In an “open letter to the Polish Prime Minister,”Airbus Helicopters chief executive officer Guillaume Faury today provided a long account of the failed offset negotiations for 50 H225M Caracal medium multirole helicopters. The Polish government ended the year-long talks last week and held a press conference to explain the decision. The H225M had been selected in April 2015 to replace the Polish Army’s large fleet of Mil Mi-8/17s, in preference to the Leonardo AW149 or Sikorsky S-70i BlackHawk. Poland said yesterday it would place a smaller order for the S-70i.

Faury said that “Polish citizens and the Polish armed forces deserve full transparency on the tender process.” The CEO claimed that misleading allegations had been reported in the media, including that his company had negotiated in bad faith. “Airbus Helicopters was chosen as the sole offer fully compliant with the demanding Ministry of Defence requirements, including the transfer of high-level technology deemed essential to guarantee the essential security of interests in Poland,” he added.

The letter said that the net contract value to Airbus Helicopters was 10.8 billion Zloty ($2.8 billion). But the company had agreed to generate offsets worth an additional 23percent, corresponding to the Polish rate of value-added tax (VAT). This is “not standard practice,” according to Airbus. Furthermore, the Polish Ministry of Development had introduced new requirements to the negotiations last August, some of which “were not compliant with EU regulations governing the tender.”

Faury said that Airbus Helicopters’ offset offer included 45 transfers of technology and would have provided Poland with at least 30 years of activity for state-owned companies. It proposed the creation of a full assembly line for the H225M at the WZL1 company at Lodz that currently overhauls Poland’s older Russian helicopters. The Polish state would have retained a 90 percent stake in this company, which could also produce H225Ms for export, as well as “a growth potential to other helicopter types in the future.” Airbus Helicopters would also have transferred source codes, licenses, and maintenance/overhaul capabilities to WZL1.

The letter continued: “As part of our offer, a minimum of 50 H225 helicopters would have been fully produced in Poland. Taking into account the time needed to transfer technology in country, and in order to comply with the urgent operational requirements of the Polish armed forces, an initial batch of helicopters would have been assembled in France, by Polish workers from WZL1. This would have ensured the proper transfer of skills, know-how and technology to Poland.”

Airbus Helicopters also proposed to create a new facility costing 370 million Zloty ($96.5 million) that would produce complex rotor and transmission parts worth 1.7 billion Zloty ($443 million) over the next 10 years for the company’s full range of existing and future helicopters. But, it said, the Polish Ministry of Development rejected this particular offset proposal. (In turn, Polish government officials claimed that Airbus Helicopters had rejected many of its offset proposals.)

Faury further noted that “there is no state-owned helicopter manufacturer in Poland.” PZL Swidnik is fullyowned by Leonardo, and PZL Mielec by Sikorsky/Lockheed Martin. He claimed that those partnerships “did not submit compliant offers” for the medium helicopter tender.

Polish defense officials said the need for new medium multi-role helicopters remains urgent. During a visit to PZL Mielec yesterday, Defence Minister Antoni Macierewicz said that talks would begin later this week to acquire some S-70i Black Hawk helicopters that are produced there, for Poland’s special forces. Today the company announced that two will be delivered by year-end and another eight next year.