Mar­i­ano Browne

I re­fer to the ed­i­to­r­i­al of Mon­day's Guardian, en­ti­tled "Will he­li­copter bil­lions be well spent?" which ques­tions the pur­chase of four he­li­copters from US man­u­fac­tur­er AgustaWest­land and wish to re­spond and clar­i­fy some of the is­sues raised in the ed­i­to­r­i­al.

First of all, AgustaWest­land is a US-based com­pa­ny and not a whol­ly owned sub­sidiary of Fin­mec­ca­ni­ca. In­deed, ex­port cred­it from the US Ex-Im Bank, which forms a ma­jor part of fund­ing for this pur­chase, is not avail­able to whol­ly-owned for­eign sub­sidiaries. In fact, the US Ex-Im Bank fo­cus­es on sup­port­ing the ex­port of US goods and ser­vices. Sec­ond, as with any high qual­i­ty, sen­si­tive equip­ment, the pack­age in­cludes not just the pur­chase price but al­so a main­te­nance com­po­nent and a train­ing com­po­nent, over a sev­en-year pe­ri­od. The four he­li­copters cost US$93.56 mil­lion or TT$589.43 mil­lion and are be­ing fi­nanced by the US Ex-Im Bank and Bank Paribas. Ne­go­ti­a­tions are un­der­way with these in­sti­tu­tions for train­ing and main­te­nance pack­ages at US$125.77 mil­lion or TT$792.26 mil­lion and US$129.74 mil­lion or TT$817.42 mil­lion re­spec­tive­ly. In ad­di­tion, the con­tract pro­vides a train­ing pack­age up un­til 2015 dur­ing which time 136 pi­lots and crew­men as well as tech­ni­cians could be ful­ly de­ployed in he­li­copter op­er­a­tions.

Third, there are clear pro­ce­dures for funds which are ear­marked for the Her­itage and Sta­bil­i­sa­tion Fund and for when mon­ey is with­drawn. This pur­chase falls in­to nei­ther cat­e­go­ry. Fourth, ac­qui­si­tion of both naval and avi­a­tion as­sets is con­sis­tent with the strate­gic ex­pan­sion and re­or­gan­i­sa­tion of the T&T De­fence Force (TTDF) as the coun­try moves to de­vel­oped coun­try sta­tus by the year 2020. The strate­gic re­struc­tur­ing of the TTDF, as you are no doubt aware, has al­ready seen the cre­ation of the T&T Air Guard (TTAG). The four medi­um twin-tur­bine he­li­copters rep­re­sent the first phase in the ac­qui­si­tion of cap­i­tal avi­a­tion as­sets for the TTAG. The mul­ti-func­tion­al roles of the he­li­copters will com­ple­ment the op­er­a­tions of oth­er se­cu­ri­ty as­sets in na­tion­al de­fence and se­cu­ri­ty, mar­itime law and en­force­ment and mar­itime safe­ty mis­sions. Fifth, to per­form those roles, the he­li­copters need­ed ap­pro­pri­ate mod­i­fi­ca­tions and equip­ment, crews will re­quire spe­cial­ist train­ing and the he­li­copters must be avail­able on a 24/7 ba­sis. The AgustaWest­land Inc (AWI) 129 he­li­copter is built for both mil­i­tary and civil­ian us­ages and will be de­liv­ered with air­wor­thi­ness cer­tifi­cates and the tech­ni­cal doc­u­men- tation avail­able to ob­tain cer­ti­fi­ca­tion from the T&T Civ­il Avi­a­tion Au­thor­i­ty. In the in­ter­im, Bris­tow Caribbean Ltd, an AWI sub-con­trac­tor, will hold the re­quired cer­ti­fi­ca­tion un­til the TTAG is so cer­ti­fied. This cer­ti­fi­ca­tion must be main­tained at the re­quired stan­dard.

The con­trac­tu­al arrange­ment for cer­ti­fi­ca­tion will guar­an­tee that the TTAG would op­er­ate and main­tain the he­li­copters with­in the civ­il au­thor­i­ty and al­so that all main­te­nance by AWI would com­ply with civ­il au­thor­i­ty to en­sure world­wide parts avail­abil­i­ty with­in their sup­ply sys­tem and tran­si­tion­al train­ing and main­te­nance would be un­der­tak­en for such pur­pos­es. As you can well imag­ine with so­phis­ti­cat­ed ma­chin­ery such as this, train­ing alone is not suf­fi­cient to de­vel­op the nec­es­sary skills to fly safe­ly. Fol­low­ing com­ple­tion of train­ing, the pi­lots and crew would be re­quired to un­der­go sev­er­al hours of ad­di­tion­al sim­u­la­tion fly­ing.

