A Deed of Agreement has been signed that resolves contractual issues between the Commonwealth and Australian Aerospace Ltd. on the remediation of Project AIR 87 – the Armed Reconnaissance Helicopters (ARH).

“The signing of the Deed is a major positive development in progressing Project AIR 87 and getting the helicopters delivered to the Army as fast as we can,” said Mr Greg Combet, the Parliamentary Secretary for Defence Procurement. 

Project AIR 87 aim is to acquire 22 ARH Tiger helicopters for the Army, a software support facility, electronic warfare and ground management systems and training facilities.

Unfortunately the project has been hampered with problems relating to delays in the training of pilots, which resulted from the Franco/German Tiger program itself experiencing delays. There were also some major issues associated with the Through Life Support contract as noted in the Australian National Audit Office report on this project in 2006.

The Stop Payment provision in the ARH acquisition contract was executed by DMO on 1 June 2007. This has resulted in the need to reprogram project funds within the Defence Budget.

Following a period of negotiations between the Commonwealth and the contractor to resolve a dispute initiated in October 2007 over the contract provisions for Through Life Support as well as the Stop Payment, an agreement has been reached that will enable the project to deliver an operational capability to Army in the shortest practical time.

The Deed of Agreement contains the basis for a Contract Change Proposal that transitions the current support contract to a performance based structure, to reduce cost of ownership to the Commonwealth over time. This will help achieve the aim for greater efficiencies in the sustainment of our major capital equipment.

The Agreement also includes an initiative by the contractor to base two EC135 helicopters in Darwin for two years for lead-in skills training for pilots prior to conversion onto the ARH Tiger.