The future of UK SAR, post SAR-H
I think there were concerns both over the long-term cost to the taxpayer and the financial stability of Soteria/CHC's banking partners and the ex-RAF footsoldier was a a convenient scapegoat for a contract that neither side could afford.
So, having tried the best value for money approach it shouldn't be a surprise that this time DfT will just go for the lowest bidder(s).
Will the remaining two be happy to divvy it up between them (one long range and the other short) or will one of them produce a surprise (and cheaper) one stop solution at the last moment?
So, having tried the best value for money approach it shouldn't be a surprise that this time DfT will just go for the lowest bidder(s).
Will the remaining two be happy to divvy it up between them (one long range and the other short) or will one of them produce a surprise (and cheaper) one stop solution at the last moment?
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CHC are no longer bidding for Lot 1, 2 or 3 in the Long-SAR contract. The 3 lots are the options of the Long-SAR bidding process, Lot 3 being both medium and heavy solutions or one type for all 10 bases.
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There are no surprises other than CHC departing so early. Maybe the similar issues are still prevalent within the company that lead them to "be dissapointed" with SAR-H being cancelled.
This competition is still a value for money competition, whatver Crab may like to guess at. Look up the first Industry Day presentation available on the DFT UK SAR web page to confirm.
The 30 year SAR-H PFI (for that what it was in contract terms) was underfunded by at least £1Bn and as far as I know, the SAR-H IPT got a shock from all bidders when the first realistic bid prices came in. Its the reason the Bristow UK Rescue consortium pulled out early. The funds available over such a long period of risk was calculated to be too low to allow any safe prospect of making any money. Its one of the reasons the new contracts are 10 years max to help minimise financial risks to the contract. Its now nearly 4 years since the previous SAR-H bidders calculated their prices and much has happened since. Prices have gone up (think fuel and aircrew pay amongst many things), and will continue doing so unless this project gets sorted by March as planned.
Looking forward to moving to the S92. Culdrose was always fun to operate from!
This competition is still a value for money competition, whatver Crab may like to guess at. Look up the first Industry Day presentation available on the DFT UK SAR web page to confirm.
The 30 year SAR-H PFI (for that what it was in contract terms) was underfunded by at least £1Bn and as far as I know, the SAR-H IPT got a shock from all bidders when the first realistic bid prices came in. Its the reason the Bristow UK Rescue consortium pulled out early. The funds available over such a long period of risk was calculated to be too low to allow any safe prospect of making any money. Its one of the reasons the new contracts are 10 years max to help minimise financial risks to the contract. Its now nearly 4 years since the previous SAR-H bidders calculated their prices and much has happened since. Prices have gone up (think fuel and aircrew pay amongst many things), and will continue doing so unless this project gets sorted by March as planned.
Looking forward to moving to the S92. Culdrose was always fun to operate from!
Last edited by 4thright; 1st Jan 2013 at 00:23.
In 2001, the DfT issued a contract notice for provision of air-rescue helicopters at MCA bases. The dominant part of the notice read as follows.
"Aircraft Sikorsky S-61N Mk II (or equivalent capacity) with an all-weather, day/night capability. ... hover ... night ... endurance ... hoist ... FLIR ... GPS ... VHF ... MF/HF ... Training sorties required, up to maximum of 45 hours per month."
In 2004, the DfT again issued a contract notice for provision of air-rescue helicopters at MCA bases. The dominant part of the notice read as follows.
"Applicants must also provide, in respect of their company or consortium, FOUR (4) copies of a concise document no longer than 25 single sheets of A4 paper giving all of the following information:- (i) Company details including full company name and address; a contact name (and status); telephone number; fax number and e-mail address; length of time trading; VAT registration number; ... "
I detect a slight difference in approach.
"Aircraft Sikorsky S-61N Mk II (or equivalent capacity) with an all-weather, day/night capability. ... hover ... night ... endurance ... hoist ... FLIR ... GPS ... VHF ... MF/HF ... Training sorties required, up to maximum of 45 hours per month."
In 2004, the DfT again issued a contract notice for provision of air-rescue helicopters at MCA bases. The dominant part of the notice read as follows.
"Applicants must also provide, in respect of their company or consortium, FOUR (4) copies of a concise document no longer than 25 single sheets of A4 paper giving all of the following information:- (i) Company details including full company name and address; a contact name (and status); telephone number; fax number and e-mail address; length of time trading; VAT registration number; ... "
I detect a slight difference in approach.
More nerdy contract stuff.