Fur­ther, AWI would per­form all the main­te­nance at the be­gin­ning, along with ex­pe­ri­enced tech­ni­cians at the TTAG to en­able the tech­nol­o­gy trans­fer. Ul­ti­mate­ly, the sup­port pack­age would en­sure a smooth and ef­fi­cient­ly run main­te­nance or­gan­i­sa­tion with­in which the he­li­copters would have high avail­abil­i­ty and dis­patch re­li­a­bil­i­ty rates.

In terms of pro­cure­ment of these items, and to en­sure that the mon­ey was well spent, the Gov­ern­ment en­gaged the ser­vices of a con­sul­tant, a for­mer ser­vice­man with the US Coast Guard, who worked along with the TTAG and oth­er tech­ni­cal per­son­nel to de­vel­op the terms of ref­er­ence and de­ter­mine the sup­pli­ers with­in the in­ter­na­tion­al he­li­copter pro­duc­tion in­dus­try who could pro­vide the air frames with mod­i­fi­ca­tions and equip­ment and train­ing and main­te­nance sup­port pack­ages. Un­der the guid­ance of a Min­is­te­r­i­al Com­mit­tee chaired by Sen­a­tor Dr Lenny Saith and util­is­ing best prac­tices in pro­cure­ment and in eval­u­a­tion method­olo­gies, the Gov­ern­ment agreed that AWI should be the sup­pli­er of the he­li­copters and the as­so­ci­at­ed train­ing and main­te­nance pack­ages. While we un­der­stand that there will be con­cerns when­ev­er a large pur­chase is made on the part of the State, the re­al­i­ty is that high-lev­el se­cu­ri­ty equip­ment is nev­er in­ex­pen­sive, and may be­come even more as time pro­gress­es.

Gov­ern­ment be­lieves it has se­cured the right com­bi­na­tion of su­pe­ri­or equip­ment and, even more im­por­tant, main­te­nance and train­ing sup­port to meet the de­mands of our se­cu­ri­ty forces at this time par­tic­u­lar­ly in main­tain­ing the in­tegri­ty of our sea bor­ders in the fight against drug traf­fick­ing which is re­spon­si­ble for much of the cur­rent crime.

Ed­i­tor's Note: We wel­come all re­spons­es to our ed­i­to­ri­als but think it nec­es­sary to cor­rect ob­vi­ous er­rors made by cor­re­spon­dents, es­pe­cial­ly when those cor­re­spon­dents are min­is­ters of gov­ern­ment whose re­leas­es are of­ten treat­ed as be­ing fac­tu­al.

Er­ror 1

Min­is­ter Browne as­serts that AgustaWest­land is a US-based com­pa­ny that is not a whol­ly-owned sub­sidiary of Fin­mec­ca­ni­ca.

Fact: Ge­off Rus­sell, at AgustaWest­land's UK cor­po­rate com­mu­ni­ca­tions of­fice, stat­ed yes­ter­day: "AgustaWest­land is whol­ly owned by Fin­mec­ca­ni­ca, an Ital­ian com­pa­ny. AgustaWest­land has its main op­er­a­tions in Italy, UK and USA. In the USA we have AgustaWest­land North Amer­i­ca which is owned by AgustaWest­land." Rus­sell al­so stat­ed that there is an AgustaWest­land Inc but this is ul­ti­mate­ly owned by Fin­mec­ca­ni­ca.

Con­clu­sion: Browne's as­ser­tion that AgustaWest­land is not a whol­ly owned sub­sidiary of Fin­mec­ca­ni­ca is sim­ply in­cor­rect.

Er­ror 2:

The Min­is­ter as­serts that ex­port cred­it from the US Ex-Im Bank is not avail­able to whol­ly owned for­eign sub­sidiaries.

