Wednesday, 26 November 2008
Dáil Eireann Debate
105. Deputy Charlie O’Connor asked the Minister for Defence the procedures involved in selling off large items of disused military equipment such as aircraft, ships and APCs; if he is satisfied that the system is working effectively; and if he will make a statement on the matter. [42731/08]
Minister for Defence (Deputy Willie O’Dea): The position is that tender competitions are usually run by my Department for the disposal of major assets such as aircraft and ships when they have reached the end of their economic working lives in the Defence Forces. Examples of these are the sales of the Naval Service ship, L.E. Deirdre in 2001 and a Gazelle helicopter, four Dauphin helicopters and six Marchetti helicopters in 2006. Earlier this year my Department ran a tender competition for the disposal of six Alouette helicopters. It is expected that the sale of the Alouettes will be completed before the end of the year.
In the particular case of the sale of the Dauphins which attracted recent newspaper headlines, the position was 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, which was fully transparent and open to all interested parties. The same procedure applied to the tender competition for the disposal of the Alouettes earlier this year.
It is not generally the practice to sell defensive equipment such as Armoured Personnel Carriers. Such equipment is normally scrapped when it is considered to be defunct and past its operational use. I am fully satisfied that the tendering procedures used in the disposal of major assets are appropriate and that my Department achieves a fair price for these assets through an open and transparent process.
106. Deputy Jan O’Sullivan asked the Minister for Defence the amount raised by the recent sale of four Air Corps AS365 helicopters; if his attention has been drawn to reports that these aircraft were subsequently sold on at a substantial profit; if he is satisfied that his Department got value for money in regard to the sale of these aircraft; and if he will make a statement on the matter. [42767/08]
Minister for Defence (Deputy Willie O’Dea): The four Dauphin helicopters, 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. 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.
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 if the aircraft were to remain in service. Even following such an investment, the Air Corps would still have 20 year old aircraft which would continue to require more extensive maintenance and would provide less output than their modern equivalents. A policy decision was therefore 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 delivered earlier this month.
When the aircraft in question 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 my 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 my Department.
I am quite satisfied that the tendering procedures used in the sale of the Dauphins were correct and that my Department achieved a fair price for the aircraft with due cognisance to their age and condition at the time of sale.
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