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Procurement: GAe FGR.3 Thunder

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Transaction Summary

The Oficina dei Armada Contractació (OAC) or Naval Procurement Office, submitted an Expression of Interest Letter to the Foreign Military Sales Office (Air) on the 29th October, 2021. On the 8th November, 2021, the OAC submitted its intent to procure 64 units of FGR Thunder with inquiries on the possibility of contracting a special variant. On the 10th January, 2022, discussions on a special variant were dropped over Armada concerns over timeline and costs. Instead, the OAC requested quotation for procurement of the FGR.3 variant with terms to order additional units within an underwritten consideration period of 3 years. By the 2nd of May, 2022, the Foreign Military Sales Office submitted its preliminary agreement draft to OAC. Terms included training support for air crew, service, and support personnel and deductibles in consideration of the procurement order volume. On the 6th of June, 2022, final terms were set a price per unit of $90,000,000.00 (Adapton Solidus) for 64 FGR.3 with commitments to order an additional 90 units within a period not exceeding 3 calendar years from the agreement signing date. On the 18th of June, 2022, the OAC received approval from the Armada Almirantasgo. The Procurement Agreement was co-signed by Capo-Almirante Francisco Mondragón, Defence Minister Ricardo Ibanes on behalf of the Executive Ministry, and Almirante Santiago Ortiss-Velasco. The Procurement Agreement for 64 units is valued at $5,600,000,000.00 with the Total Transaction Value for 154 units estimated at $13,860,000,000.00.


Private Commentary

Expenses for the FGR.3 procurement annualised over a 2-year period is not expected to exceed the Republican Armed Service Procurement Budget of $18.22 Billion. Of that amount, the RAS operating procurement expense sans the FGR.3 procurement is estimated at $10.9 Billion for Fiscal Year 2022; top expense items include the procurement of 6 units of Trident-Class Frigates per year, 200 units of assorted ANCILE ABM Interceptors, the procurement of items of the Next-Generation Infantry Weapon Systems, the procurement of 120 more UC-42-A2 MBTs, and the general increase in other systems including other armoured vehicles and precision guided munitions. The Procurement of the FGR.3 is estimated to be the largest procurement expendiature undertaken by the RAS in a single contract to date. The deal follows the anticipation of a $4 Billion decrease in discretionary procurement marked for Fiscal Year 2023. Following the terms of the modernisation programme RAS-2020, no branch of service will retain excess cash or debit from the national budget by the end of Fiscal Year 2022 with any remaining funds returned for welfare programmes, personnel benefits, and tax returns.

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