Tender feelings
The government is in the thick of accusations that the mishandling of the F-16 offsets deal with planemaker Lockheed Martin and its associated suppliers could seriously reduce the amount of cash reaching industry.
Opposition MPs are accusing the Miller administration of making such a mess of the negotiations around the offsets that the $3.5 billion contract for the F-16s could turn into a disaster. Other analysts said the last-minute dash to Washington by premier Leszek Miller was purely political stagecraft, although government officials had unquestionably muddied the negotiations because they could not understand the complexities of the deal.
Observers say the fault lies in the way the tender process was conducted, and a lack of clear vision by the government over what the offsets input was intended to achieve. All three bidders - Lockheed Martin, the Swedish-British Gripen alliance, and Dassault Aviation from France - promised to undertake knock-on investments in industry and infrastructure, a familiar feature of major armaments contracts.
The prime minister has admitted the situation has deteriorated since the tender committee chose Lockheed Martin as the winner shortly after Christmas.
Meeting the American media during his Washington summit with President George W. Bush last week, Miller declared that the Polish side was "not entirely satisfied" with the US version of the offsets offer. "Some propositions should be eliminated and replaced with different ones," he told journalists immediately after his meeting with Vance D. Coffman, chief executive of Lockheed Martin.
Central to the government's position is the desire to have more money pumped into hightech and biotechnology businesses. Lockheed Martin spokespeople in Warsaw refused to comment on the negotiations on the grounds that talks were still continuing.
But it seems clear that the American side is losing patience and is pressing the Miller administration to sign both the aircraft tender and the contracts deal at the same time, and as soon as possible.
Mac Stevenson, a vice president of Lockheed Martin and a key negotiator in the deal, said: "By Polish law, the aircraft contract is not effective until the offset contract is signed. Therefore, we need the offset contract signed before we can begin the aircraft implementation programme."
Lockheed Martin won the tender with an offset offer of $6.02 billion, which represents the total extent the industry would expect to benefit in the long term from collateral investments. If the figure were reduced, it would invalidate the tender conditions.
"Miller went to the USA in order to change the conditions of the agreement, and he is coming back with guidelines as to what he should do to make the American investors happy," said Bronisław Komorowski, former minister of defence. He added that it is too late to change anything of substance. The fact that the offer was accepted by the tender committee is proof that the Polish side had declared its satisfaction.
"The Americans think the further negotiations should concern only details," he said.
MPs complain they are being kept in the dark as to what the government is demanding. "We learn what is supposed to be happening from the newspapers," said Tadeusz Jarmuziewicz of the parliamentary infrastructure committee. Jarmuziewicz is among those in the Sejm calling for a parliamentary commission to act as a watchdog over government dealings with major investors, and over deals such as the F-16 contract. "We start to think that the government lost control over the negotiations," he added.
The government created an offsets committee to oversee the negotiations, and sources close to the administration said the trouble started when its members did an internal audit of the offset programme and came up with a revised figure which was about one-third lower than the $6.02 billion put to the tender committee. There are also reports of a letter sent by a member of the offsets committee to the economy ministry, warning that the proceedings "could end up badly."
Opposition sources claimed the confussion arose because a different method of evaluation was used, and that the offer contained many propositions which were irrelevant to national needs.
At the government's scientific strategy committee - the nearest there is to a ministry of science - president Michał Kleiber has been pushing strongly for much more of the promised investment to go into hightech. Kleiber is said to be responsible for edging out claims of state industries to offsets cash.
Bohdan Wyżnikiewicz from the Institute for Market Economics is sceptical about the investments in high tech undertakings. "Polish companies are not ready to absorb this money," he said.
But in other respects, government officials - and especially those at the economy ministry and the Agency for Industrial Development - are being accused of being incapable of understanding the complexities of the deal, and therefore directly responsible for much of the confusion and misunderstandings.
"They have never heard of an offset," one analyst told the Business Journal. "They have no commercial background. They are bureaucrats who have never even run a shop."
Bronisław Komorowski says negotiations to seal both agreements should have been carried on until reaching a successful conclusion, without announcing a winner until then. This would have left the French and the British-Swedish bidders in the game as a balance to the Americans. "Now the government can only make believe that it has any influence on the matter whatsoever," he said.
A political observer of the confusion said much of it was being staged for theatrical effect, just as Miller had done at the EU Copenhagen Summit.
"Miller will go all the way to the wire," he said. "Then he'll proclaim that he's the man who engineered a great deal, when in fact it's all being done purely for public consumption."
