Search and rescue helicopter contracts awarded despite police probe

Prince William pilots a search and rescue helicopter.

A Canadian helicopter company at the centre of an ongoing MoD police investigation into bidding ‘irregularities’ has been allowed to re-tender for the multi-billion pound contract for the UK’s search and rescue service.

The Bureau has learned that CHC Helicpoter has also recently been awarded interim contracts to run services in the south of England. The company’s alleged involvement in serious irregularities resulted in the government having to abort a previous bidding round at a cost of £10m.  The Bureau’s revelations will now be brought  before the House of Commons Transport Select Committee.

The multi-billion pound privatisation of search and rescue helicopter operations has been dogged by controversy since it was first proposed in 2005. It will hand over control of the service from the RAF, the Royal Navy and the Maritime Coastguard Agency to a purely civilian operation. Prince William, who qualified as a search and rescue pilot yesterday, was one of those who raised concerns directly with the prime minister, David Cameron, over the planned sell-off.

The whole process was thrown into disarray last year when the Government cancelled the £6bn procurement contract after it emerged that ‘commercially sensitive information’ came to be in the possession of CHC Helicopter. The company was part of the Soteria consortium also including, Thales UK, Royal Bank of Scotland and Sikorsky.

In a Commons statement, the then Transport Secretary, Philip Hammond said: ‘The irregularities included access by one of the consortium members, CHC Helicopter, to commercially sensitive information … and evidence that a former member of that project team had assisted the consortium in its bid preparation, contrary to explicit assurances given to the project team at the time.

‘The Government has sufficient information to enable it to conclude that the irregularities that have been identified were such that it would not be appropriate to proceed with either the preferred bid or with the current procurement process.’

The MOD revealed in answer to a Parliamentary Question that approximately £10m had been spent on the project.

The Ministry of Defence has now withdrawn completely from the replacement PFI deal announced last November and the procurement process is being run solely by the Department for Transport.

According to the Department of Transport the inclusion of CHC Helicopter in the new bidding process is good for business.

‘The Ministry of Defence Police investigation into the failure of the PFI is ongoing. Not only would it be wrong to pre-judge the outcome of that investigation, CHC’s participation in the current UK SAR helicopters procurement increases competitive tension in the tendering process.’

However he asserted that pending the outcome of the police investigation, the Department did not rule out the option of trying to recoup the £10m losses incurred by the taxpayer in aborting the previous round.

The chair of the House of Commons Select Committee for Transport, Louise Ellman expressed surprise at the Department’s decision.

‘It is important that this procurement is conducted in a way that gives public confidence.  I am surprised that anyone involved with the collapse of the previous procurement, where investigations have not been concluded, may be involved. I will discuss this with the Committee,’ she said.

CHC Helicopter has been shortlisted in the procurement process along with 10 other companies. The range of 10 year contracts to run the new, entirely civilian, search and rescue service are worth between £2-3bn. They will replace more than 40 helicopters currently operated by the Royal Navy, the Royal Air Force and the Maritime Coastguard Agency. The final contract will be awarded in February next year, with operations starting in full in 2017.

Meanwhile, in addition to making it on to the DfT shortlist for the main national contracts, the Department renewed contracts with CHC Helicopter to run the interim search and rescue helicopter services in Portland and Lee on the Solent in the south of England. The company also previously ran services in Scotland but lost those to a more competitive bid.

The MOD Police were also called in to investigate the bidding irregularities and decide whether a criminal offence had been committed. It has confirmed to the Bureau that its investigation is still ongoing. In a statement a spokesperson said: ‘The investigation has been continuing for over a year, and has required much painstaking work and the interviewing of potential witnesses over a wide area internationally.  There have been no arrests to date, but when this investigation is complete, the findings will be reviewed before a final decision is made as to whether any further action is required.’

Responding to criticism over the move to renew interim contracts and allow CHC Helicopter to re-bid, the company told the Bureau that the British public could be confident in the probity of the company. In a statement it said that as soon as it became aware of the irregularities it brought them to the attention of the Government, and that the information was irrelevant to the bid.

Mr T R Reid, vice-president of global communications for CHC Helicopter in Canada said: ‘Obviously we’d much rather that any seeds of poor judgement or worse don’t get into the organisation in the first place. But when they do we’ve got to make sure that they don’t take root. We’ve got high standards, people know them, overwhelmingly they follow them, in the air and on the ground, and the rare occasions that they don’t – we take action. Three individuals were properly dismissed from CHC Helicopter.’

He added: ‘We’ve been fully cooperative from the time we called the activity to the attention of the Government. We know the case is continuing – we are not going to speculate about how it might turn out.’

Under EU law any company or individual convicted of offences involving corruption is excluded from the tendering process.

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