The GAP (2013-2017) contract notice had the following financial information.
"The total estimated value of the North and South options together is between 200 000 000 GBP and 235 000 000 GBP."
"Excluding VAT"
The GAP award notice had the following financial information.
"Total final value of contract(s) Value: 158 433 543 GBP Excluding VAT"
"NRP10043Lot1 ... Value: 106 570 559 GBP Excluding VAT"
"NRP10043Lot2 ... Value: 51 862 984 GBP Excluding VAT"
The MAIN (2015-2026) contract notice had the following financial information.
Estimated value excluding VAT: Range between: 2,000,000,000 and 3,100,000,000 GBP"
"Lot No: 1 ... Estimated value excluding VAT: Range between: 1,200,000,000 and 1,800,000,000 GBP"
"Lot No: 2 ... Estimated value excluding VAT: Range between: 800,000,000 and 1,300,000,000 GBP"
"Lot No: 3 ... A bid which delivers the service at or in the vicinity of all the bases specified in both Lot 1 and Lot 2.
The old dead LONG SARH contract notice had the following financial information.
"Estimated value excluding VAT: Range: between 3 000 000 000 and 5 000 000 000 GBP"
However, before the process collapsed, figures of £6bn had been regularly publicised and figures of £7bn had started to appear. At least one member of the current government expressed major concerns about cost.
The GAP (2013-2017) contract notice had the following financial information.
"The total estimated value of the North and South options together is between 200 000 000 GBP and 235 000 000 GBP."
"Excluding VAT"
The GAP award notice had the following financial information.
"Total final value of contract(s) Value: 158 433 543 GBP Excluding VAT"
"NRP10043Lot1 ... Value: 106 570 559 GBP Excluding VAT"
"NRP10043Lot2 ... Value: 51 862 984 GBP Excluding VAT"
The MAIN (2015-2026) contract notice had the following financial information.
Estimated value excluding VAT: Range between: 2,000,000,000 and 3,100,000,000 GBP"
"Lot No: 1 ... Estimated value excluding VAT: Range between: 1,200,000,000 and 1,800,000,000 GBP"
"Lot No: 2 ... Estimated value excluding VAT: Range between: 800,000,000 and 1,300,000,000 GBP"
"Lot No: 3 ... A bid which delivers the service at or in the vicinity of all the bases specified in both Lot 1 and Lot 2.
The old dead LONG SARH contract notice had the following financial information.
"Estimated value excluding VAT: Range: between 3 000 000 000 and 5 000 000 000 GBP"
However, before the process collapsed, figures of £6bn had been regularly publicised and figures of £7bn had started to appear. At least one member of the current government expressed major concerns about cost.
Last edited by jimf671; 1st Jan 2013 at 14:59. Reason: Correcting minor typos carried over from govt docs.
Seven years’ ago this month, the MCA announced that CHC had won the Interim SAR-H contract with a mixed fleet solution of seven new delivery S-92 and AB139 platforms, operated from four UK bases with some 100 front and rear crew, engineers and support staff too, for a period of 5-years’ and all for just £100m.
Services Contract Award Notice
06/01/2006
II.2.1) Total final value of contract(s) Value 0
OR Lowest Offer
AND Highest Offer to be taken into consideration
IV.1) TYPE OF PROCEDURE Negotiated with a call for competition
IV.1.1) Justification for the choice of negotiated procedure without prior call for competition
d) The works/goods/services can be provided only by a particular tenderer for reasons that are technical
V.4.1) Initial estimated total value of the contract: 120,000,000, currency: GBP, Including VAT: ...
V.4.2) Total final value of the contract:
Value: (Blank! Not stated.)
OR Lowest offer:
/ highest offer:
The key problem with SAR-H was the intransigence of the IPT. UK Air Rescue pulled out for a considerable number of reasons, many of which were deal-breakers. Skulduggery through leaks was way down the list. Just a couple of the nuttier non-negotiable ones were:
The consortium carrying the risk of any Law changes over 32 years (would be funny when you consider who the customer was and who enacts Law changes if it wasn't so untenable);
The consortium agreeing to penalties for non-performance which would bankrupt the company in 9 days in the event of a fleet type grounding (thought possible over 32 years and in hindsight if you'd picked the EC225.......) which had to be backed by parent company guarantees (which none of the shareholders as listed companies would ever sign up to).
