Helicopter

As Tom Clancy once said, “helicopters don’t fly, they vibrate so badly the ground rejects them.” And not only the ground, it seems, with the news that PZL-Świdnik has filed a law suit against the Defence Ministry following the failure of its bid in a recent tender to supply helicopters to the Polish army.

The Defence Ministry has chosen the French Caracal helicopter for its tests, with the second stage of the tender negotiations continuing. There were three participants in the tender tender to supply multi-functional helicopters to the Polish army: PZL Świdnik (owned by AgustaWestland), offering its AW 149; PZL Mielec (part of the UTC Group with Sikorsky Aircraft Corporation) offering its Blackhawks; and Airbus Helicopters offering the EC 725 Caracal. The applications of PZL Mielec and PZL Świdnik were declined by the government for “formal reasons.”

It seems likely that rather than the British-Italian AgustaWestland AW149, or the American Black Hawk S-70i, Poland will buy 70 helicopters of the French Caracals. The Caracal (also known as the “Super Cougar”) is a long-range tactical transport helicopter for military use. It is a twin-engined aircraft and can carry up to 29 seated troops, and two crew, and may be used for troop transport, casualty evacuation and combat search and rescue.

Needless to say, and in a reaction all too common in Polish tender procedures, in PZL-Świdnik’s view, there were “serious breaches” in the tender procedure. The company said in a statement that these “couldn’t be discussed publicly due to their delicate character,” and that it is “deeply convinced that these injustices and breaches, which are included in the law suit, are in contradiction to the principles of competition, leading to a decision being taken that is not in the best interest of the Armed Forces of the Polish Republic, the Polish air sector and Polish taxpayers.” PZL-Świdnik, whose tender was valued at Euro four billion, now apparently plans to lay-off 800 workers during the next three years.

Military procurements the world over seem fraught with controversy and have in common that the hapless taxpayer seldom receives value for money, with delays and overspends the order of the day. And while, of course, the full details of PZL-Świdnik’s claim have not been disclosed, even away from the defence sector (which is not subject to the Public Procurement Law), there do seem to be particular problems with the way public procurement tenders operate in Poland.

The four commonly cited problem areas are the inability of the buyer (that is the public sector body) to choose the “right” company; that the lowest price wins; the burdensome documentary requirements; and the unrealistic risk allocation expectations. Taking each of these in turn, the typical Polish procurer all too often seems to forget that object of the exercise should be select the right company – in other words the most economically advantageous solution to the awarding body – and not to protect the procurer.

This leads to the second problem: too often the choice is made on the basis of the lowest tender price without due consideration of, amongst others, price v. quality issues, project life cycle costs, project delivery schedules, maintenance and technical support. In any procurement more complex than a basic supply agreement, the lowest price is unlikely to offer the best, or least expensive, result.

The paper burden is also taken to extreme lengths with the management boards of tendering companies having to provide certificates as to facts which are wholly irrelevant to the procurement. In other words, there is a complete lack of trust on the part of the public body, which sees the contractor as an enemy rather than a partner in a mutually beneficial project. The expectations of the public body regarding the assumption of risk by the contractor are also often commercially unrealistic.

All of which serves to put off potential contractors because the cost of bidding and the often unrealistic time tables preclude the careful preparation of bids with robust design and project management elements which serves only to deprive the public sector of the best solution. And, in the final analysis, the tax payer is the loser. Again.

The Polish army will no doubt receive its new helicopters, whoever builds them, but whether the public procurement process will ever receive a dose of common sense is less certain.

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