Farnborough: MD's ‘sham’ claims stall work on EADS UH-145 LUH helicopter contract...

Flightglobal.com ^ | 21 July 2006 | Paul Derby

[Yo-Yo]

Farnborough: MD's ‘sham’ claims stall work on EADS UH-145 LUH helicopter contract, as US congress investigates deal

By Paul Derby in Farnborough

The US Army’s Light Utility Helicopter (LUH) contract, awarded to EADS North America last month, has been suspended while the country's contract investigation body examines a formal protest by losing MD Helicopters that brands the army’s pricing analysis “a total sham”.

The US Government Accountability Office (formerly the General Accounting Office, GAO), is the investigative arm of Congress charged with examining government contracts. It has imposed a 90-day freeze, which is a legal requirement under the procurement process and means that EADS will face increasing production pressures, with eight EC-145-based UH–145 twin engined helicopters due to be delivered by the end of 2006. The US Army wants to increase that number to 16 via supplemental funding.

The decision poses a difficult problem for EADS North America because if it does start work on the UH-145s before the GAO reports in October it would be at its own risk.

MDHI filed a scathing protest, obtained by Flight Daily News, about the way the army conducted the procurement process following a decision to award the 322–aircraft, $3 billion contract to what it describes as “a foreign conglomerate”. It also challenges EADS North America’s standing as a ‘low risk’ supplier. The protest document alleges that the decision has “far reaching and serious unexamined risk issues”.

The protest document also reveals that in May the US Army suggested to MDHI that it should raise the price of its bid, based on the MD Explorer, because it was potentially unprofitable and might jeopardise the viability of the business. A mechanism has been built into military procurement in the USA to avoid unrealistic contract pricing.

MDHI reserves its most stinging criticism for the pricing analysis element of the bid process, saying: “The army’s pricing analysis was arbitrary and capricious at best, a total sham at worst.”