- The Washington Times - Sunday, July 24, 2011

A Pentagon program to rush 21 helicopters to Afghan military forces in time for this summer’s fighting season was derailed by the Obama administration’s conciliatory policy toward Russia and by Army procurement missteps amid allegations of corruption, according to current and former defense officials and military contractors.

Four Russian-made Mi-17 dual-use civilian-military helicopters were sent to Afghanistan in September 2009 under a competitively bid Navy contract that delivered the aircraft in a record 45 days.

But eight other helicopters that were painted in Afghan National Army Air Corps colors are now sitting in a warehouse in Slovakia because their delivery was blocked last November by the Russian government. The reason: Moscow demanded the Pentagon use the state arms trader Rosoboronexport as the sole-source contractor for the helicopters.

The contract change boosted costs by tens of millions of dollars and delayed further deliveries until later this year, at the earliest, according to officials involved in the procurement.

“Gaining political points with the Russians trumped meeting military requirements, and as a result we have a one-year delay in getting aircraft into Afghanistan,” said John J. Young, former undersecretary of defense for acquisition under former President George W. Bush.

Mr. Young said he is encouraged that Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, and Ashton Carter, current undersecretary of defense for acquisition, are reviewing the delays.

“I think they want to see equipment delivered to the Afghan forces, so the Afghan government can assume greater responsibility for the security of their country,” Mr. Young said.

The 21 additional Mi-17s could have been purchased legally by private companies directly from the Russian manufacturer, like some 36 others purchased by the U.S. government in the past several years for Iraq and Pakistan, through U.S., Russian and East European brokers.

The reason private companies were used as middlemen was that U.S. companies until recently were barred from using Rosoboronexport, after the arms exporter was slapped with U.S. economic sanctions in 2008 for selling weapons to Iran and China.

The Obama administration in May lifted the sanctions as part of its so-called “reset” policy with Russia and opened the helicopter deal to Moscow’s bureaucratic red tape and corruption, according to officials involved with weapons procurement.

A 2008 cable from then-U.S. Ambassador to Russia William J. Burns, currently awaiting confirmation as deputy secretary of state, said Russia ignores most U.S. protests about its weapons exports and uses arms sales to Iran, Syria and other rogue states to undermine U.S. interests.

Russia attaches importance to the volume of the arms-export trade, to the diplomatic doors that weapon sales open, to the ill-gotten gains that these sales reap for corrupt senior officials, and to the lever it provides the Russian government in stymieing American interests,” Mr. Burns said in a secret cable made public by WikiLeaks.

Pentagon spokesman Col. Dave Lapan said the Mi-17s are military helicopters and that Moscow “made the decision that the export of helicopters for Afghanistan needed to go through Rosoboronexport.”

“The Russian government’s decision did cause a delay, because it required us to restart the process,” he said. “However, the longest source of delays in terms of days has been working through the bid protests, some of which predate the Russian government’s decision.”

Defense Technology Inc., the Huntsville, Ala.-based Navy contractor, took the Pentagon to court over the sole-source Rosoboronexport contract and lost.

The company, according to its president, Mark Young, was notified in December that its contract for the 21 Mi-17s was canceled and that eight remaining Mi-17s waiting to be delivered were put on hold after the Army said all sales had to go through Rosoboronexport. (Mark Young is not related to the former Bush administration official.)

However, a letter to Mr. Young sent by DTI’s partner in the deal, Ukrainian state exporter Ukrspetsexport, revealed that the 21 helicopters could have been delivered to Afghanistan legally by the spring of 2011 using Ukraine’s military- and civil-cooperation agreement with Russia.

Also, the Navy praised DTI for expediting delivery of the four helicopters sent in 2009 in 45 days to the Afghan National Army Air Corps for $43.4 million.

“The helicopters were assembled within two days and provided urgently needed vertical logistics capabilities for the war effort,” said Lt. Cmdr. Asid Lohdi in a Navy contractor assessment report.

DTI then bid and won the Navy contract for 21 more Mi-17s, with the first six to be sent within 180 days of signing a contract.

The Russian state arms company become involved after Mr. Carter, the undersecretary of defense for acquisition, technology and logistics, in January 2010 ordered the creation of new office called the Non-Standard Rotary Wing Aircraft Office and put the Army in charge, in an effort to consolidate helicopter and other purchases.

In November 2010, then-U.S. Ambassador to Russia John Beyrle wrote to the Russian government, asking whether private companies could buy Mi-17s for Afghanistan directly from the manufacturer.

On Nov. 25, 2010, Deputy Foreign Minister Sergei Rybakov replied that only Rosoboronexport could be used by the Pentagon to buy Mi-17s for Afghanistan, according to a translation of the Russian-language letter.

The Rosoboronexport contract for the 21 helicopters was delayed by DTI’s court challenge, but concluded on May 26 with the first deliveries planned for October, Col. Lapan said.

As a result, Mark Young of DTI estimates that cost for each Mi-17 increased from $15 million per aircraft to $19 million and probably more. Delivery schedules under the Army-Rosoboronexport deal also slipped from this summer to October, meaning Afghan forces could not use them during the current fighting season.

Mr. Young estimates that the new contract will cost the Pentagon $46 million more for the 21 helicopters than if the Navy had been allowed to use private companies to buy the aircraft.

The Army office running the helicopter procurement also is under investigation by the Pentagon inspector general over several alleged improprieties, according to current and former officials with direct knowledge of the probe.

The IG is investigating whether Army officials failed to follow procurement guidelines for the sole-source contract with Rosoboronexport, they said. Also, officials in the Non-Standard Rotary Wing Aircraft Office are being probed for allegations of improperly steering contracts to a company in Alabama.

A spokesman for the Pentagon inspector general declined to comment.

A company called FTA alerted the IG to the Army’s purported mishandling of funds related to a contract with a St. Petersburg, Russia, company that was involved in refurbishing Mi-17s. A company official said that, after they alerted the Pentagon to Russian contract violations, they were ordered to ignore the violations and continue payments.

As much as $17 million in improper payments is involved in the investigation, the official said.

Another indication that conciliatory policies toward Russia are involved in the helicopter procurement problems is the fact that the Czech Republic has offered to give its Mi-17s to Afghanistan.

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