D&I Alert on New Industrial Participation Rules

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On Friday, 22 April 2016, the Finnish Defence Forces Logistics Command issued requests for information (RFI) in relation to the HX Fighter Program for the replacement of the F/A-18 Hornet fleet. Earlier this year, RFIs were launched as part of Squadron 2020 vessel project, where the intention is to provide the Finnish navy with four new missile vessels.

Industrial participation (IP), or offset orders, will play an important role in both projects. The new Finnish rules on IP adopted in 2012 will be applied for the first time in these projects. In the past, the IP requirement (or offset requirement) could be based on, e.g., employment considerations.

Under the new rules IP is limited to major projects involving security of supply considerations. The RFIs issued in the current projects encourages IP, requesting that proposals for IP be submitted. Under the new rules the scope of the IP as well as the negotiations of the IP agreements containing the terms of the IP will require careful consideration.

Under the acquisition schedule of HX Fighter Program, responses to the RFIs are required by the end of 2016. The request for quotation (RFQ) phase starts in 2018 and the final selection decision on the replacement aircraft will be made by 2021. The RFI phase of the Squadron 2020 project has been completed and the RFQ phase starts later this year, with signing scheduled for 2019.

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