The Israeli defense industries are not learning the lessons of past failures in tenders for upgrading Russian warplanes, caused by competition and lack of cooperation.
Israel Aircraft Industries (IAI) and Elbit Systems (Nasdaq: ESLTF) are currently competing with each other in a tender to upgrade MiG-29 fighters for the Bulgarian Air Force. In India, for example, the Israeli companies were beaten by MiG manufacturer Mikoyan-Gurevich. On the other hand, the Israeli companies competed against each other in Ethiopia, and Elbit Systems won.
Two out of the five international companies competing in the Bulgarian tender are from Israel. In addition to IAI's Lahav plant and Elbit Systems, the European Aeronautic Defence and Space Company (EADS), a consortium of major defense industries on the continent; Rossiskaya Samoletostroitelnaya Korporatsiya MiG (RSK MiG) of Russia; and Baranovichi Aircraft Repair Enterprise (ARE) of the Republic of Belarus submitted bids.
The Bulgarian Ministry of Defense confirmed that these five companies were competing in the tender, adding that Bulgaria wishes to upgrade its MiG-29s and equip them with Western technology in preparation for joining NATO. The tender for upgrading 20 airplanes is worth an estimated $45-100 million. The Bulgarian Ministry of Defense spokeswoman expects the tender winner to be chosen by the end of February.
Elbit Systems and IAI declined to respond to the report on the tender. Industry sources, however, confirmed that the two Israeli companies were competing against each other in Bulgaria.
Published by Israel's Business Arena on January 24, 2002