Fact: The Ex-Im bank's char­ter at Sec. 2(b)(1)(G) states: "Par­tic­i­pa­tion in or ac­cess to long-, medi­um, and short-term fi­nanc­ing, guar­an­tees, and in­sur­ance pro­vid­ed by the Bank shall not be de­nied sole­ly be­cause the en­ti­ty seek­ing par­tic­i­pa­tion or ac­cess is not a bank or is not a Unit­ed States per­son."

Fur­ther, Chris­tine Wood at the Ex-Im Bank's project fi­nanc­ing de­part­ment said yes­ter­day: "If the goods or ser­vices are made in the US, it does not mat­ter who owns the com­pa­ny." She cit­ed as an ex­am­ple the fol­low­ing: "Ku­mat­su Trucks made in the US are el­i­gi­ble for US Ex-IM Bank cov­er­age, but Cater­pil­lar trucks made out­side the US are not."

Con­clu­sion: It would be cor­rect to say that the US Ex-Im Bank sup­ports the ex­port of US goods and ser­vices even when the com­pa­nies in­volved are whol­ly-owned sub­sidiaries of non-US com­pa­nies, some­thing most in­vest­ment bankers would know.?

Er­ror 3:

Mr Browne as­serts that the cost of the he­li­copters is be­ing fi­nanced by the US Ex-Im Bank and Bank Paribas.

Fact: This is in­com­plete in­for­ma­tion. The US Ex-Im Bank's press re­lease on its cov­er­age of the trans­ac­tion makes clear at para­graph four: "Ex-Im Bank is co-fi­nanc­ing the trans­ac­tion with Italy's ex­port-cred­it agency SACE, which is pro­vid­ing a guar­an­tee for a por­tion of the fi­nanc­ing cov­er­ing for­eign con­tent. The ma­jor­i­ty of the ex­port is the US con­tent, which con­sists of man­u­fac­tur­ing ac­tiv­i­ties, as­sem­bly, cus­tomi­sa­tion, avion­ic and in­stru­men­ta­tion."?

Er­ror 4:

In his fifth para­graph, Min­is­ter Browne refers to the he­li­copters as AWI 129. All oth­er re­leas­es on this is­sue make it clear that the he­li­copters be­ing pur­chased are the AW139.

Apart from the er­rors, Min­is­ter Browne's re­lease is very help­ful in many ways. We learn from his re­lease, for ex­am­ple, that the Gov­ern­ment pro­pos­es to spend US$125.77 mil­lion pro­vid­ing train­ing to 136 pi­lots and crew­men as well as tech­ni­cians.?

For near­ly $800 mil­lion, it is quite like­ly to be much, much cheap­er for the State to es­tab­lish a he­li­copter train­ing fa­cil­i­ty in T&T and im­port the flight sim­u­la­tors and the train­ing ex­per­tise.?

That aside, and as­sum­ing that ten pi­lots per he­li­copter would be a suf­fi­cient he­li­copter ro­ta­tion for pub­lic ser­vants en­ti­tled to eight-hour shifts, ca­su­al leave, be­reave­ment leave, pa­ter­ni­ty leave and set pe­ri­ods of an­nu­al va­ca­tion, the num­ber of pi­lots need­ed to man the four he­li­copters would be 40.?

The cost of he­li­copter pi­lot train­ing is be­tween US$30,000 and US$50,000 and the pi­lots re­quire re­fresh­er train­ing at a cost of US$10,000 every six months.?This means that the cost of the for­eign train­ing for each pi­lot would be, at most, US$150,000 over the five-year pe­ri­od. The cost of train­ing these pi­lots over a five year pe­ri­od, there­fore, should not be more than US$6 mil­lion.

If we as­sume, but do not ac­cept, that the cost of train­ing a pi­lot is more than the cost of train­ing a me­chan­ic or a crew­man, it means that the max­i­mum cost for train­ing 136 peo­ple to op­er­ate these he­li­copters would be US$20.4 mil­lion. This means that the Gov­ern­ment, through Min­is­ter Browne per­haps, still needs to ac­count for the ex­pen­di­ture of tax­pay­ers' mon­ey amount­ing to US$105.3 mil­lion. We in­vite the Min­is­ter, or some­one else des­ig­nat­ed to re­spond, to do so and are de­light­ed to of­fer him (her or them) a firm com­mit­ment that his (her or their) re­sponse will be pub­lished ver­ba­tim.