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C O N F I D E N T I A L SECTION 01 OF 02 BRASILIA 000216 
 
SIPDIS 
 
STATE FOR WHA/BSC, PM/RSAT 
 
E.O. 12958: DECL: 02/14/2019 
TAGS: BR PREL MARR ETTC
SUBJECT: BRAZIL FX2 COMPETITION: THE BIDS ARE IN; NEXT STEPS 
 
REF: A. BRASILIA 41 
     ¶B. 08 BRASILIA 1373 
 
Classified By: Ambassador Clifford Sobel.  Reason 1.5 (D) 
 
¶1.  (C)  SUMMARY.  Following the February 2 submission of 
bids for Brazil's FX2 fighter competition, the Brazilian Air 
Force (BRAF) will begin the process of technical evaluation. 
The U.S. competitor, Boeing's F18 Super Hornet, submitted a 
proposal that complied with Brazilian technical requirements 
and offered an extensive package of offsets that evoked an 
positive initial reaction from the BRAF.  Despite this, the 
Super Hornet is still perceived as trailing the French 
competitor as Brazilian affinity for its "strategic 
partnership" with France has led to Dassault's Rafale being 
perceived as the default choice.  To overcome such 
perceptions, Boeing hosted a group of prominent Brazilian 
journalists on a tour of U.S. Navy and Boeing facilities that 
should result in more balanced reporting in the Brazilian 
press.  For a successful outcome to the FX2 process, the USG 
will need to be prepared to answer Brazilian questions about 
technology release, particularly regarding source codes and 
integration of third party weapons outside the U.S., in a way 
that does not give an outright "no" to the Brazilians while 
remaining consistent with USG policy.  See paragraphs 4-8 for 
specific suggestions on next steps.  END SUMMARY. 
 
¶2.  (C)  On February 2, responses to the Request for Proposal 
(RFP) for Brazil's next generation fighter aircraft (FX2) 
were submitted to the BRAF in Sao Jose dos Campos by Boeing, 
Dassault and Saab.  With the RFP issued as recently as 
November, the rapid response from the USG, particularly with 
regard to technology release, was a significant achievement. 
Thus far in the FX2 process, most BRAF reps have told embassy 
officials that they might prefer the F18 as the superior 
aircraft but were not confident about the releasability of 
U.S. technology.  USMLO Brasilia reports many congratulations 
from the BRAF on the completeness of Boeing's bid, although 
there has already been one follow up request for confirmation 
that all technologies included in the package have been 
approved for export.  Despite the success of the RFP 
response, there remains a perception among Brazilian leaders 
that the French candidate, the Rafale, remains the plane to 
beat in the competition.  President Sarkozy's 
highly-publicized visit to Rio in December and his strong 
personal friendship with President Lula are seen as giving 
the Frencha strong political preference. 
 
¶3.  (U)  As a step toward building the public case for the 
F18, Boeing sponsored a February 2-5 tour for Brazilian 
journalists to Washington, NAS Oceana and St. Louis. 
Participants heard from WHA A/S Shannon and PM AA/S Ruggeiro 
that the USG strongly supports the sale, including through 
the transfer of technology and understands Brazil's 
importance for the stability of the Western Hemisphere.  The 
journalists' questions seemed to accept that the USG was 
prepared to approve the transfer of relevant technologies and 
focused on wheather this represented a change in policy to 
now provide Brazil with the best equipment available.  There 
was also considerable interest in the overall cost of the 
aircraft and the possibility of financing.  By visiting Navy 
units operating the Super Hornet, the journalists heard first 
hand accounts of the plane's superior performance from those 
who have flown it in combat and observed flight operations. 
The Navy presentations drove home the point that with the F18 
Brazil will get a plane with proven performance and 
reliability, something neither of the other competitors can 
offer.  In St. Louis, the group was briefed on Boeing's 
manufacturing operations and the potential advantages to 
Brazilian industry of partnership with Boeing. 
 
