The partnership between Raytheon and Italy's Leonardo-Finmeccanica to sell jet trainers to the US is back on track after nearly falling apart thanks to a dispute over who calls the shots, multiple sources knowledgeable of the talks have told Defense News.
"The partnership was saved at the end of last week," one source said.
Raytheon teamed with Leonardo in February as the prime contractor to offer the Italian firm's T-100 jet trainer in the US T-X program, which could see a 350-aircraft purchase. The two firms are competing with Lockheed Martin and Korea Aerospace Industries' T-50A, and new designs by Northrop Grumman and a team-up of Boeing and Saab.
Problems over who should take a senior role in the partnership arose because while Raytheon is the prime contractor, Leonardo designed and built the aircraft and has already sold the M-346, on which the T-100 is based, to Italy, Israel, Poland and Singapore.
"Because of having experience and design authority, Leonardo wanted to count for more in the team than Raytheon wanted," the source said. Raytheon reportedly argued that there was an advantage in a US company being the actual team lead, given it was a US bid.
"Talks were interrupted, then the Italians decided to take a step back and convince Raytheon, which was ready to walk, to reopen talks," the source added. "Since we are talking about a plane with advanced technology, you cannot not share it with Raytheon."
Raytheon declined to provide comment on the status of the T-X partnership. Leonardo did not respond to a request for comment by press time.
A second source with knowledge of the program confirmed that Raytheon and Leonardo officials held a face-to-face meeting on Oct. 14, which lasted about two hours and included "the people who needed to be in a room together to get this stuff worked out."
Although Raytheon committed that the aircraft would be assembled in the United States, there were some issues over the work share, the second source said — defining whether that would include structural assembly, for example.
Other complications arose from differing cultures of business and defense acquisition, the second source said, stating that sometimes acronyms and turns of phrase were misunderstood by the other company. Other T-X competitors had long-standing industrial partnerships with their partners, while the teaming agreement between Leonardo and Raytheon was comparatively new. It took time for the companies to speak the same language, figuratively speaking, the source explained.
Another delicate question is potential exports of the plane by Raytheon outside the US, should it win the T-X competition, said the first source.
Having shared the technology with Raytheon, Leonardo could find its own global marketing effort to sell the M-346 challenged, as the company competes with exports of an "American" plane by Raytheon to countries who might prefer doing business through the US Foreign Military Sales program.
"There might need to be a deal to split the export market with Raytheon," the source said.
Valerie Insinna is Defense News' air warfare reporter. She previously worked the Navy/congressional beats for Defense Daily, which followed almost three years as a staff writer for National Defense Magazine. Prior to that, she worked as an editorial assistant for the Tokyo Shimbun’s Washington bureau.