The Department of Defence opted to buy three Sikorsky helicopters for the Air Corps because of fears that an inflation clause in a competing French bid would cost millions extra over the next two decades. The decision was taken even though the Eurocopter EC725 narrowly defeated the Sikorsky S-92 in an assessment by an expert group.
The Eurocopter came out ahead, 1,803.7 points to 1,796.7 points, in a complex league table measured by the expert panel.
Eurocopter, which argues that the Minister for Defence, Mr Smith, ignored experts' recommendations and changed tender rules mid-way, will challenge the decision shortly in the High Court.
In a memorandum to the Minister on January 17th, the Department's Secretary General, Mr David O'Callaghan, said "there was little to choose" between the two. These standards included operational suitability and capability, technical merit, ease of maintenance, product support and warranties, training, life-cycle costs over 20 years, and tender prices.
A third competitor, EH Industries' EH-101, led the operational capability category, while Sikorsky was voted best on operational suitability, technical merit, ease of maintenance and tender prices.
Eurocopter's EC725 scored best overall of the four competitors on product support, but it came in above the Sikorsky S-92 on operational capability and risk weight- ing, according to Defence memos seen by The Irish Times.
In addition, Sikorsky was committed to delivering the S-92s in late 2003, while the French model could not be ready until late the following year, according to the Defence memorandum.
Sikorsky's price for three search-and-rescue medium-life helicopters was more than €3 million cheaper than Eurocopter and was priced in euros and dollars, even though the contract specified euros only. However, the cost of future spare parts and maintenance - known as an escalator formula - was eventually decided in Sikorsky's favour, even though the Department arrived at its results on the basis of December 2002 prices.
Sikorsky offered some guarantees about future pricing, compared to Eurocopter's formula: "The application of escalators has a significant bearing on the final result and is likely to affect the placing order in favour of Sikorsky," said a memo.
Replying to Mr O'Callaghan, Mr Smith wrote: "I was satisfied that the Sikorsky would provide best value for money from the taxpayers' point of view." In a discussion with the Assistant Secretary General, Mr Michael O'Donoghue, Mr O'Callaghan agreed that all of the aircraft "complied with the technical essentials", according to a minute of the conversation.
"The financial aspects obviously required a very close look. Points awarded by the technical team did not factor in an escalator clause, which applies to the Eurocopter bid. This would increase the gap between Sikorsky and Eurocopter on basic price on three search-and-rescue aircraft.
" The fact that Sikorsky quoted in dollars raised currency issues, which could be positive or negative from our point of view.
"As their final quotation had a particular dollar-euro rate of exchange which was used for evaluation purposes, any negotiations with them for a contract would have to be based on an exchange rate no less favourable to the State than the one used by Sikorsky," the minute continued.
The High Court challenge could delay for months negotiations between Sikorsky and the Air Corps, which warns that its existing Dauphin fleet is nearing the end of its serviceable life.
The defence contract, the biggest placed in the State's history, has been bitterly fought between the competing companies since it began over a year ago, amid charges of diplomatic interference and information leaks. The Minister has insisted that the offer by Sikorsky's parent company, UTC Technologies, to offer €130 million worth of aircraft conversion work to the troubled FLS Aerospace did not sway his decision.
