The contract for four Merlin helicopters, announced earlier in the month, has finally been signed.

Poland had earlier signed a £77m agreement relating to the purchase of the AW101 military helicopters, however many had reported this news as a contract to purchase the aircraft. That was not the case.

As we reported at the time, the agreement, signed by Leonardo MW Ltd, in fact provided for establishing critical in-country maintenance capabilities and precedes a contract for the supply of AW101 military helicopters.

The signing of the ‘Offset Agreement’ preceded this contract for the supply of AW101 military helicopters.

Four AW101s and a comprehensive integrated logistics and training package will be supplied with PZL-Świdnik acting as prime contractor. Deliveries are to be completed by 2022 the fleet will perform Anti-Submarine Warfare and combat search and rescue missions.

Alessandro Profumo, Leonardo CEO, said:

“We are proud that the Polish MoD has confirmed its trust in Leonardo as one of its key partners to collaborate on national defence, to support the  modernization of the Armed Forces and  boost technological and industrial growth. We are committed to further reinforcing our presence and contribution to Poland, one of Leonardo’s home countries where we see significant collaboration opportunities in the future.”

Gian Piero Cutillo, Leonardo Helicopters MD, added:

“The supply of the best-in-class maritime AW101s will allow the Polish Navy to meet its rigorous requirements for the protection of national security in the Baltic Sea and for NATO operations. It will also enable life-saving missions in demanding conditions with second-to-none effectiveness, leveraging Leonardo’s leading role in the maritime helicopter field. Also, the broad scope of industrial collaboration under the Offset Agreement will guarantee secure and independent fleet management.”

Leonardo say that the contract was signed today (Thursday the 26th of April) in the presence of the Prime Minister of the Republic of Poland Mateusz Morawiecki, the Polish Minister of National Defence Mariusz Błaszczak and Leonardo CEO Alessandro Profumo.

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John Clark
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John Clark

A great choice by Poland, hopefully followed by a second batch.

It’s a fantastic Helicopter.

Mike Saul
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Mike Saul

£328m for 4 aw101 including support/maintenance.

Seems a lot of money, what am I missing here?

Paul Bestwick
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Paul Bestwick

I suspect that there is nowhere currently in Poland to maintain and supply these helicopters. So it’s basically creating all that from scratch. Also the level of inventory of parts required might not be much different for four helicopters, than it would be for say ten. There are no economies of scale in having only four of them.

Mike Saul
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Mike Saul

The only reasonable explanation I can think of is a much larger order for the transport version further down the track.

I know the Poles were going to order 70 H225M but this was cancelled.

So hopefully more good news to come.

Cam
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Cam

Atleast they get a great product.

Cam
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Cam

Every time I see “Leonardo” I get annoyed… it should read Westland……..

Steve
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Steve

Seems a strange decision considering they haven’t been built in a few years now and there must be better priced options out there that were subject to bigger order numbers

However good news, and hopefully it might encourage the MOD to consider either rebuilding the frames in storage or buying new frames.

Chris H
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Chris H

@Steve – well that is the obvious and sensible conclusion anyone would make but sadly we are dealing with Civil Servants whose mindset is to put the UK last and search for anything foreign and preferably American first. Westland have never failed to produce top quality aircraft as required. Apaches, Lynx, Wildcat and Merlins all testify to that but what support does Westland get on a long term basis? Not a lot. You can add shipbuilding and land vehicle acquisition to that sad tale. 4 tankers built in SK and for sure the FSS ships will be built abroad. We… Read more »

Mike Saul
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Mike Saul

Of course the armed forces should wherever possible buy UK sourced equipment.

The problem is UK industry seems incapable of developing and producing equipment that is both affordable and capable.

Whilst there are successes there are too many failures.

Given there is only limited amount of money available we need to spend defence money where it is most cost effective.

For one price of one Foxhound you can buy four Oshkosh vehicles.

Chris H
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Chris H

So on one item: the OshKosh vehicle. How much more expensive per unit would it be if it were built here in the UK after netting off the retained taxpayer money recycled within the UK economy? Estimates put that as an actual saving 40%+. So maybe build OshKosh vehicle here and get 6 for the cost of a Foxhound. Mind I don’t think you are comparing like for like but I accept the principle of your argument. I have no problem with us using the best designs and paying a licence fee to use them just as the Americans did… Read more »

Rudeboy
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Rudeboy

The Oshkosh JLTV has skyrocketed in price, and its likely to get more expensive as the US now appears to be cutting its order dramatically, after realising it may not be the vehicle for the future. They were looking at getting 49,000!! Don’t be shocked if that number drops by more than half, at which point the unit cost will climb further. It’s already been reported that the JLTV costs more like $600,000 rather than the original aim of c$250,000. At that price point, and a UK version will cost more due to UK specific modifications, you have to wonder… Read more »

Mike Saul
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Mike Saul

The cost numbers for the JLTV including add on’s and R&D I understand are around US$400k.

The foxhound using the same terms is US$1300k.

It would be good if UK industry could produce a low cost Foxhound which matches the JLTV in terms of price and capability, but it hasn’t and probably cannot.

We have to deal with the reality of the situation, money is short and decisions have to be made taking that into account.