This explains why the cost was so high - every commercial company builds in "risk money" according to what they are being asked to sign up to. Even aside the deal breakers above, the general penalty ratchet was enormous and needed so much redundancy of equipment to make the risk low enough that the asset utilisation became not much of an improvement over Mil policy. Also add in the Falklands compulsion and it was easy to see why it was unaffordable as demanded.
At the end of the day a mature commercial operator just looks to make a reasonable market profit of 10-15%, not gouge the customer, particularly on a long-term baseload contract like this. The operations folk take equal pride as their Mil cousins and everyone wants to keep the customer happy. The IPT (and it seems a trait of the Mil procurement world, driven by some mega defence contractors) came from a defensive position first - "we're here to avoid being screwed" rather than letting naturally successful businesses with high service levels get on with doing it their way at much reduced cost through asset efficiency.
The consortium carrying the risk of any Law changes over 32 years (would be funny when you consider who the customer was and who enacts Law changes if it wasn't so untenable);
The consortium agreeing to penalties for non-performance which would bankrupt the company in 9 days in the event of a fleet type grounding (thought possible over 32 years and in hindsight if you'd picked the EC225.......) which had to be backed by parent company guarantees (which none of the shareholders as listed companies would ever sign up to).
This explains why the cost was so high - every commercial company builds in "risk money" according to what they are being asked to sign up to. Even aside the deal breakers above, the general penalty ratchet was enormous and needed so much redundancy of equipment to make the risk low enough that the asset utilisation became not much of an improvement over Mil policy. Also add in the Falklands compulsion and it was easy to see why it was unaffordable as demanded.
At the end of the day a mature commercial operator just looks to make a reasonable market profit of 10-15%, not gouge the customer, particularly on a long-term baseload contract like this. The operations folk take equal pride as their Mil cousins and everyone wants to keep the customer happy. The IPT (and it seems a trait of the Mil procurement world, driven by some mega defence contractors) came from a defensive position first - "we're here to avoid being screwed" rather than letting naturally successful businesses with high service levels get on with doing it their way at much reduced cost through asset efficiency.
Last edited by Non-Driver; 2nd Jan 2013 at 12:36.
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Lurving that post ND. IMO its about as spot on as it gets, including the last paragraph. My only addition would be to say that whatever the bidder might add for their risk contingency, its then compounded when the "customer" - particularly a paranoid HM Government one, then adds their own risk percentage on top to compund matters even more. In the midst of this top level and overwhelming financial driver it puts specification issues such as what radar the aircraft is equipped with way down the scale.Having flown SAR both in the MoD and civil now, I cant accept any suggestion that professionalism or ability to do the job is better in one or the other. However, on balance, and given the above issues, I believe the UK is wrong to commercialise SAR especially as the chosen route doesn't really offer better comparative value. Yes I think I might just have agreed with Crab! Well in that respect anyway.
Last edited by 4thright; 3rd Jan 2013 at 01:12.
Blimey! Happy New Year
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Helicopter rescue bidders cut to two
Extract from the FT
Helicopter rescue bidders cut to two - FT.com
The £3bn contest to run the UK’s helicopter search and rescue services for up to 13 years has been reduced to a race between two operators, after the government threw out a bid that would have cost the taxpayer a fifth more than at least one other.
The Department for Transport told British Columbia-based CHC Helicopter last month that it was no longer in the running.
The company was underbid by 20 per cent by one of its shortlisted rivals – Bond Offshore Helicopters, based in the UK, or New York-listed Bristow Group. According to a provision in the invitation to tender, this big a difference triggers dismissal.
One person close to the process said he was surprised by the size of the difference, given that all the operators should be able to secure financing for a similar cost, and that the prices of the helicopters were also unlikely to vary significantly between groups.
Helicopter rescue bidders cut to two - FT.com
The £3bn contest to run the UK’s helicopter search and rescue services for up to 13 years has been reduced to a race between two operators, after the government threw out a bid that would have cost the taxpayer a fifth more than at least one other.
The Department for Transport told British Columbia-based CHC Helicopter last month that it was no longer in the running.
The company was underbid by 20 per cent by one of its shortlisted rivals – Bond Offshore Helicopters, based in the UK, or New York-listed Bristow Group. According to a provision in the invitation to tender, this big a difference triggers dismissal.
One person close to the process said he was surprised by the size of the difference, given that all the operators should be able to secure financing for a similar cost, and that the prices of the helicopters were also unlikely to vary significantly between groups.
