Russia tops Boeing in $1 billion U.S. chopper deal

WASHINGTON — The deal looked sketchy from the start.

To outfit Afghanistan’s security forces with new helicopters, the Pentagon bypassed U.S. companies and turned instead to Moscow for dozens of Russian Mi-17 rotorcraft at a cost of more than $1 billion.

Senior Pentagon officials assured skeptical members of Congress that the Defense Department had made the right call. They repeatedly cited a top-secret 2010 study they said named the Mi-17 as the superior choice.

Turns out the study told a very different story, according to unclassified excerpts obtained by the Associated Press.

An American-made helicopter, the U.S. Army’s workhorse Chinook built by Boeing in Pennsylvania, was found to be “the most cost-effective single platform type fleet for the Afghan Air Force over a twenty year” period, according to the excerpts.

Lawmakers who closely had followed the copter deal were stunned.

Sen. John Cornyn of Texas, the Senate’s No. 2 GOP leader and one of the most vocal critics of the contract, said the Department of Defense “repeatedly and disingenuously” used the study to prove the necessity of buying Mi-17s.

More than two years since the Mi-17 contract was signed, a veil of secrecy still obscures the pact despite its high-dollar value, the potential for fraud and waste, and accusations the Pentagon muffled important information. The unprecedented arms deal also serves as a reminder to a war-weary American public that Afghanistan will remain heavily dependent on U.S. financial support even after its combat troops depart.

“So why are we buying Russian helicopters when there are American manufacturers that can meet that very same requirement?” Cornyn asked. “Makes no sense whatsoever and the Department of Defense has steadfastly refused to cooperate with reasonable inquiries into why in the world they continue to persist along this pathway.”

Just a few weeks after the secret study was completed, Army Secretary John McHugh wrote in a 2011 memo “that the Mi-17 stands apart” when compared with other helicopters.

The Pentagon denies it misled Congress.

A senior department official said the study was focused on long-term requirements and not the immediate needs of the Afghan military, which were best met by the Mi-17. Also, U.S. commanders in Afghanistan wanted the Mi-17 because it is durable, easy-to-operate and the Afghan forces had experience flying it, according to the official.

The war in Afghanistan, now in its 13th year, has been full of paradoxes.

What was once President Barack Obama’s “war of necessity” has become a race for the exits. Hopes of eradicating the Taliban and transforming Afghanistan into a viable state have been dialed down. U.S. combat forces are scheduled to depart by the end of next year, leaving the Afghans responsible for ensuring the country doesn’t collapse into the pre-Sept. 11 chaos that made it a terrorist haven.

There’s no dispute that heavy-duty helicopters capable of quickly moving Afghan troops and supplies are essential to accomplishing that mission. But the decision to acquire them from Russia has achieved the rare feat in a deeply divided Congress of finding common ground among Republicans and Democrats.

Why, lawmakers from both political parties have demanded, is the U.S. purchasing military gear from Russia?

“We’re not dealing with a corrupt system. Corruption is the system,” said Stephen Blank, a Russia expert at the American Foreign Policy Council, a Washington think tank. “This is not a world we’re familiar with.”

Overall, 63 Mi-17s are being acquired through the 2011 contract. It was awarded without competition to Russia’s arms export agency, Rosoboronexport, even though the Pentagon condemned the agency after Syrian President Bashar Assad’s forces used Russian weapons to “murder Syrian civilians.”

Rep. Rosa DeLauro of Connecticut, a high-ranking Democrat on the House Appropriations Committee, said the arrangement has put American taxpayers in the intolerable position of subsidizing a company complicit in the atrocities occurring in Syria.

Afghanistan’s mountainous terrain demands a helicopter capable of operating in the most rugged conditions at altitudes well in excess of 15,000 feet. The Mi-17 met all these requirements, Carter and other U.S. military officials told lawmakers in correspondence and in testimony.

But so could the heavyweight Chinook. The Boeing helicopter is larger than its Russian counterpart, carries up to a 26,000 pound payload, which is twice as much as the Mi-17, and can operate at nearly the same high altitude.

The armed Mi-17s being purchased for Afghanistan from Rosoboronexport will replace older and less capable Mi-17s that the U.S. and other countries had purchased from brokers and contractors through the open market and then donated or loaned to the Afghans.

The fact that the Afghan forces had years of experience flying the Mi-17 figured prominently in the Pentagon’s decision.

