When the Coalition Government engages in the single most expensive tendering process in the history of the State, every aspect should be open and above board.
Unfortunately, last Tuesday's decision by the Cabinet to grant a contract worth €60 million for the delivery of three Sikorsky helicopters to the Defence Forces, with the option of two more later, raises questions concerning the impact of political lobbying and commercial off-set deals. A spokesman for the Department of Defence has insisted that everything was done by the book and that the US company, Sikorsky, won fairly on the basis of the criteria set down for the tender competition. But the rush to welcome Sikorsky's success by local Fianna Fáil politicians facing into a general election and by the management of FLS Aerospace - formerly Team Aer Lingus - who will now benefit from contracts amounting to almost €150 million, would suggest that the realities of commercial life may have impinged on the situation.
It should never have come to this. Ireland must be the only country in Europe that does not link military contracts with so-called "offsets" contracts for related businesses that generate jobs and wealth in the host country. The tendering process within the Department of Defence specifically excludes such considerations in the awarding of contracts. No doubt there were very good reasons for such restrictions in the past. But circumstances have changed. The history of this contract is instructive. Last August, E.H. Industries was favoured on the grounds of technical merit, even though it was the most expensive tender . But then Sikorsky offered a €76 million contract to the troubled FLS company for the conversion of Boeing aircraft at its Dublin facility. By December, as TDs lobbied the Government to save up to 1,500 Northside jobs, Sikorsky had increased its offset offer to €159 million. Competing companies had engaged in a similar process. EH Industries threatened possible legal action unless the original tendering process was adhered to, or offsets were specifically included. The Government's response was to call for a "best and final price" on the basis of the original terms.
The Minister for Defence, Mr Smith, announced yesterday that negotiations would open with Sikorsky for the purchase of three helicopters, with an option for two more, as its tender had been "the most strategically and economically advantageous". Within hours, FLS Aerospace issued a statement saying the contract would underpin job security over a five-year period and generate as much as 50 new jobs. However, the present restructuring process at the company will continue. Whatever reservations exist about this tendering process, it would appear the Government drove a hard bargain. Last year, a medium range search and rescue helicopter was being priced at €30 million. Yesterday, the "best price" was said to be €20 million, with still-to-be-negotiated off-sets.