MOSCOW. Aug 11 (Interfax-AVN) - The Russian Helicopters Holding has started the fulfillment of a helicopter contract with the United States, however, the cost of Mil Mi-17V5 helicopters for Afghanistan is nearly 20% higher because of the state intermediary, the newspaper Kommersant said on Thursday.
The final value of the contract appeared to be $52.5 million larger than the United States had planned to spend. That happened after Rosoboronexport joined the deal, the newspaper said.
Defense Technology Inc. (DTI) won the helicopter tender of the Pentagon. The company suggested buying 21 Mil Mi-17 helicopters in the civilian modification from Russia and remodeling the choppers into assault aircraft in the United Arab Emirates (UAE). The suggestion was made because Rosoboronexport had been under U.S. sanctions since 2008 for supplying armaments to Iran.
DTI manager Brian Byron Kreck said in late September that the company had been granted the Russian Defense Ministry's permission to buy 21 helicopters directly from the manufacturer, the Kazan Helicopter Plant.
Yet, Rosoboronexport entered the deal almost immediately. The sanctions against Rosoboronexport were cancelled in May 2010, as a result of the Russia-U.S. reset policy. The Pentagon said on December 20 that the contract with DTI was invalidated because it was possible to strike the deal with Rosoboronexport only.
The involvement of Rosoboronexport enlarged the price of the contract. DTI General Director Mark Young said his company was ready to sell the helicopters to the Pentagon at $15 million per piece. The total price of the contract would have been $315 million or less than Rosoboronexport had demanded. DTI used this factor in appealing the contract at the U.S. Congress' Government Accountability Office (GAO) and nearly thwarted the deal.
However, the GAO declined the appeal on January 21, 2011, and approved the Pentagon's deal with Rosoboronexport.
The contract price really grew with the involvement of Rosoboronexport, a source close to the governmental arms seller said. "It was planned initially to buy a batch of civilian helicopters and modernize them at a U.S. base in the Middle East. However, sanctions were lifted and Rosoboronexport joined the deal, so we suggested the selling of combat helicopters. Their price is totally different," he said.
Afghan Air Force Chief of Staff Gen. Abdul Wahab Wardak told the newspaper that the cost of one helicopter was $17.5 million, and the total contract price stood at $367.5 million. Three sources close to the deal confirmed the information to the newspaper.