MAJOR DEFENSE PROCUREMENT TAKES TROUBLING TURN

C O N F I D E N T I A L TIRANA 000667

SIPDIS

E.O. 12958: DECL: 10/05/2019
TAGS: PGOV PREL MARR AL
SUBJECT: MAJOR DEFENSE PROCUREMENT TAKES TROUBLING TURN

Classified By: Ambassador John Withers for reasons 1.4 (b) and (d)


1. (C) Summary. A lack of transparency in recent developments
concerning the Government of Albania's tender for medium-lift
helicopters has caused us concern. After a seemingly
successful meeting with Prime Minister Berisha and new
Defense Minister Imami on September 16, Sikorsky (who has
advocacy rights as the sole U.S. competitor) was stunned to
receive on September 24 a letter dated September 14
cancelling the tender for medium-lift helicopters. Post was
likewise not previously informed of the cancellation.
Sources subsequently told Post that the MoD had instead
decided to offer a single-source contract to Eurocopter. The
DCM, the Attache, the Chief of the Office of Defense
Cooperation and Pol-Mil Officer met with Defense Minister
Imami on October 1 to share concerns over the lack of
transparency and the poor treatment of Sikorsky. During the
meeting, Imami moved back from his position of offering a
single-source contract to Eurocopter, and agreed to contact
Sikorsky and consider parallel negotiations with both
companies. Imami made clear that PM Berisha is determined to
finalize a contact by December 31. The Ambassador raised our
concerns with the Prime Minister and the Foreign Minister on
October 5. End Summary.


2. (U) On September 16, Sikorsky representatives travelled to
Tirana to meet with the new Albanian government and to urge
the GOA to accept its offer of Blackhawks for the current
tender for medium-lift helicopters. (Note. Sikorsky is the
only U.S. company bidding and has U.S. advocacy rights. End
note.) During their meetings with PM Berisha, State Minister
Genc Pollo and Defense Minister Imami, all Albanian
interlocutors were positive and open to Sikorsky's
solicitations. None made mention of the fact that the tender
had already been cancelled two days before. Neither did
anyone from the GOA inform Post of the cancellation. Post
did not learn until September 24, when Sikorsky forwarded to
Post a copy of the faxed letter they just received (although
dated September 14) cancelling the tender.


3. (C) Subsequently, several sources in the MoD informed Post
of rumors that the GOA was negotiating a single-source
contract with Eurocopter. Officials from the German Embassy
were seen in several meetings with the DefMin; at a
subsequent reception, one German official noted to the U.S.
Defense Attache his belief that Eurocopter would shortly win
the contract.


4. (C) October 1, the DCM, the Defense Attache, the Chief of
the Office of Defense Cooperation and Pol-Mil Officer met
with Defense Minister Imami. The DCM decried the poor
treatment of Sikorsky in concealing the cancellation from
them and the lack of transparency in conducting negotiations
for a single source contract. ODC Chief warned of the damage
to US assistance that such conduct could bring. Imami
confirmed that the MOD was considering a single-source
contract with Eurocopter. He also stressed that the
cancellation had been decided before he assumed his new
duties, and claimed that during his September 16 meeting with
Sikorsky, he was unaware that Sikorsky had not been informed
of the cancellation. On Post's strong urging, Imami agreed
to contact Sikorsky to explain the miscommunication and to
consider parallel negotiations with both Sikorsky and
Eurocopter.


5. (C) In October 5 meetings with the Prime Minister and
Foreign Minister, the Ambassador forcefully addressed the
transparency issue. Albania has the right to choose the
helicopter most suited to its needs, but should not treat the
U.S., its most important ally, in such a manner. This is a
poor first signal from Albania's newly elected government.
The fact that Imami has no military background or experience
and owes his position as Defense Minister to his closeness to
the PM leaves Albania vulnerable to charges of political
manipulation. Berisha professed that this was all a
"misunderstanding" occasioned by poor staff work during the
government transition. Imami, he said, would be in a better
position to give better answers during his scheduled meeting
with the Ambassador October 8.

COMMENT
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6. (C) Despite Berisha's assertions, the decision on the
helicopter procurement will be made by the Prime Minister and
will largely be a political one. Imami noted to the DCM that
Berisha gave Imami strict instructions to complete the
contract within the fiscal year (by December 31). As
Albania's overriding foreign policy objective is now EU
membership, the GOA will likely feel more political
obligation to EU member states. Yet, Imami admitted that the
U.S. continues to be Albania's strongest ally. Our major
concern is that any contract or procurement be handled in a
transparent and fair manner. The Ambassador will reiterate
our concerns to Defense Minister Imami later this week.

WITHERS