In other nebulous defense contract news, Turk attack helo project in doubt

well, no surprise there!
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Date Posted: 21-Nov-2003

JANE’S DEFENCE WEEKLY – NOVEMBER 26, 2003

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Turkish attack helicopter project in doubt
LALE SARIIBRAHIMOGLU JDW Correspondent
Ankara

Turkey’s dispute with Bell Helicopter-Textron of the US over the suggested cost of its project to acquire 50 AH-1Z King Cobra attack helicopters has placed the entire project at risk, according to sources within the country’s Defence Industries Undersecretariat (SSM).

The SSM and prime contractor Turkish Aerospace Industries (TAI) will submit by 15 December the results of their final negotiations with Bell and a rival Kamov/Israel Aircraft Industries team offering the Ka-50-2 to the Turkish General Staff and the Turkish Land Forces Command. “We [Turkey] may either go for a direct purchase of some King Cobras or cancel the project,” said a senior defence industry source in Turkey.

While negotiations have been continuing with both companies, Turkish Prime Minister Recep Tayyip Erdogan said recently that he had frozen the King Cobra acquisition: a tactic viewed by some as an attempt to drive down the approximately $2.5 billion project cost (Jane’s Defence Weekly 8 October).

Announced in July 2000, the procurement has been dogged by protracted negotiations centred primarily on the costs and risks associated with locally producing key components for the aircraft. Bell’s share in the project is quoted as $700 million, while the Turkish government is to charge about $306 million in taxes linked to the sale. The remaining $1.5 billion will be shared among companies including TAI and Northrop Grumman, which is supplying the aircraft’s mission computer. The cost of acquiring weapons, such as the Raytheon Stinger air-to-air and AGM-114 Hellfire and Rafael Armament Development Authority NT-D Dandy air-to-surface missiles, is not included in the project.

Meanwhile, local industry sources said that after lengthy talks, a $400 million price gap remains between the Bell offer and the joint Russian and Israeli bid. However, Bell sources in Ankara told JDW that factors such as life-cycle costs should also come under consideration. Should Turkey opt for the Ka-50-2, additional investments would be required to introduce the system, another local source added.

General budgetary constraints in Turkey have restricted the SSM’s budget to an estimated $800 million this year. The undersecretariat has, meanwhile, requested that the government maintains the SSM fund, an extra-budgetary resource for defence, until 2007. The International Monetary Fund has urged that this be dissolved and instead included in the fiscal year budget, as part of a process to introduce budgetary discipline and transparency.