Turkey imposes $183 million penalty on Boeing over delivery delay

Turkey has demanded $183 million worth of services from U.S. aircraft maker Boeing as compensation for the late delivery of airborne early-warning and control (AEW&C) aircraft, the Hurriyet Daily News reports quoting an official as saying.

The Turkish Defense Ministry has requested an increase in the start-up support period from an initially planned two years to five years, as well as three years of software maintenance service and close to $32 million in spare parts, in return for canceling the $183 million delay penalty and accumulated interest, said Cemal Evci, a project director at the Undersecretary for Defense Industries (SSM).

He said the Boeing contract had been valued at $1.385 billion but that there had been a $59 million reduction, as some of the requirements were not met. He also noted Turkey had paid $637 million to Boeing in advance.

Under a July 23, 2003, contract, Boeing was to develop and deliver four AEW&C aircraft to the Turkish Air Force by 2008.

However, the first of the aircraft slated for deployment along the country’s Syrian border could only be delivered recently.

The AEW&C aircraft had arrived in Turkey for acceptance tests at the end of January and tests are to be followed by an inauguration ceremony Feb. 21 in the Central Anatolian province of Konya.

Last year, Defense Minister İsmet Yılmaz had said Turkey would impose sanctions on Boeing for the delays, and the supplier and buyer parties have been attempting to reach a consensus over the cause for the delays for some time.

Some officials had said there were disagreements over whether the delays stemmed entirely from the company’s shortcomings, or whether they were due to extra features that Ankara demanded be installed on the aircraft.

In yesterday’s remarks, Evci said “technological difficulties in developing some of the high-quality features demanded by Turkey” led to the six-year delay.

The program involved the delivery of the 737-700 airframes, ground radars and control systems, ground control segments for mission crew training, mission support and maintenance support.

The 737-700 aircraft are to be used as part of Turkey’s NATO capabilities. An AEW&C system is an airborne radar system designed to detect aircraft, ships and vehicles at long ranges, and control and command the battle space in an air engagement by directing fighter and attack aircraft strikes.

Used at a high altitude, the radars on the aircraft allow the operators to distinguish between friendly and hostile aircraft hundreds of miles away.