Wisła Programme: Phase I Offset Agreement Concluded

Conclusion of the offset agreements is a condition required to be met, before the Wisła air/missile defence system procurement contract is signed. The procurement contract, pertaining to the Phase I of the acquisition, is planned to be concluded on 28th March. The whole process is going to be divided into two phases. Polish Ministry of Defence is acquiring the US-made Raytheon Patriot system coupled with the IBCS (Integrated [A]ir and [M]issile [D]efense Battle Command System) suite, developed by Northrop Grumman. The whole solution is going to utilize the PAC-3 MSE missiles in a role of the effector. The missiles in question are being manufactured by Lockheed Martin.

Offset agreements have been concluded, in case of the Wisła programme. The value of the transfer of technology is defined as almost one billion zlotys, with the said transfer expected to bolster the capacity remaining at hand of the Polish defence industry. This is the last step preceding the conclusion of the Patriot system procurement agreement.

According to the information released by the Polish Ministry of Defence the offset agreement concluded with the Raytheon Company has a value of PLN 224,121,788, and it includes 31 offset commitments, with a 10 years term of validity. According to the MoD, the agreement would allow Poland to acquire capabilities within the scope as follows:

• C4ISR capabilities based upon the IBCS module;
• Launcher and transport/missile loading vehicles overhaul and manufacturing capacity;
• Creating a certified Centre of Manufacturing Administration and Management, dealing with customization, maintenance and repairs of the “Wisła” system and equipment acquired through other air/missile defence programmes.
• The Agreement also assumes that manufacturing capability is obtained with regards to manufacturing and servicing of the 30 mm Bushmaster cannons.

Analogous agreement signed with the Lockheed Martin Global Inc. company has a value of PLN 724,764,000. It contains 15 offset commitments distributed across an identical term of a decade.

Polish MoD announced that the capabilities obtained via the agreement would make it possible to manufacture and maintain the PAC-3 MSE launchers. Furthermore, the offset is also to allow Poland to manufacture components of the PAC-3 MSE missiles. The Polish industry will also have a chance to create a missile research laboratory. Finally, extra know-how would be received with regards to maintenance of the F-16 fighters, operated by the Polish Air Force.

Both offset agreements have been signed by the Deputy Minister of Defence Sebastian Chwałek, on behalf of the MoD. Chwałek, as of January this year, has had a task assigned to supervise the technical modernization programme pursued by the military. On behalf of the Raytheon company the contract has been signed by Raytheon International President, Bruce Skilling. Meanwhile, Lockheed Martin Global Inc. delegated Vice-President PAC-3 Programme, Jay Pitman, to place his signature under the Polish contract.

The press release issued by Raytheon quotes Vice-President for the Polish Integrated Air/Missile Defence Programme, Pete Bata, who stressed that by signing the offset agreement, both Raytheon as well as the Polish Ministry of Defence have created a roadmap for an unprecedented transfer of technology for the Polish industry. The said transfer is going to take place to the maximum extent achievable in compliance with the US law and policy. The agreement, Bata said, also reinforces the partner relations established by and between the US and Polish industries. Bata referred to Poland as one of the most important NATO allies.

Defence24.pl found out that one of the key documents related to the Wisła programme, signed by the US party, has been sent to Poland two weeks ago. The above refers to the draft agreement, also known as the Letter of Offer and Acceptance (LOA). The document in question has already been received by the Polish Ministry of Defence. Its volume is defined as several pages.

Conclusion of the LOA means that Poland received an offer defining the relevant provisions of the agreement, in line with the Civil Code. Should it be accepted, the contract shall be considered to be concluded. In the light of the fact that the provisions of the agreement were being developed through a negotiation that lasted until late January 2018, one may assume that LOA approval is only a formal step here.

Noteworthy, it is the first significant offset agreement that is a subject to the new Offset Act introduced back in 2014. The aforesaid Act is to, in its basic assumption, to adjust the Polish regulations to the EU requirements. Following the amendment, the Polish Ministry of Defence became the main subject responsible for the offset related to the newly concluded agreements. Before the new regulations were introduced, the competent minister in charge of economy was the one that had been responsible for the offset-related processes.