In theory, the government can nullify the deal, and restage the tender, but few doubt it would be a politically suicidal decision which would destroy the country's credibility in the eyes of foreign investors.
Opposition MPs are accusing the Miller administration of making such a mess of the negotiations around the offsets that the $3.5 billion contract for the F-16s could turn into a disaster. Other analysts said the last-minute dash to Washington by premier Leszek Miller was purely political stagecraft, although government officials had unquestionably muddied the negotiations because they could not understand the complexities of the deal.
Observers say the fault lies in the way the tender process was conducted, and a lack of clear vision by the government over what the offsets input was intended to achieve. All three bidders - Lockheed Martin, the Swedish-British Gripen alliance, and Dassault Aviation from France - promised to undertake knock-on investments in industry and infrastructure, a familiar feature of major armaments contracts.
The prime minister has admitted the situation has deteriorated since the tender committee chose Lockheed Martin as the winner shortly after Christmas.
Meeting the American media during his Washington summit with President George W. Bush last week, Miller declared that the Polish side was "not entirely satisfied" with the US version of the offsets offer. "Some propositions should be eliminated and replaced with different ones," he told journalists immediately after his meeting with Vance D. Coffman, chief executive of Lockheed Martin.
Central to the government's position is the desire to have more money pumped into hightech and biotechnology businesses. Lockheed Martin spokespeople in Warsaw refused to comment on the negotiations on the grounds that talks were still continuing.
But it seems clear that the American side is losing patience and is pressing the Miller administration to sign both the aircraft tender and the contracts deal at the same time, and as soon as possible.
Mac Stevenson, a vice president of Lockheed Martin and a key negotiator in the deal, said: "By Polish law, the aircraft contract is not effective until the offset contract is signed. Therefore, we need the offset contract signed before we can begin the aircraft implementation programme."
Lockheed Martin won the tender with an offset offer of $6.02 billion, which represents the total extent the industry would expect to benefit in the long term from collateral investments. If the figure were reduced, it would invalidate the tender conditions.
"Miller went to the USA in order to change the conditions of the agreement, and he is coming back with guidelines as to what he should do to make the American investors happy," said Bronisław Komorowski, former minister of defence. He added that it is too late to change anything of substance. The fact that the offer was accepted by the tender committee is proof that the Polish side had declared its satisfaction.
"The Americans think the further negotiations should concern only details," he said.
MPs complain they are being kept in the dark as to what the government is demanding. "We learn what is supposed to be happening from the newspapers," said Tadeusz Jarmuziewicz of the parliamentary infrastructure committee. Jarmuziewicz is among those in the Sejm calling for a parliamentary commission to act as a watchdog over government dealings with major investors, and over deals such as the F-16 contract. "We start to think that the government lost control over the negotiations," he added.
The government created an offsets committee to oversee the negotiations, and sources close to the administration said the trouble started when its members did an internal audit of the offset programme and came up with a revised figure which was about one-third lower than the $6.02 billion put to the tender committee. There are also reports of a letter sent by a member of the offsets committee to the economy ministry, warning that the proceedings "could end up badly."
Opposition sources claimed the confussion arose because a different method of evaluation was used, and that the offer contained many propositions which were irrelevant to national needs.
At the government's scientific strategy committee - the nearest there is to a ministry of science - president Michał Kleiber has been pushing strongly for much more of the promised investment to go into hightech. Kleiber is said to be responsible for edging out claims of state industries to offsets cash.
Bohdan Wyżnikiewicz from the Institute for Market Economics is sceptical about the investments in high tech undertakings. "Polish companies are not ready to absorb this money," he said.
But in other respects, government officials - and especially those at the economy ministry and the Agency for Industrial Development - are being accused of being incapable of understanding the complexities of the deal, and therefore directly responsible for much of the confusion and misunderstandings.
"They have never heard of an offset," one analyst told the Business Journal. "They have no commercial background. They are bureaucrats who have never even run a shop."
Bronisław Komorowski says negotiations to seal both agreements should have been carried on until reaching a successful conclusion, without announcing a winner until then. This would have left the French and the British-Swedish bidders in the game as a balance to the Americans. "Now the government can only make believe that it has any influence on the matter whatsoever," he said.
A political observer of the confusion said much of it was being staged for theatrical effect, just as Miller had done at the EU Copenhagen Summit.
"Miller will go all the way to the wire," he said. "Then he'll proclaim that he's the man who engineered a great deal, when in fact it's all being done purely for public consumption."
In theory, the government can nullify the deal, and restage the tender, but few doubt it would be a politically suicidal decision which would destroy the country's credibility in the eyes of foreign investors.
