Pentagon Inks Sweetheart Deal For Mi-17s


A tapped in source tells Defense Tech that the Pentagon recently inked a deal with Russia's largest state-controlled arms export company to purchase an unknown number of Mi-17 transport helicopters for the Afghan air force.

You might remember that others have reported shady deals and poorly-executed negotiations by the Army's Threat Systems Management Office based in Huntsville on a deal for Iraqi Mi-17s. Our source tells us that deal was concluded with a rumored FSB-connected Russian middleman for 100 percent more than their factory price. Three years later and only about six have been delivered, our source tells us.

As Strategy Page put it in an excellent commentary in December:

Three months ago, the U.S. Navy began evaluating proposals in a competition for 21 additional Mi-17 aircraft for Afghanistan. The estimated value of this acquisition is $300-400 million. The navy requirement was tailored to ensure only "civil variant" Mi-17s were being procured. While the navy expected the usual “sour grapes” protests from U.S. helicopter manufacturers, they did not expect the ban on Rosoboronexport to be lifted, or that the U.S. Army would combine efforts with Rosoboronexport in an attempt to cancel the competition.

The U.S. Army had conducted two previous sole source acquisitions of Mi-17s; twenty one for Iraq and ten for Afghanistan. These programs have experienced more than $40 million in overruns, had the performance requirements reduced, and are respectively two years and one year behind schedule. The Navy, however, conducted an open competition for four new Mi-17 aircraft and delivered them in less than 50 days, at a price 40 percent lower than the Army’s sole source price. The Army did not want to see another Navy success, and the opening of the Rosoboronexport channel gave the Army a new plan.

Now, we hear the same office inked a deal with the Russian state arms office (oh yeah, I'm sure that's not a shady place) for Mi-17s at $18 million each, or 100 percent over their $9 million drive away price from the factory. Our source tells us the Navy inked a small deal last year for four Mi-17s at $11 million each. And those were delivered within three months.

NavAir didn't handle this latest deal and that throws into question whether it will go the same way the ill-fated Iraqi Mi-17 one went (nowhere)...

And, oh yeah, isn't Rosoboronexport the same place where our buddies from Syria and Iran go shopping gor S-300M systems? Confidence inspiring...

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