The cost of transformation

Saab AB has received a contract to perform maintenance on the Swedish Air Force new HKP 16 UH-60M Blackhawk helicopters. Good for Saab, but how come Saab ended up with he contract? Their main profession is after all building Gripen fighters, or...?

First some background.

The Swedish Armed Forces is undergoing a painful transformation process. From a force of 800.000 men based upon a conscript system to a force of some 60.000 based upon professional full-time or part-time soldiers.

As a part of this process the Armed Forces Headquarters forced every officer to change their contract. It used to be voluntary to apply for international service, but with the new contract it is mandatory. This at no increase in the salary. The choice were between getting fired or accepting the new contract.

Unfortunately for the Armed Forces some of the most specialized officers (and trained at a high cost for the Swedish tax payers) choosed to leave their employment. Among them many helicopter engineers at Malmslätt AFB outside of Linköping. Specialists on HKP 15 and HKP 14.

This resulted in a lack of knowledge and manpower during a very hectic period of training. The HKP 15 - Augusta A109 was ready to deploy as part of the EU Battlegroup (is was later changed when a Croatian helicopter unit was contracted), the HKP 10 - Super Puma was deploying to Afghanistan as part of ISAF MEDEVAC and the HKP 14 - NH-90 was slowly being delivered to Sweden.

At this critical moment the Air Force lost their most experienced helicopter maintenance engineers! Their new employer became Saab AB. It is after all only some 10 kilometer between Malmslätt and Saab AB.

The result of this was that the Air Force needed to buy the competence back from Saab AB. During 2011 Saab received a contract to perform maintenance on the HKP 15.

Since helicopters has been a major focus in the Swedish Armed Forces due to the delays of NH-90 and due to the need of MEDEVAC in Afghanistan, the Swedish industry has prepared for future needs of support to the Armed Forces.

Helicopters is after all not a new competence at Saab AB.

- Saab was already a sub-contractor in the NH-90 contract. The main task was to deliver the tactical planning system, TMS. Unfortunately this contract has resulted in a huge financial loss for Saab. The contract was worth 2 Bn SEK. Saab has, according to Swedish news, so far lost approximately 600 MSEK on that contract and the system is still not combat ready.

- Saab has been cooperating with Heli-One in Norway (part of the planned Gripen sales to Norway.) Heli-One was the company involved in the MEDIVAC modification of the Swedish Super Puma.

- Saab is also cooperating with Finnish Patria regarding maintenance of helicopters.

Saab is also not the only Swedish company with a sudden interest in helicopters. Volvo has been preparing to perform maintenance on helicopter engines by cooperating with Norwegian Astec.

So, the result for the Swedish Armed Forces is that they lost some experts on helicopters at a critical moment and needed to buy them back from the industry. Most probably at a higher cost. The Armed Forces will loose the capability for heavy maintenance on helicopters and will depend on the industry to support them on international missions. It will be very interesting to see how the industry will support the UH-60 when they deploy to Afghanistan during 2013.

The Swedish Armed Forces has a plan to use more civilian contractors for work that is not part of the combat missions. In Sweden this is is called OPS - Public Private Cooperation. Unfortunately they have not examined in detail the experiences from USA and the UK where the Governments has changed their ideas. It is not cheap to let the industry do the work and it can also be difficult to use civilian contractors at a front-line unit. Unfortunately in this case there were no other choice than buying back the competence that the generals did not want to keep. Cooperation by necessity rather than by choice.

It is not only the Armed Forces that has problem with helicopters in Sweden. The Swedish government has sold out medical transports and sea rescue to a civilian company, Norrlandsflyg. Unfortunately the cost for this service increased and the govenrment had to add extra money outside of the contract. The contract was therefore revoked.

There has been a number of investigations (report "Helicopter Support to civilian society" in Swedish)in the Swedish Government to find the reason behind all delays and increases in cost. But so far not very much has happened. None has taken the blame for the situation becoming what it is.

Summary: The Swedish tax payers has lost a lot of money on the helicopter "affairs". So far the Armed Forces has received very little capability. Hopefully this will change with the introduction of the UH-60. But the Armed Forces will as a result of loosing much of the competence regarding maintenance of helicopters be very much in need of continuous support from the industry. At a certain cost of course!

SR

Where is the money?

The last few days there has been a public debate in the press regarding how the Swedish Armed Forces bought their eighteen HKP 14, Swedish designation for Eurocopter NH-90. One thing is for sure. There has been a lot of delays in the delivery of the helicopters resulting in:

- A lack of trained helicopter pilots in Sweden. During the last few years there has been many accidents involving helicopters. A lot of airmen has lost their lives. The investigations of these accidents has found two common cause. That is the lack of leadership and many organisational changes in the helicopter forces. This in combination with a lack of flying experience too often results in accidents.

- Three HKP 10 - Super Puma had to be rebuilt for MEDEVAC operations in order to support Swedish units in Afghanistan. (This business case was also not handled very well, but it is another story). The HKP 10 are today in Marmal in northern Afghanistan and will be there until 2013.