FT Article
The £3bn contest to run the UK’s helicopter search and rescue services for up to 13 years has been reduced to a race between two operators, after the government threwout a bid that would have cost the taxpayer a fifth more than at least one other. The Department for Transport told British Columbia-based CHC Helicopter last month that it was no longer in the running. The company was underbid by 20 per cent by one of its shortlisted rivals – Bond Offshore Helicopters, based in the UK, or New York-listed Bristow Group. According to a provision in the invitation to tender, this big a difference triggers dismissal.
One person close to the process said he was surprised by the size of the difference, given that all the operators should be able to secure financing for a similar cost, and that the prices of the helicopters were also unlikely to vary significantly between groups.
However, equipment usually represents just 20-30 per cent of search and rescue (SAR) costs, meaning bidders have scope to undercut one another in other areas. They will be looking for savings in the way they run bases, for example, or on whether training is conducted in or out of house and in the way pilots’ employment contracts are structured.
Moreover, because the DfT did not specify howmany aircraft it would require to replace the Sea King fleet retiring in 2016, some operators may have submitted plans that use fewer helicopters, bringing down annual costs.
Louise Ellman, chair of the transport select committee, has previously questioned the lack of public consultation, asking whether the privatisation plans could lead to more deaths at sea. OnMonday, she said those fears had not yet been allayed by ministers. “I amconcerned about howthe service might be affected,” she said.
This is not the first time CHC has come close to, but missed out on, the chance to run the bulk of search services in the UK. It led a consortiumthat was selected as the preferred bidder in a 2010 attempted privatisation. But that process – led by the Ministry of Defence – was cancelled after allegations of fraud; an investigation is under way.
Operating margins for such a service could be as high as 30 per cent, according to Gregory Lewis, an aviation analyst at Credit Suisse in New York. Groups interested in the UK contracts may opt for higher bids because of the level of risk they are taking on.
As well as the right to terminate a contract irrespective of performance and levy unspecified penalties, the government is imposing liabilities – if something goes wrong– at a minimum of three times the contract’s annual revenues, or about £300m, according to the person close to the talks.
That compares with much smaller provisions for rail contracts – although whether rail liabilities were sufficient was one of the questions in the scandal over the West Coastmain line bidding.
“There’s a lot of optionality built into the [SAR] contracts, so bidders will take a viewthat they should be conservative,” the person said.
CHC currently runs some SAR services for the UK government – in Scotland and on the southeast coast. The DfT is expected inMarch to select a winning bidder for the longer contracts, and is aiming for a completely privatised service by 2017.
The three shortlisted operators were selected froma list of 10 over the summer.
One person close to the process said he was surprised by the size of the difference, given that all the operators should be able to secure financing for a similar cost, and that the prices of the helicopters were also unlikely to vary significantly between groups.
However, equipment usually represents just 20-30 per cent of search and rescue (SAR) costs, meaning bidders have scope to undercut one another in other areas. They will be looking for savings in the way they run bases, for example, or on whether training is conducted in or out of house and in the way pilots’ employment contracts are structured.
Moreover, because the DfT did not specify howmany aircraft it would require to replace the Sea King fleet retiring in 2016, some operators may have submitted plans that use fewer helicopters, bringing down annual costs.
Louise Ellman, chair of the transport select committee, has previously questioned the lack of public consultation, asking whether the privatisation plans could lead to more deaths at sea. OnMonday, she said those fears had not yet been allayed by ministers. “I amconcerned about howthe service might be affected,” she said.
This is not the first time CHC has come close to, but missed out on, the chance to run the bulk of search services in the UK. It led a consortiumthat was selected as the preferred bidder in a 2010 attempted privatisation. But that process – led by the Ministry of Defence – was cancelled after allegations of fraud; an investigation is under way.
Operating margins for such a service could be as high as 30 per cent, according to Gregory Lewis, an aviation analyst at Credit Suisse in New York. Groups interested in the UK contracts may opt for higher bids because of the level of risk they are taking on.
As well as the right to terminate a contract irrespective of performance and levy unspecified penalties, the government is imposing liabilities – if something goes wrong– at a minimum of three times the contract’s annual revenues, or about £300m, according to the person close to the talks.
That compares with much smaller provisions for rail contracts – although whether rail liabilities were sufficient was one of the questions in the scandal over the West Coastmain line bidding.
“There’s a lot of optionality built into the [SAR] contracts, so bidders will take a viewthat they should be conservative,” the person said.
CHC currently runs some SAR services for the UK government – in Scotland and on the southeast coast. The DfT is expected inMarch to select a winning bidder for the longer contracts, and is aiming for a completely privatised service by 2017.
