assad said.

The Pentagon is also exploring the possibility of having Lockheed build all Air Force jets for a period, then switching to a different variant, and so on.

That review is expected to wrap up in 60 to 90 days, Assad said.

Iraq FM Hopeful Some U.S. Troops Stay Past 2011

BAGHDAD - Iraq's president has called a meeting to decide whether U.S. troops should stay beyond a year-end deadline, Foreign Minister Hoshyar Zebari said July 27, adding there could be consensus to keep a small number of trainers.

President Jalal Talabani had set last weekend as the deadline for the Iraqi government to give a unified yes or no answer to Washington about some troops remaining, but it expired without an answer from Baghdad.

Zebari told reporters that Talabani had now called another meeting for July 30 to discuss the issue.

Meanwhile, Prime Minister Nuri al-Maliki said in a telephone conversation with U.S. Vice President Joe Biden that the issue would be decided in parliament, his office said.

"The prime minister assured Mr. Biden that in the end it is up to the parliament to decide whether the country needs American forces to stay or not after the end of this year," a statement from Maliki's office said, adding it was Biden who had called Maliki.

Zebari said he believed that some U.S. troops were needed beyond 2011 to train Iraqi forces.

"Is there a need for trainers and experts? The answer is 'yes,'" Zebari said. "I think it is possible to reach a consensus on this," he added.

"The Iraqi government alone cannot reach a decision on this issue. It needs political and national consensus; it's an issue all political leaders should back."

"President Talabani has announced a decision to gather all political leaders this Saturday" to discuss the issue.

"In my assessment, it is possible to reach an acceptable agreement."

The discussions about some troops staying on comes as the nearly 47,000 U.S. troops now in Iraq are packing to pull out at the end of this year under the terms of 2008 pact.

Rebuffed by U.S. Navy, Lawmakers Order New LCS Study

Rep. Duncan Hunter, R-Calif., recently rebuffed by the U.S. Navy in asking the service to review its Littoral Combat Ship (LCS) program, has turned to the Government Accountability Office (GAO) to further examine the shipbuilding effort.

In a July 27 letter to the GAO, Hunter, joined by Rep. Rob Wittman, R-Va., cited his concerns about the program's historic cost overruns and schedule delays, and more recent corrosion and structural issues with the ships.

Hunter and Wittman asked the GAO to "review and as necessary update the August 2010 [GAO] report on the LCS program." Specifically, the lawmakers want GAO to examine:

■ what the Navy is doing to overcome technical design flaws in the first two ships;

■ what the Navy is doing to make sure follow-on ships are delivered with cost and time estimates;

■ what actions the Navy has taken to make certain that mission packages have the capabilities they were intended to have; and

■ provide performance and operational maintenance date on the propulsion systems for both LCS variants.

Hunter, in a July 1 letter to Navy Secretary Ray Mabus, had asked the service "to immediately conduct a formal review of the entire LCS program, provide an assessment of the technical design flaws of the current fleet and determine the best way forward to include the possibility of rebidding this contract so that the program can be put back on a fiscally responsible path to procurement."

Mabus, in a July 7 reply, said the Navy had "faced and overcome the program's past cost and schedule challenges," and addressed many of the issues presented in the GAO's 2010 report.

Noting that both ships have yet to complete all test and trial programs, Mabus wrote that the service now "is confident that we are on a path of success" with LCS.

In addition to Hunter, a group of seven senators, led by Sen. John McCain, R-Ariz., have questioned the Pentagon's handling of the LCS program. In a July 12 letter to Pentagon acquisition chief Ash Carter, the group questioned the Pentagon's certification procedures allowing the program to go forward, and asked for more information on corrosion problems affecting the ships.

Joe Kasper, a spokesman for Hunter, explained that the San Diego-area congressman's intent "is not to terminate the program."

Rather, Kasper said, "it's about efficiency of production, it's about efficiency of dollars. And if there's an opportunity to improve production and reduce costs in the process, then that's important and something worth considering."