- A lack of helicopters for sea operations. Sweden no longer has any airborne anti-submarine capability. Having the submarine incidents during the 1980-90:s in fresh mind this is very serious lack of capability in the Swedish Armed Forces. The old HKP 4 - Boeing Vertol had this capability, but there were no political interests to prolong the service life of these helicopters. When Sweden sent the HMS Carlskrona to the Gulf of Aden the smaller HKP 15 - Augusta A109 had to be used. This helicopter is not designed for continuous operations at sea and afterwards it has been found out that the helicopters has been seriously damaged by corrosion from salt water. Even when the HKP 14 become operational it will take a long time before the Swedish Armed Forces has any anti-submarine capability, since this is last on the list of planned capabilities of the HKP 14.

- A lack of helicopters for training of new pilots. The Swedish Armed Forces has been forced to rent civilian helicopters and also start sending their pilots for basic training in Germany.

- A lack of helicopters for transport of troops. During the NBG 08 - Nordic Battlegroup 08 readiness period the Armed Forces had to upgrade a few of the remaining HKP 4 for this type of operations. After the readiness period, the HKP 4 were all scrapped. During the Nordic Battlegroup 11 readiness period it was planed that the HKP 15 were to be used for troop transport. But since a lot of the pilots were busy with the Gulf of Aden operations, the HKP 15 is also a bit to small for transporting troops and the HKP 10 were busy in Afghanistan, it was decided to cooperate with a Croatian helicopter unit using the Mi-17. This gave the NBG 11 MEDEVAC capability as well as troop transport capability. Even when he HKP 14 is being delivered there are big unsolved problems. The interior of the NH-90 has been found out to be very sensitive. In other countries using the NH-90, a wooden floor has been put into the troop compartment to protect the structure from heavy boots and equipment.

- Sweden has now ordered sixteen Blackhwak UH-60M with Swedish designation HKP 16 in order to have troop transport and MEDEVAC capability no matter what happens with the NH-90. These helicopters will be used in Afghanistan starting 2013. But Sweden will start to reduce the number of units in Afghanistan (starting this year?). In 2013 there will be very little use for the helicopters in Afghanistan. The first Blackhawks will be delivered in December 2011 and the pilots and technicians are undergoing their training as of now in the USA. I personally believe this will be a good solution to quickly enhance Sweden´s helicopter capability. But in the future the Swedish Armed Forces will operate three different types of helicopters (A109, NH-90 and UH-60M) instead of he planned two. This will increase the logistic and maintenance cost in the future. My recommendation is to sell the A109 when the NH-90 become operational. The UH-60M is unfortunately a bit to small to be used for anti-submarine operations. The A109 is bought to be a basic cost effective tactical trainer. But maybe buing a few extra UH-60M instead of the A109 would be the solution today when the basic training anyway is being done in Germany?

In addition to all the technical problems with the HKP 14, the Swedish Armed Forces has lost many of their trained maintenance personnel. Due to the new contract that all Swedish officers had to sign, many technicians applied for jobs at Saab AB. They are now working at Saab as part of Saab maintenance contract of the Swedish HKP 14. Some of them increased their salary with 30%.

In the Swedish press he focus is on how the helicopters was ordered. The Swedish Defence Material Administration, FMV, wanted to buy the Sikorsky S-92 since it fulfilled all requirements better than the other helicopters that were studied. But the Minister of Defence at the time, Björn von Sydow of the Social Democrat party, decided to overrule the experts and to buy the NH-90 as a joint Nordic project involving Denmark, Norway and Finland. Swedish Saab were to build the tactical planning system for the NH-90 and Finnish Patria to assemble part of the helicopters. But later on the Nordic countries went their separate ways. Denmark bought the Augusta Westland AW-101. But the Danish Air Force had a lot of problems with the first delivered helicopters and decided to postpone the project. The AW-101 were instead sold to the UK and modified to RAF Merlin standards. Today the AW-101 is in operational use in Denmark. In Finland and Norway the NH-90 is in limited operational use today. Norway and Sweden has a joint logistical program. But Sweden decided to buy a version of he NH-90 with a higher cabin. Why this was required has not been found out. It was not in the original helicopter specification, but has been modified during the time of the project. The result is that Sweden is the last of the Nordic countries to receive their helicopters.

But if the decision to over-rule the experts was bad enough there are other very serious aspects in how the business case was handled.

A Swedish Air Force colonel has been investigated for leaking information about the project to Eurocopter. The information included what the other companies offered and how FMV would perform their evaluation of the different helicopters. Eurocopter could of course have used this information to make sure that heir bid was the most favourable. The Swedish Military Intelligence, MUST, has stated that no important information was leaked and there has been no damage done. After that nothing happened with the investigation. But damage or no damage, why did the colonel leak information and what did he gain by doing so? Did the Swedish Department of Defence know about this? Was the colonel more or less ordered to leak the information in order to make sure that the Minister of Defence, Björn von Sydow, got what he wanted?

Swedish reporters very often focus their articles on other countries lack of transparency when it comes to buying military equipment. But maybe Sweden is no better then most other countries? Sweden is at least no more effective. But, has all these problems occurred due to only lack of political leadership or is there money involved? If so, who were to gain from this affair? There is a saying in cases like this, "Always follow the money".

DN, SvD