Airplane maker Avioane Craiova has been notified by Israel's Elbit Systems, with which it has a contract for the delivery of software for the upgrade of IAR Soim advanced trainer aircraft, that the high-tech giant will invoke the force majeure clause, given that it was requested to put any other project on halt in order to help Ukraine, Minister of Economy, Digital Transformation, Entrepreneurship and Tourism (MEDAT) Radu Miruta told a press conference on Thursday.
Under the given circumstances, Avioane Craiova cannot meet the deadline in its contract with the Defense Ministry, which has already calculated penalties of 3.6 million euros.
"The Craiova-based company must deliver some improved IAR Soim planes to the Defense Ministry. For that, they depend on a piece of software that is produced by an Israeli company. If the Israelis do not deliver the software under the contractual terms, Avioane Craiova charges around 11,000 euros in penalties, but if they are unable to deliver to the Romanian Army because of this, they are slapped with penalties of up to 10-11 million euros. We have contacted the Israelis, we are looking at the contract, these are the terms. We are making reasonable attempts to obtain that software. A software transfer was performed two weeks ago, the pilots did some tests, the plane is quite improved. They sent the last requests for fine-tuning of the software parameters and, from what I have spoken to Board of Directors members, part of the aircraft will be delivered to the Romanian Army," the minister explained.
Asked what is next, given that information emerged that the Defense Ministry has already written down penalties of 3.6 million, Radu Miruta replied: "It's an entire discussion, because Avioane Craiova were notified by the Israeli company that - at least for a certain period of the contract - they invoked force majeure for being required to cease all other projects in order to assist Ukraine. The Defense Ministry are analyzing whether they can also accept the passing down the chain of the force majeure claim Avioane Craiova received. But, that is just for one of the time periods, not for the entire interval."
"Basically, Elbit Systems invoked the fact that with the ongoing war in Ukraine, many entities around the world have asked them to prioritize support for Ukraine, which is why, they say, they were unable to deliver part of what they were supposed to deliver to Romania on time, exempting them from the delay clauses. Avioane Craiova, who bear the brunt of this delay, are also passing this argument further to those they have to pay to for this delay. It's a commercial, legal discussion between these three entities," the MEDAT chief emphasized.
In early September, president of the Avioane Craiova Free Trade Union Victor Peta asked Defense Minister Ionut Mosteanu to intervene so that the company would not be penalized for the delays in the modernization of the IAR 99 aircraft used for the training of F16 pilots, since "the company is not at fault", and the penalties "would mean a disaster for it, also compromising the Armed Forces' equipment program".
Victor Peta also pointed out that five aircraft were completed at the end of last year, having already clocked 150 flight hours, but they are not homologated because Elbit was late with the final version of the software which they should have delivered as per contract.
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