Jonathan
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Jonathan

Unfortunately it’s that very basic neoliberal paridigm that has turned the UK into a net importer. Government spending should always take into account the whole cost vs benefit of any procurement, that should include: 1) total created tax revenue (probably around 50% of the total cost base will come back at some point). 2) opportunity costs in loss of manufacturing capability, if you don’t support your industry it can’t sell to others and create even greater tax revenue. 3) social cost, lost industry means you end up with a population on welfare. Neoliberalism is a generally 0 point game in… Read more »

Mike Saul
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Mike Saul

The fantasy that the more money we spend the richer we will be regardless of the economic outcome has only one destination, bankruptcy.

Chris H
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Chris H

@Mike Saul – well that is a simplistic statement Mike and one has to have regard to the context. If you compare apples and apples (as in two products bought abroad) then yes your argument stands up. But when you compare the import apple against the home build orange I’m afraid it doesn’t. This is the point our civil servants just either ignore or are too fixated on buying foreign to admit. If we build something here paid for by the public purse then we must also calculate how much of that taxpayer money is recycled back to the taxman… Read more »

Mike Saul
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Mike Saul

All of what of what you have stated has been tried before and the UK armed forces have ended up with overpriced equipment, which in some cases means they end up with poor capability equipment.

The UK armed forces should be equipped with the best equipment we can afford, hopefully from the UK but if necessary from.foteign suppliers.

Our recent history is littered with UK industry military projects that have failed and cost a future the process.

The aim of the defence budget is provide equipment to the armed forces not a subsidy to UK industry.

DaveyB
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DaveyB

I agree to disagree. This country is very good at “make do and mend” and thus keeping a system in service well past its use by date – Challenger 2 is a very good example as the life enhancement program today is what the mid life enhancement program was 10 years ago but was cancelled. However, this country is also very good at innovation and thinking outside of the box, put poor at program management and not letting mission creep distort the original purpose. A good example of this is Nimrod AEW. The radar was truly pushing at the boundaries… Read more »

Jonathan
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Jonathan

The aim of HMG is to secure the future well being of the United Kingdom, using ever possible tool, including investing In industry.

Chris H
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Chris H

Apart from the main points people make I always look at their use of language. You use terms like ‘subsidy’ and ‘littered’ and ‘failed’. And then of course ‘overpriced’ to cast a negative prognosis. I could use your terminology and say “So you prefer to subsidise foreign industry?”. I can tell you very clearly that in the USA they very firmly believe their tax dollars should be used to support (note the positive term) home industries rather than foreign. The French also have that sentiment embedded in their Government and their purchasing record proves it. Just to repeat my earlier… Read more »

Jonathan
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Jonathan

What he said.

Mike Saul
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Mike Saul

Always build here even if we use a foreign design. For example Watchkeeper UAS? We made a right pig’s ear out of that one. 10 years late, grossly over budget and still not working properly. 10% of WK have crashed during training exercises. What about Apache WAH1? For the cost of one WAH1 we could have purchased four US built Apache helicopters. Going back even further, the Phantom F4K/M. We managed to produce the most expensive and slowest F4 ever built by insisting on a high UK content. The defence budget is finite, we need to spend the money wisely… Read more »

Chris H
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Chris H

Its pointless taking this further because you just do not acknowledge the difference between Gross cost of imports and the Nett cost of UK build. So you are doing the apples and oranges thing again. Lop 40% of the costs of the UK build variants you mentioned and then do a comparison. And I challenge your WAH1 comparison anyway. Of course the Phantom F4K and M were not built here. We paid McDonnell Douglas a premium to put Speys and other UK specific kit in them. And of course they had to be modified anyway because the UK carriers were… Read more »

Jonathan
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Jonathan

The business that does not spend is dead, the nation that does not produce doomed. The fallacy of cheapest wins is as created the monster that is China and the national sham which is our “production sector”.At some point the consumer will have nothing left and the producer will own everything.

Mike Saul
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Mike Saul

There is a difference between spending and investing.

Throwing money at problems, rarely solves the problems.

You need to invest wisely to.maximise sustainable returns.

Jonathan
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Jonathan

I don’t disagree, I don’t believe in wasting money. But we need to have a properly funded industrial strategy and part of that should be all government procurement has a total cost and opportunity review that includes, increased tax returns, industrial development, infrastructure investment etc and not just basic cheapest wins…we should always look to make our nation stronger and wealthier if we can not by cheap. We also need to ensure department budgets reflect this complexity…. so if we by British at a 40% cost increase, because we will get 30% back in revenue, save 5% on unemployment, have… Read more »

Rudeboy
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Rudeboy

It’s gone up since then. Last I saw was $540,000 per unit. And that is before the major cuts in orders that are about to happen take place which will boost the per unit cost up significantly.
The important thing to realise with Foxhound is that the development costs have already been paid by the UK taxpayer for the limited numbers purchased already. That R & D cost wouldn’t be incurred again. Essentially it is a sunk cost already.

Lee1
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Lee1

The main issue is that we do not keep production lines open as we order all our equipment in one go then nothing at all so the production line closes and the skilled workers go to other projects etc. We really should order a large chunk at once then tail it off so that the other units are produced at a vastly reduced rate over a long time. Then the spares are still able to be easily made and if we want to order others then they are cheaper because the production line is still there. It also means sales… Read more »

Jonathan
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Jonathan

It will be the UK, the main merlin production line is on Yeovil, the Italian line is purely for the Italian armed forces. Any export models are UK built.