Elbit Systems Ltd. And Israel Aerospace Industries Ltd are two important Israeli defense suppliers, who also compete with one another in international markets to supply defense systems to national governments.
Whilst competition in such cases is meant to be robust, with competition on price and performance through international tenders the norm, sometimes it can get out of hand.
Elbit Hermes 900 unmanned aerial vehicle (UAV)
This has just happened with a tender for the armed forces of Poland who were looking to buy substantial quantities of unmanned aerial vehicles, UAVs – or drones – to upgrade their battlefield surveillance and defensive systems.
Both Elbit and IAI were bidding for the contract, which the Government of Poland finally looked like it would award to Elbit. However rather than accept the situation, their competitor for the deal IAI subsequently behaved very badly afterwards, even going so far as to publicly question the preference of Poland’s Deputy Minister of Defence at the time, General Waldemar Skrzypczak.
This caused significant annoyance to the government of Poland and diplomatic embarrassment to the State of Israel, as when General Waldemar Skrzypczak was ultimately forced to resign from the Polish Government, for other reasons, it was said that the UAV brouhaha was nevertheless a contributing factor.
To correct the situation with respect to a friendly nation, therefore, the Director General of the Israel Ministry of Defence Dan Harel has now, in a judgment of Solomon, withdrawn completely the export licences of both Elbit and IAI to operate in Poland at all, basically saying to them if this is how you behave then wise up as it simply won’t pay.
An Israel Aerospace Industries (IAI) Heron (Machatz-1) drone
Elbit had been in the running for a $50 million Polish order for its Hermes 450 series UAV.
So for the moment neither IAI, who behaved badly, nor Elbit Systems may sell UAVs and their peripheral systems in Poland until further notice.
“This is a sad story, ” a defense source familiar with the affair told “Globes”. “Both companies invested a lot effort in the Polish deal, and it has now gone to waste.”
Both companies have confirmed the situation in fairly terse terms and will now retire to lick their wounds for a while and then hopefully move on. Since the Polish market remains a good one, and it is modernising its armed forces, one can assume that eventually they will be allowed to return to the market there again, suitably chastened no doubt.
It is far from unknown for losing bidders in a tender to sometimes sue over the substance of the business issues involved, especially where large contracts are at stake. However to personally embarrass members of a friendly government clearly go over the line of politesse for what fair competition is about.