Jimmy Deenihan (Kerry North, Fine Gael)
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Question 199: To ask the Minister for Defence the reason four helicopters sold to a company (details supplied) in the USA by his Department for €311,000 were later sold to the Chilean Navy by that company for €19 million; and if he will make a statement on the matter. [40561/08]

Willie O'Dea (Limerick East, Fianna Fail)
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I welcome the opportunity to clarify for the Deputy the situation on the sale of the Dauphin helicopters following the Sunday Tribune article on 9 November 2008. In 2005, the General Officer Commanding Air Corps recommended the sale of four Dauphin helicopters. The Dauphins being over twenty years old needed significant maintenance and the investment required in the aircraft was considered to be excessive for the potential return. Indeed it was estimated at that time that each aircraft required a major inspection and avionics re-fit at an estimated cost of €3,000,000 – €3,500,000 per helicopter in order to meet the operational requirements of the Air Corps. A policy decision was taken not to proceed with the required maintenance given the cost involved in favour of a re-equipment programme. This programme has seen the acquisition of 2 EC135 helicopters and 6 AW 139 helicopters for the Air Corps, with the final AW 139 helicopter due for acceptance this week.

The four Dauphins, special tools and spare parts were sold following an open tender competition to Rotor Leasing Incorporated in the USA for €311,000 in October 2006. It should be noted that the sale of the helicopters was advertised on the Department of Finance's e-tender website, the tender documents were also available from the Department of Defence's website and were made available to military attachés. An advertisement for the sale of the helicopters was also placed in Flight International magazine. The records show that over eighty sets of tender documents issued in connection with the competition. The tender competition also included the sale of one Gazelle helicopter. Five tenders were received, three of which made offers for the Dauphins. Rotor Leasing submitted the highest bid in relation to the Dauphins and were awarded the contract for the sale of the helicopters and spare parts. The sales agreement was completed in October 2006.

The suggestion in the Sunday Tribune that the sale of the Dauphin Aircraft to Rotor Leasing Ltd has cost the taxpayer €18,000,000 is factually incorrect and disingenuous. The aircraft when sold were unserviceable and as already stated required extensive work to make the aircraft serviceable. When the aircraft were taken to the United States, Rotor Leasing set about restoring them. This involved doing the major inspections and overhauling components, with a total of between 5,000 and 5,500 man hours being devoted to each aircraft. It is the Department's understanding that the aircraft were then sold on by Rotor Leasing to Eurocopter, the original equipment manufacturer, in South America where the aircraft are being outfitted with specific mission equipment for the Chilean Navy. In this context, it is perfectly reasonable to expect that the market value of the aircraft would have increased in line with the cost of the major refurbishment work.

I am not in a position to confirm the reported sale value to the Chilean Navy. The very significant extent of refurbishment undertaken, the outfitting with mission specific equipment and any additional contract terms such as warranty, supply of parts or servicing would also have an important bearing on the contract value and is a matter outside the remit of this Department. I am quite satisfied that the tendering procedures used in the sale of the Dauphin were correct and that the Department achieved a fair price for the aircraft with due cognisance to their age and condition at the time of sale.

I trust that this now clarifies the actual situation for the Deputy. In this context the Deputy may now wish to consider withdrawing some of the comments attributed to him in the Sunday Tribune story.