NEXT STEPS 
---------- 
¶4.  (C)  While the presentation of a strong RFP was an 
important step, there are still several potential pitfalls in 
the evaluation process and opportunities to build support for 
the U.S. candidate.  As noted in ref B and previous 
reporting, Brazilian concerns that the U.S. could withhold 
key technologies remain a significant factor against success 
in the FX2 competition.  The RFP response, along with 
 
BRASILIA 00000216  002 OF 002 
 
 
positive press coverage, has alleviated much of this concern, 
but there are several points remaining which, if incorrectly 
presented, could revive accusations that the U.S. will not 
transfer technology.  The RFP response to the BRAF 
requirement for a within visual range (WVR) weapon proposed 
either the U.S.-made AIM9M or integration of a third party 
weapon, presumably Brazilian-made.  While either option will 
meet the RFP conditions, the Brazilians may notice that a 
more advanced U.S.-made missile, the AIM 9X, has been 
approved for export to such Air Forces as those of Saudi 
Arabia and South Korea and assume that Brazil is less 
trusted.  Post understands that approval of the AIM9X for 
Brazil remains unlikely, but it will be important not to 
respond to Brazilian inquiries about this weapon with an 
outright "no."  We should be prepared to explain that we 
understand that Brazil's policy is to favor indigenous 
weapons, as articulated in the recent defense strategy, and 
we are prepared to work with Brazil to integrate such 
missiles as they become available.  We are also offering a 
lower cost, high performance alternative in the AIM9M.  If 
Brazilian industry is interested, we could suggest 
partnership with U.S. firms on an improved WVR weapon. 
 
¶5.  (C)  Similarly, we may see some Brazilian pushback on the 
location for weapons integration.  Ideally, the Brazilians 
will want this done in Brazil with Brazilian engineers, an 
arrangment we understand that the USG will not approve. 
Again, rather than simply denying such a request, it would be 
better that the USG response focus on the downsides of doing 
the work in Brazil: huge increases in cost and the 
disadvantage of exempting Brazilian Super Hornets from 
ongoing technological improvements occurring in the worldwide 
Hornet/Super Hornet communities.   In order to take full 
advantage of the mature technologies Boeing is offering (as 
opposed to its competitors, many of whose key systems are 
still on the drawing board), Brazil will have to participate 
in the Super Hornet program as a regular partner, and that 
means with key weapons integration done in the U.S. 
 
¶6.  (C)  Before any aircraft could be transferred to Brazil, 
we will need to complete an information sharing agreement 
that will ensure protection of classified data.  While this 
is in process, the process of approving technology release 
for the RFP response revealed that the BRAF will also need to 
complete an arrangement for protection of the GPS signals 
used for weapons guidance.  Prompt progress on these 
arrangements will be instrumental to completing a sale. 
 
¶7.  (SBU)  The journalists participating in the tour gave 
strongly positive feedback to Boeing and Embassy reps. We 
have heard from several that stories will soon be appearing 
in major Brazilian publications (to be reported septel).  As 
a follow on, embassy is discussing with Boeing the 
possibility of organizing a similar tour for Brazilian 
political/opinion leaders that would focus on the importance 
of the U.S.-Brazil relationship and the benefits, both 
political and economic to enhancing our partnership. 
Participation could be open to members of the Brazilian 
Congress that will have to approve funding for the FX2 and 
former Ministers who now can influence Brazilian opinion. 
 
¶8.  (SBU)  President Lula's March visit to Washington will 
provide an opportunity to signal USG support for the sale of 
the Super Hornet and highlight the advantages to Brazil of 
buying the planes.  Ideally, President Lula would be offered 
the same sort of familiarization flight in a Super Hornet 
that was conducted for Defense Minister Jobim in July 2008. 
Given the high degree of Brazilian interest in the new U.S. 
administration, we expect plentiful opportunities for high 
level contacts in the coming months.  These should be used to 
remind Brazilian leaders of strong USG support for Boeing and 
the superiority of the F18 offer. 
SOBEL