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Russian Firm Got No-Bid Pentagon Contract After Selling Arms to Iran

August 31, 2011

Source: Danger Room

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;

•  a $322 million sole-source deal given to ARINC, a U.S. engineering firm, to buy 22 helicopters for Iraq; and

•  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.

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