Helicopter `offset deal' not on table

An offer by a US aerospace company to spend over £60 million in Ireland if it wins the battle to supply helicopters to the Defence Forces cannot be taken into account, the Department of Defence has declared.

The offer from United Helicopters to convert nine Boeing 767 aircraft for cargo business could safeguard the troubled FLS Aerospace at Dublin Airport and almost 2,000 jobs.

The prospect of such a deal for FLS has led to lobbying of the Department of Defence and the Taoiseach's Office by Dublin northside TDs of all parties.

Three companies have tendered for the contract to supply five medium-size helicopters to the Aer Corps: United Technologies' subsidiary, Sikorsky, the French/German combine, Eurocopter, and Augusta West land.

Civil and military experts are examining the Sikorsky S-92, Eurocopter's Cougar and the EH-101 from Augusta Westland. They are due to make a recommendation to the Minister for Defence, Mr Smith, by the end of the month.

The helicopter deal is the biggest single contract negotiated by the State. Each helicopter will cost about £30 million. However, parts and service will add another £30 million to each helicopter over its lifespan.

In an attempt to gain ground, United Technologies offered deals with FLS, AIB and Dell. In addition, it has told the Government that General Electric will spend £50 million with FLS to service GE Capital's commercial planes in Europe.

The use of such so-called "offset" deals is common throughout the European Union. Indeed, there is surprise in some quarters that the Department of Defence had not sought such concessions in the tender documentation.

Earlier this year, the Austrian government demanded that Sikorsky buy almost £300 million worth of Austrian goods before it won a £140 million contract to supply nine S-70A Blackhawk transport helicopters.

The 1985 purchase of 24 Swedish jets by Vienna led BAE Systems-Saab to establish 100 partnership deals with Austrian companies. So far, these have been worth £1.3 billion to the Austrian economy.

Asked why no such clause had been included, a Department of Defence spokesman said: "It is not something we have ever done, though we know that it has happened elsewhere."

In the tender documentation, seen by The Irish Times, the Department merely stated that the contract would be offered on "the suitability of the helicopters offered, on the completeness of documentation submitted and on the applicant being in a position to furnish evidence of financial and technical ability to fulfil any eventual contract within agreed time limits".

The announcement that Gateway is to close its Dublin operation, with the loss of 800 jobs, has heightened the TDs' fears for the future. "This could mean the difference for 2,000 people,", one of them said.