The three shortlisted operators were selected froma list of 10 over the summer.
Last edited by jimf671; 8th Jan 2013 at 20:13. Reason: Links expired.
Media Links
Britain’s Next Search-and-Rescue Helicopters: Civilian Contractors | Defense Industry Daily
CHC leaves UK SAR helicopter contest | Waypoint AirMed and Rescue Magazine
Aberdeen helicopter firms in battle for billion pound contract | Evening Express
UK MoD extends Sea King support deal | Flight
Minister visits new maritime coordination centre ... (Your new best friends?) | The News, Portsmouth
CHC leaves UK SAR helicopter contest | Waypoint AirMed and Rescue Magazine
Aberdeen helicopter firms in battle for billion pound contract | Evening Express
UK MoD extends Sea King support deal | Flight
Minister visits new maritime coordination centre ... (Your new best friends?) | The News, Portsmouth
Last edited by jimf671; 9th Jan 2013 at 17:44. Reason: Additional recent links.
"Instructions to Bidders
Procurement Timetable
Return of final tenders (Phase 4) - - - - 14 December 2012
Sign contract - - - - 22 March 2013"
That's 5 weeks ago today for the return of tenders. Has anyone heard anything?
I am hearing indicators for an end of April signing which is about 5 weeks late compared to the date in the September documents.
Procurement Timetable
Return of final tenders (Phase 4) - - - - 14 December 2012
Sign contract - - - - 22 March 2013"
That's 5 weeks ago today for the return of tenders. Has anyone heard anything?
I am hearing indicators for an end of April signing which is about 5 weeks late compared to the date in the September documents.
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4 week delay
I am hearing indicators for an end of April signing which is about 5 weeks late compared to the date in the September documents
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From helihub today.
The first of the four Sikorsky S92s arrived at Aberdeen Airport around 2pm today after a ferry flight from Prestwick. Serial 920166 and registered G-MCGA (presumably reflecting the involvement of the Maritime and CoastGuard Agency). We expect the other three will be 920167, 920169 and 920171, and these will no doubt be confirmed as they are delivered in the weeks ahead.
The first of the four Sikorsky S92s arrived at Aberdeen Airport around 2pm today after a ferry flight from Prestwick. Serial 920166 and registered G-MCGA (presumably reflecting the involvement of the Maritime and CoastGuard Agency). We expect the other three will be 920167, 920169 and 920171, and these will no doubt be confirmed as they are delivered in the weeks ahead.
"GROUND EMERGENCY SERVICE PERSONNEL"
For those of you who have submitted your CV to Bristow and Bond, in the hope of getting a piece of the action, please consider the following.
AIR-GROUND COLLABORATION
The following are the suggested benefits for continuous collaboration between SAR aircraft and MRT during Land SAR operations.
Contact with the incident location when MRT are already on-scene.
Access to local knowledge.
Latest information from the casualty or the casualty's companions.
Shortening of lines of communication to the primary Land SAR co-ordinating authority (police).
Allows MRT and police to marshal appropriate resources or stand-down surplus resources.
In conditions that prevent flying at the incident location, MR resources can be deployed by air to a point nearer the incident.
Makes additional mountaineering skills available to the aircraft to improve casualty and crew safety during air evacuation from challenging locations.
When aircraft fuel is low, allows remaining fuel to be used to contribute to the operation so that the operation can continue to advance while the aircraft is refuelling.
AIR-GROUND COLLABORATION
The following are the suggested benefits for continuous collaboration between SAR aircraft and MRT during Land SAR operations.
Contact with the incident location when MRT are already on-scene.
Access to local knowledge.
Latest information from the casualty or the casualty's companions.
Shortening of lines of communication to the primary Land SAR co-ordinating authority (police).
Allows MRT and police to marshal appropriate resources or stand-down surplus resources.
In conditions that prevent flying at the incident location, MR resources can be deployed by air to a point nearer the incident.
Makes additional mountaineering skills available to the aircraft to improve casualty and crew safety during air evacuation from challenging locations.
When aircraft fuel is low, allows remaining fuel to be used to contribute to the operation so that the operation can continue to advance while the aircraft is refuelling.
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12/00735/SCR_L | Search and rescue helicopter facility, associated with air sea rescue operations, comprising a hangar, workshops and ancillary space within a prefabricated two-storey building, plus associated hardstanding | Search And Rescue Stornow
Anything similar happening anywhere else at present?
Anything similar happening anywhere else at present?