Procurement: What is This Pre-Owned MiG-27 Worth?

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March 27, 2007: There was a government investigation in Sri Lanka recently, to try and determine if the prices paid for second hand MiG-27 fighter bombers over the past seven years, had been inflated by corruption. The report concluded that there was no corruption, or at least none that could be detected. The numbers from the report seems to bear this out.

Sri Lanka, which has been at war with its separatist Tamil minority for over a decade, needed some easy-to-use, and easy- to-maintain, ground attack aircraft. Ukraine had lots of old, Cold War era, MiG-27 fighter bombers. These were well worn aircraft, with only about a thousand flight hours left on them. But the Ukrainians were willing to sell them cheap, and, as a bonus, offer inexpensive refurbishment services, that would add 2-3,000 flight hours to the aircraft. The first batch of seven MiG-27s (one was a trainer version) were bought between 2000-2003, for an average $1.72 million each. The aircraft performed well, even though two crashed and one was destroyed on the ground. In 2007, another four, of more recent vintage, were purchased, for $2.5 million each. Some of the older aircraft were also refurbished.

The major problem the anti-corruption crowd had was that it was difficult to put a fair price on these Cold War surplus warplanes. Ukraine had inherited thousands of these warplanes (including hundreds of MiG-27s) in 1991. The Soviet Union dissolution deal had military equipment belonging to whatever new country the stuff was in, when the Soviet Union dissolved into 15 new countries (including Russia, and Ukraine). For decades, Ukraine had been the major staging area for a possible invasion of Western Europe. Thus lots of warplanes were parked there. Ukraine had no need for most of these, and there was not a big market for second hand Russian warplanes in the 1990s. But some of the better stuff was kept in decent shape, so Sri Lanka was able to get some proven combat aircraft at a fraction of what any alternatives (new or used) would cost.

That said, Ukraine could have sold the aircraft for less, and still come away with a profit. These aircraft were headed for the recycling facility in a few years anyway. And the refurbishing contracts meant months of well paid work for hundreds of Ukrainians.

The anti-corruption investigators could not find any decisive evidence of shady dealing. But the situation still left plenty of opportunity for payoffs. After all, Ukraine wasn't the only country with pre-owned MiG-27s. In the end, however, Sri Lanka got their moneys worth. They defeated the Tamil rebels, largely because the air force now had a potent and reliable ground attack aircraft.

 


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