Skip Ribbon Commands
Skip Navigation LinksHome > Reports > Investigation by the Office of the Auditor General into the procurement and the phasing in of maritime helicopters (NH90) for the Norwegian Armed Forces

Investigation by the Office of the Auditor General into the procurement and the phasing in of maritime helicopters (NH90) for the Norwegian Armed Forces

Document 3:3
Download document
Summary

The supplier of the new helicopters for the Armed Forces' coast guard vessels and frigates is largely to blame for the delays but the Ministry of Defence, the Defence Materiel Agency and the Armed Forces have also not been proactive enough in following up on the procurement project. It appears that delivery of the NH90 helicopters is due to take 14 years longer than agreed.
Only parts of the investigation, which is mostly classified, have been published.

Findings

The prerequisites set out by the Storting for the procurement of NH90 models and the operational capabilities of these helicopters have not been fulfilled

The status is as follows:

  • There is a severe delay in both the delivery and phasing in of the helicopters;
    • Only seven helicopters have been delivered, of which six are training-only versionso
    • The planned final delivery date is now 2022, which represents a 14-year delayo
    • The helicopters will not be ready for full operational capabilityuntil several years after 2022
  • So far, the helicopters have seen very few flight hours, are not widely available and are very limited in terms of their operative activities;
    • In 2017, the Armed Forces achieved an average of 90 hours per helicopter, compared to the 430 hours that were originally estimated for the procurement project
    • Only one helicopter was available in 2017, with the other helicopters grounded in expectation of spare parts and maintenance
  • The helicopters require a significant amount of maintenance and are very expensive to operate;
    • Maintenance requirements have so far been approximately 15 times greater than originally estimated.

Main causes of the delays:

  • The supplier, NHI, is largely to blame for the delays and changes in the scope of deliveries.
  • Important prerequisites for the procurement project have not been followed up on proactively enough. It was specified that a helicopter with developed technology and a supplier with a proven record of operational reliability was to be chosen. The NH90 existed only as a prototype and NHI had no previous manufacturing history but was still chosen as the supplier.
  • There are significant weaknesses in the contract with the supplier.
  • There have been deficiencies in terms of planning and insufficient staff assigned within the Air Force and the Defence Logistics Organisation/Defence Materiel Agency.
  • Management of the procurement project has been poor and coordination of the helicopters' gradual introduction in the Coast Guard and the Marine has been ineffective. There has been no overarching entity responsible for effective coordination and decision-making.

The Office of the Auditor General believes that the late involvement of the Ministry of Defence was a serious problem, particularly given the financial impact and extensive operational consequences that the NH90 delay has had for coast guard vessels and frigates.

The investigation indicates that the Air Force experienced coordination problems in its role as the overall project coordinator, especially while the NH90 helicopters were gradually being introduced, due to the lack of an overarching entity to tackle priority conflicts and follow up on decisions. The Office of the Auditor General considers it very reprehensible that the Ministry of Defence as the project owner did not tackle the challenges facing the Air Force as the overall project coordinator at an earlier stage.

Even though the supplier, NHI, is largely to blame for the delays, the Office of the Auditor General also considers it very reprehensible that the Ministry of Defence and the Armed Forces did not look further into the decision when choosing the NH90 in 2001, and that they did not follow up on important prerequisites for the procurement project proactively enough or take the associated risks more seriously. This has had major consequences for the operational capabilities of both the Coast Guard and the Frigate Branch.

Reporting to the Storting has been restricted

Recommendations

The Office of the Auditor General recommends that the Ministry of Defence:

  • Ensures that fundamental prerequisites for the specific aquisitions are clearly defined and followed up on throughout the procurement project
  • Completes a thorough assessment of the supplier in connection with significant procurement projects and that the assessments are followed up on throughout the procurement project
  • Considers whether the terms of the contracts for significant procurement projects provide the supplier(s) with sufficient incentives to comply with the regulations in the contract
  • Considers measures for ensuring that plans for phasing in defense materiel are made in good time, particularly when several entities are involved and are dependent on one another to introduce the materials effectively
  • Sets out a procedure for significant procurement projects that ensures a defined distribution of responsibility and clears the lines of management and aspects of authority between the Ministry of Defence, the Defence Materiel Agency, Armed Forces staff and the appropriate weapons branches

Background and objectives of the investigation

In 2001, the Armed Forces concluded a contract with Nato Helicopter Industries (NHI) for the delivery of 14 NH90 helicopters. The cost of the procurement project was NOK 8.018 billion in 2018 terms. The helicopters were to be delivered during the years 2005–2008. The delivery, integration and phasing in of the NH90 helicopters within the Armed Forces has been significantly delayed. The Storting has been told that the delays are primarily due to deficiencies in the deliveries from the supplier.

The objective of this investigation was to investigate the reasons why the NH90 helicopters have not been delivered and integrated into the Armed Forces as per the Storting's decision and prerequisites. The investigation primarily covers the period 2010–2017. The supplier has accepted responsibility for the delays up until 2011. Where the investigation has uncovered significant circumstances dating back to before 2010, information about these circumstances has also been included.

Ministry/ministries:

Riksrevisjonen, Storgata 16, P.O. Box 6835 St. Olavs plass, 0130 Oslo, Norway

Phone: +47 22 24 10 00

Org.nr: 974 760 843