Carter and other U.S. defense official contended that adding the Boeing helicopter to the mix would unnecessarily burden the Afghans with having to learn how to operate and maintain an unfamiliar helicopter.

The 2010 study “specifically analyzed the opportunity for DOD to provide a U.S. alternative to the Mi-17 for Afghanistan,” according to the excerpts.

It outlined a transitional approach in which Chinooks being retired from the U.S. military’s fleet would be available in late 2013 to be refurbished and then replace older Mi-17s in the Afghan fleet, according to the excerpts. A combination of Mi-17s and renovated Chinooks, known in the Army’s nomenclature as the CH-47D, could work as well.

The 2010 study advised proceeding cautiously. Shifting too quickly away from the Mi-17s already in use could undermine progress made in training the Afghan air force, the excerpts said. But it recommended a plan for converting the Afghan forces from a “pure” Mi-17 fleet to one that uses US helicopters.

The Chinook option never materialized.

An extensive analysis of both helicopters concluded that a refurbished Chinook would cost about 40 percent more overall to buy and maintain than the Mi-17, said the senior defense official.

Boeing executives informed congressional staff during a meeting held in late September that the cost of a refurbished CH-47D would be in the $12 million to $14 million range, according to a person knowledgeable about the discussion.

That would make an overhauled Chinook $4 million to $6 million less than what the department is currently paying for Mi-17s, according to figures compiled by the Joint Rapid Acquisition Cell, the Pentagon office that fills urgent requests for equipment from battlefield commanders.

The figures also show the average cost of each new Mi-17 has increased with each successive order — from $16.4 million to $18.2 million. The Pentagon has assured Congress that the prices were “fair and reasonable,” and in line with what other countries have paid.

But an internal Defense Contract Audit Agency document shows that the department could not conduct a comprehensive cost comparison because Rosoboronexport wouldn’t allow U.S. auditors to look at its books.

Army negotiators omitted a provision standard in government contracts that permits pricing reviews. In examining the contract, the audit agency noted that Rosoboronexport “is arguably an agent or instrumentality of a foreign government, and is therefore exempt from most cost accounting standards.”

Rosoboronexport’s director general, Anatoly Isaykin, said last month that his agency was “completely transparent” in negotiating Mi-17 prices with the U.S.

“In our opinion this contract is most acceptable to the U.S. Department of Defense in terms of quality/price ratio,” Isaykin said.

The roots of Rosoboronexport’s involvement reach back to 2010 when the U.S. and Russia were engaged in high-stakes diplomacy aimed at fulfilling Obama’s goal to reset relations between the two former Cold War foes.

Dmitry Medvedev was Russia’s president, not Vladimir Putin, and the talks resulted in agreements to expand cooperation on global security issues and strengthen economic ties.

Among the breakthroughs: The U.S. terminated penalties against Rosoboronexport that the Bush White House had imposed in 2006 after the State Department determined the export agency had provided Iran and Syria sensitive military technology. The sanctions had barred the U.S. government from entering into any contracts with Rosoboronexport. Russia agreed to support a U.N. resolution to punish Iran over its nuclear program.

Headquartered in Moscow, Rosoboronexport is the only Russian agency authorized to export and import military hardware. The agency is controlled in turn by Russian Technologies, a state holding company that includes the country’s top arms manufacturers. The chief executive of Russian Technologies is Sergei Chemezov, a longtime confidant of Putin, who returned to the Russian presidency last year.

With the penalties lifted against Rosoboronexport, Russia’s ministry of foreign affairs wasted little time informing U.S. officials that new Mi-17s could be purchased only through the arms export agency because the helicopters were military gear intended for another country’s armed forces.

After lengthy deliberations, the U.S. agreed. Pentagon officials no longer would permit third parties to acquire Mi-17s. They would deal with Rosoboronexport directly.

Last month, the Pentagon changed its mind. After re-evaluating, officials decided to cut 15 copters out of the 78 they had planned to buy from Moscow. Isaykin, Rosoboronexport’s director general, said the decision won’t hurt the export agency’s bottom line.

“Rosoboronexport’s order book is sufficient to ensure the steady utilization of Russian defense industrial complex’s production capacities, especially in the helicopter sector, for the next three-four years,” he said.

The move was a bittersweet victory for the program’s opponents.

“There was no redeeming value, no redeeming feature to this sale,” said Sen. Richard Blumenthal, D-Conn. “An inferior product bought with American taxpayer money from a Russian export agency that was unconscionably selling to Assad. If you made it up, no one would believe it.”

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