Pentagon Inks Sweetheart Deal For Mi-17s

A tapped in source tells Defense Tech that the Pentagon recently inked a deal with Russia’s largest state-controlled arms export company to purchase an unknown number of Mi-17 transport helicopters for the Afghan air force.

You might remember that others have reported shady deals and poorly-executed negotiations by the Army’s Threat Systems Management Office based in Huntsville on a deal for Iraqi Mi-17s. Our source tells us that deal was concluded with a rumored FSB-connected Russian middleman for 100 percent more than their factory price. Three years later and only about six have been delivered, our source tells us.

As Strategy Page put it in an excellent commentary in December:

Three months ago, the U.S. Navy began evaluating proposals in a competition for 21 additional Mi-17 aircraft for Afghanistan. The estimated value of this acquisition is $300-400 million. The navy requirement was tailored to ensure only “civil variant” Mi-17s were being procured. While the navy expected the usual “sour grapes” protests from U.S. helicopter manufacturers, they did not expect the ban on Rosoboronexport to be lifted, or that the U.S. Army would combine efforts with Rosoboronexport in an attempt to cancel the competition.

The U.S. Army had conducted two previous sole source acquisitions of Mi-17s; twenty one for Iraq and ten for Afghanistan. These programs have experienced more than $40 million in overruns, had the performance requirements reduced, and are respectively two years and one year behind schedule. The Navy, however, conducted an open competition for four new Mi-17 aircraft and delivered them in less than 50 days, at a price 40 percent lower than the Army’s sole source price. The Army did not want to see another Navy success, and the opening of the Rosoboronexport channel gave the Army a new plan.

Now, we hear the same office inked a deal with the Russian state arms office (oh yeah, I’m sure that’s not a shady place) for Mi-17s at $18 million each, or 100 percent over their $9 million drive away price from the factory. Our source tells us the Navy inked a small deal last year for four Mi-17s at $11 million each. And those were delivered within three months.

NavAir didn’t handle this latest deal and that throws into question whether it will go the same way the ill-fated Iraqi Mi-17 one went (nowhere)…

And, oh yeah, isn’t Rosoboronexport the same place where our buddies from Syria and Iran go shopping gor S-300M systems? Confidence inspiring…

  • joe

    Hmmmmm $18 mil each eh? or with the Navy running the show $11 mil each.

    Oh, by the way, a UH-72a cost around $3 mil or so…how many of those baby’s could have been bought, and delivered on time by now? Yeah, I know, it’s not a Mi-17, different capabilities and all, but just how many Pilots does Afghanastan still have that aren’t in their late 40’s or 50s? So, training might not actually have been a issue.

    So, Is this more of a Political move to get Russia to play ball in Afghanistan (or surrounding areas) more with NATO/ US?

  • Marcase

    “…The estimated value of this acquisition is $300–400 million…”

    Besides airframes, this may include (civilian) pilots, transport to A’Stan, training and a boatload of spares.

    • Ing3nium

      Good point. I would hope so.

  • Stephen Russell

    Bring some the US for Cargo use & civil & Upgrade main engine, avionics etc vs Soviet models & add NOTAR mode or ducted rear fan mode??? Nice.

  • Jonathan

    We are stupid.

    Why would we pay that much for these heli’s?

    These heli’s arent going to accomplish all that much for Afghanistan. That amount of money could be spent on better things.

    WASTE OF MONEY AS USUAL

  • Ted Langley

    More examples of how incompetent the Army’s Acquisition Department is at sourcing equipment. You know somebody was making major kickbacks.

  • Doz

    Rosboronexport is “shady”? Its Russia’s official state arms exporter, and sells all Russian armaments (though some individual Russian companies are given special licence to deal direct with the purchaser). How exactly is it going to be shady? OMG - countries we don’t like bought things from them, clearly they’re not on the level!

    Bizarre argument.

  • ********

    Would have been a better story if say our military was buying equipment from AMERICA!!!!!!! but no, lets pay millions for helos just to turn around and give them to the Afghans.. makes more sense… im sure the US got suckered into maintaing these aircraft on our dime for the next 20yrs in this “SWEETHEART” deal as well.. while were at it, why dont we throw in free lifetime refueling too..

  • Enthusiast

    Mi-8/Mi-17 are superior to US and Euro helicopters for Afghanistan environment. In terms of payload(cargo, soldiers) Mil helicopters are able to lift at much higher altitude. Even US/NATO special forces and CIA using Russian-built Mil helicopters for their own special operations in AF.

  • Enthusiast

    >>>And, oh yeah, isn’t Rosoboronexport the same place where our buddies from Syria and Iran go shopping gor S-300M systems? Confidence inspiring…<<< Russian-Iran long-range SAM deal was cancelled by Russia. What is S-300M anyway? The question is about "M" letter in this designation. There're no such system.

  • Blight

    It’s hard not to laugh at the markup on old Soviet helicopters. We couldn’t buy anything from pseudo buddies Ukraine or Caucasus Georgia?

    • Mongo

      I know Georgia doesn’t produce any kind of aircraft and I doubt Ukraine builds Mi-17’s either.

      • blight

        I was initially assuming that CIS nations would have surplus to buy; following precedents from OIF where we bought old Soviet hardware that literally was too old.

        Apparently the Thais, India and others have been buying Mi-17s…I guess the fun question would be how our deals compare with theirs. Are we getting the markup?

  • Wendish warrior

    If we have money to spend in Russia on weapons, we can cut the Pentagons budget, because we have less threat. I suggest we start with cutting some Generals in the Procurement Department, who are so ignorant they don’t understand that unemployment in the US is is very high and they are spending money in acountry that is building military bases in Venezuela, while Hugo Chavez openly threatens to Communize our whole continent. By the way we are broke, so if we had made our own weapons, the US government could have taxed the workers.

  • Bruce

    The Afgans will finally have decent helicopters to transport there heroin with, this should help lower worldwide heroin prices. Now we just need to give them some cargo planes to set up a real distribution network.

  • Mitch S.

    I suggest the navy buy the helos for $11mil and sell them to the army for $18mil.

  • Jer

    The So-Called “Leadership” in this country is doing a Fantastic Job of DESTROYING us as a nation. 2 more years of this “administration” and we should be just about done in. Good job all you Obamaites!

    • Glenn

      You aren’t very bright, Jer. You are not even on topic or discussing anything about this transaction.

  • Mitch S.

    The Navy should buy the helos for $11mil and sell them to the Army for $18mil!

  • mat

    One thing you are forgeting these helos are only ones beside Chinooks able to operate in hot and high enviroment ,no to mention are built for use in third world airforces ad are easy to fly and maintain.

  • hunan chicken

    I recommend that the Navy later Helos as $ 11mil, and sell them to the army $ 18mil.