Polish MoD aims to Annex the Offset Agreement for Wisła Air Defence System

Earlier this month we reported that the MoD is considering concluding an annex to the offset agreement accompanying the phase I of the Wisła programme. The relevant agreement had been signed with Raytheon in March 2018, just before the main FMS contract was signed with regards to delivery of two IBCS/Patriot batteries.

However, the corresponding offset commitments performance agreements have not been signed by and between the US and Polish industries. And these are required to begin implementation and transfer of the technologies covered by the offset agreement. The signing date has now been postponed several times. The package of memorandums pertaining to the second offset agreement within the very same programme, signed with Lockheed Martin, was a subject to finalization in March 2019.

In practical terms then, the MoD is willing to end the impasse and sign the agreements that would make it possible to implement all technologies covered by the Wisła programme’s phase I within the industry. In order to create the Annex, the MoD brought a working group to life, that would be responsible, according to a relevant ruling published within the Official Journal of the Ministry, “for carrying out negotiation pertaining to Annex No. 1 to the offset agreement signed on 23rd March 2018 in Warsaw, by and between the Treasury of the Republic of Poland represented by the head of the MoD and the Raytheon company”.

The working group will include:

1) Head – Director of the Offset Agreements Bureau at the MoD;
2) Deputy Head – Plenipotentiary of the Minister of Defence with regards to the matters of acquisition and introduction of the Wisła system in the Armed Forces of the Republic of Poland;
3) Secretary – Representative of the Director of the Offset Agreements Bureau at the MoD;
4) Members:
a) Representative of the Minister responsible for economy,
b) Representative of the Minister responsible for foreign affairs,
c) Representative of the Minister of National Assets (supervising, since recently, the PGZ Group and the subordinated companies that also are the offset receivers),
d) Representative of the PM’s Office,
e) Representative of the Armament Policy Department of the MoD,
f) Four representatives of the Director of the Offset Agreements Bureau at the MoD,
g) Two representatives of the General Commander of the Polish Armed Forces,
h) Representative of the Head of the Polish Armament Inspectorate,
i) Representative of the Head of the Armed Forces’ Support Inspectorate.

Apart from the above, representatives of the National Security Bureau, Central Anti-Corruption Bureau, Military Counterintelligence and Chief of Staff of the Head of the MoD may also participate in works in a role of observers. The working group is to be led by the head who arranges the meetings (independently or after a request is received from a team member), acts as a chairman of the meetings and organizes the work of the group - including scheduling of the dates of the meetings.

The team in question would be making decisions during the meetings. These decisions would take on a form of resolution, and they would be established with ordinary majority of votes. In case of equal number of votes, the vote of the chairman shall have a precedence. The group will be disbanded when Annex No. 1 to the offset agreement is approved by the Council of Ministers.

The offset agreement signed with Raytheon covers 31 commitments, including capabilities that are to be delivered by Northrop Grumman. The latter were to be associated with IBCS C2 capabilities or maintenance and manufacturing of the 30 mm Bushmaster II gun. The agreement also covered ability to manufacture and maintain launchers and loading/cargo platforms, as well as to create a certified facility that would deal with administration of and manage the manufacturing, maintenance and customization processes pertaining to the Wisła system and other air defence measures.

Regardless of the offset agreements Raytheon also concluded business memorandums pertaining to the Wisła program, with the Polish manufacturers. One of the memorandums assumes that HSW S.A. would manufacture sixteen M903 launchers for the Polish Wisła systems. The scope of that memorandum, however, differs from the one contained in the offset agreement and thus it may be implemented before finalization of the performance agreements that regulate the offset commitments. Another memorandum of similar nature, signed with the WZE facility, pertains to the DLTM electronic modules that are a part of the M903 launcher system.

Ministry of Defence assumes that before Phase II of the Wisła programme begins, all offset agreements related to phase I shall be finalized. Hence the MoD would be in a better position to negotiate, with a greater decisionmaking freedom when it comes to phase II of the Wisła programme and other projects, potentially. Conclusion of the offset performance agreements is relevant from the holistic point of view on the air defense system establishment.