Turkey Finalizes Lot 2 Order for 17 S-70B SeahawksNov 10, 2006 05:06 UTC by Defense Industry Daily staff
In June 2005 the government of Turkey and Sikorsky signed a Memorandum of Understanding to buy 12-17 S-70 Seahawk helicopters for the Turkish Navy. Sikorsky just announced that it has managed to turn that MoU into a contract with the Ministry of National Defense, Undersecretariat for Defense Industries (SSM) for 17 new S-70B Seahawks, with first deliveries to begin in a year later than originally envisioned in 2009.
Turkey currently flies 7 S-70B Seahawks, after one of its helicopters crashed in 2002. The contract includes an order for 12 helicopters with options for another 5, as well as a retrofit program for existing S-70Bs, ongoing support, and other aspects. According to Turkish reports, the reason for the long delay was apparently the settling of a payment methods dispute between Turkey and Sikorsky.
The Platform and Contract
The S-70B helicopter is an international derivative of the U.S. Navy SH-60B Seahawk, but includes a fully integrated “glass” (digital) cockpit and a mission management system. Its flexible mission package includes dipping sonar, electronic surveillance measures, FLIR, multi-mode radar, aircraft survivability equipment, and Penguin and Hellfire missiles. According to Lockheed, Their nearest US comparison is thus the new MH-60R “Romeo” rather than the older SH-60Bs.
The Turkish Navy reportedly plans to deploy the Seahawks on FFG-7 Oliver Hazard Perry Class frigates it had earlier acquired from the United States.
Lockheed informs us that the total contract includes aircraft, a retrofit program for Turkey’s other S-70Bs, ongoing support, and a host of other aspects. The Turkish Daily News gives a figure of $380 million for 12 helicopters, which would appear to give a figure of around $538 million if the full 17 helicopters are purchased. Submission of this figure to Sikorsky yielded no corrections.
That final figure matters because this Lot 2 agreement, which adds to the Turkish Navy’s current inventory of 7 remaining S-70B Seahawks from its 2001 order of 8, includes industrial offsets worth 50% of the contract’s value. Sikorsky President Jeffrey Pino said in a press release that this contract builds on the industrial cooperation foundations established under the prior Sikorsky-Turkey Black Hawk helicopter programs, which has seen delivery of over 100 helicopters.
The Payment Conundrum
The Turkish SSM and Sikorsky signed a memorandum of understanding in June 2005 for the Seahawk sale. The Turkish Daily News reports that the problems began when the Turks wanted to use the remaining $320 million of a $1.3 billion Export-Import Bank of the United States (Ex-Im Bank) loan framework – a framework that had been designed to help Turkey buy S-70A Black Hawk helicopters for its army. Sikorsky demurred, requesting a letter of credit scheme to be administered by a commercial bank.
In January 2006, the Ex-Im Bank extended the remaining loan guarantee beyond the previous 2008 deadline, allowing its use to cover the full S-70B Seahawk deal. Turkey would have financed the remaining $60 million portion through its own assets. The SSM then decided that the loan guarantee formula would be too costly, and decided to finance the entire deal through its own resources instead.
In the end, Sikorsky and the SSM agreed on the Turkish government’s proposed payment scheme, and the deal finally went through.