For two years, the United States regarded Rosoboronexport, Russia’s official weapons exporter, as an international pariah for selling arms to Iran and Syria. Then, in 2010, the U.S. suddenly lifted sanctions against it. By June of this year, the reversal was complete: the Pentagon awarded the company a no-bid contract worth upwards of $1 billion.
How exactly did the United States end up spending taxpayer dollars on Russian equipment with no competition?
The Russian deal may be a small part of the nearly $140 billion in no-bid contracts the Pentagon awarded last year, but it is also in some ways typical, according to an ongoing series by the Center for Public Integrity. If military operations in the early years of Iraq and Afghanistan justified the use of sole-sourcing contracting for support services, then the drawdown in Iraq and Afghanistan created a new justification for steering contracts to a single bidder: the need to quickly equip the military forces there so that the United States could eventually ship out.
This rush was the Pentagon’s stated justification for sole-source procurements for a host of weapons and equipment, particularly for what’s called “non-standard” equipment — in this case, Russian helicopters. The local military forces that the U.S. built in Iraq and Afghanistan were more familiar with Russian equipment than with U.S. gear, the argument went. Even in Afghanistan, a country which fought off a Soviet occupation in the 1980s, U.S. officials argued that the Northern Alliance and Afghan pilots were used to flying Russian helicopters, which are regarded as rugged and reliable.
Today, U.S. contracts for Russian equipment, used primarily to buy Russian-built Mi-17 helicopters for Iraq, Afghanistan and Pakistan, have topped $1 billion. They’ve almost all been sole-source or non-competitive contracts given to a variety of middle men companies. Rosoboronexport included.
Here are where the contracts landed:
• a non-competed $89 million contract awarded to General Dynamics Ordnance and Tactical Systems to buy three VIP Russian helicopters for Afghanistan’s president;
• most recently, another sole-source contract, which could be worth almost $900 million, to Rosoboronexport, to supply Russian helicopters for Afghanistan.
In 2009, the Navy eventually held a rare competition to buy four Russian Mi-17 helicopters for Afghanistan and opened it up for bidders, ultimately awarding the $43.5 million contract to Huntsville-based Defense Technology Inc. The Navy was preparing to hold another competition for 21 Mi-17s in 2011. But the Pentagon decided, after months of deliberation, to hand the responsibility to a newly created Army office, which canceled the competition. It began sole-source negotiations with Rosoboronexport, the state arms agency, which acts as the official arms dealer for the Russian government.
Rosoboronexport, whose annual revenues have grown to nearly $9 billion, had only recently been removed from the list of companies sanctioned by the U.S. State Department for violating U.S. laws prohibiting the sale of weapons to Iran and Syria. Among the suspected sales were surface-to-air missiles to Iran. But after sanctions were lifted, the Army went full steam ahead with plans to sole-source a $375 million contract to the Russian arms agency, now arguing that it was the only legitimate vendor of Russian armaments.
Ironically, less than a year earlier, the Pentagon had argued in briefings that buying from the Russian arms agency was unnecessary.
A number of American companies lodged protests against the award, including Sikorsky, which argued that the U.S. should have considered American aircraft, and ARINC, which, after having won its own sole source contract for Russian helicopters, now argued it was being disadvantaged because the contract required working with Rosoboronexport. The Government Accountability Office, however, dismissed the protests.
According to a copy of the contract provided to iWatch News, the $375 million contract includes an option for another $550 million for additional helicopters, which would bring the total contract to nearly $1 billion. The Pentagon confirmed that, to date, the Army office in charge of Russian helicopters has not yet held any open competitions, although there are plans for one next year, according to the Pentagon.
The Pentagon defends its decision to sole source the contract to Rosoboronexport, and denied reports, made by Cornische Aviation, a firm based in the United Arab Emirates, that the Russian arms agency was charging the U.S. government twice what it paid for the choppers. “We have no information concerning the nature of the alleged reports” about price inflation by Cornische Aviation, a Pentagon spokesperson told Danger Room on condition of anonymity. “The contracting office determined that the costs were fair and reasonable.”
There is, however, an ongoing Pentagon inspector general investigation looking at Russian helicopter procurement, examining “whether [Defense Department] officials properly and effectively managed the acquisition and support of Non-Standard Rotary Wing Aircraft, such as the Russian Mi-17.”
It’s unclear what impact, if any, that investigation could have the current sole-source contract. But in the meantime, business is good for Rosoboronexport — which announced this month that it will continue to sell arms to Syria.
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