Gulfstream declined to buy government jet for scrap

€45 million jet sold for just €418,000 as maintenance costs escalated

30th September, 2016
The jet in 2006 Pic: RollingNews.ie

Official efforts to dispose of the government's Gulfstream jet fell flat when the manufacturers refused to buy it for scrap.

The disclosure, contained in the Comptroller and Auditor General's report on public services for 2015, reveals the decision to sell.

This came in August 2014, came as the government faced a €1.8 million bill for ongoing maintenance of the ageing aircraft – first commissioned in 1992.

In 2010, in the teeth of the financial crisis, an annual cap of €400,000 was put on maintenance for the jet, with a decision that it would be grounded if faced with costly repairs.

In July 2014, an estimate of €2.5 million to overhaul both engines precipitated the decision to sell.

Officials were told that the jet had "had its day" by an aviation consultancy.

The consultants said an immediate sale would likely be to a parts dealer, in which case it would be worth in the ‘sub $1 million range’ – or less than €750,000 at the prevailing exchange rates.

Alternatively, the jet could be used as a deposit against another aircraft.

The following month a group of Department of Defence officials and Air Corps officers was dispatched to the US to effect a sale.

Gulfstream declined an invitation to submit an offer to acquire the jet for salvage and to buy back spare parts held in Baldonnel aerodrome.

The department decided against the normal process for major asset disposal, of public tender or auction, on security and practical grounds.

In December 2014 the government declined an bid of €836,000 from Journey Aviation for the jet in a "serviceable condition" because of the additional costs of bringing it up to scratch.

In January 2015 an offer of €418,000 was accepted for the jet, without any further repairs.

Eighty-seven spare parts, bought at a cost of €1.4 million, were later sold to the same buyer for €53,000.

The Gulfstream jet entered service in 1992, at a cost of approximately €45 million, which include lease payments for the first ten years.

The C&AG report raps the Department of Defence for not formally appraising the costs of returning the jet to serviceable condition against the benefits that would accrue from its use for ministerial travel in an island nation.

The report recommends that in future "discounted cash flow analysis of life cycle costs is undertaken for all major items of equipment, as a framework to assist decision-making".

However, the accounting officer did not agree in this case, in the light of the escalation of costs.

The C&AG points out that the rationale for the decision to deviate from a competitive sales process should have been documented, in the interests of transparency.

The report finishes "In the absence of a competitive sales process, it is difficult to conclude whether the best value was obtained."

In a separate chapter the report pinpoints the figure for saving on social welfare fraud after the introduction of the public services card at €2.5 million by July 2016.

This figure is based on the suspension of welfare payments in cases where an individual invited to make a SAFE [Standard Authentication Framework Environment] registration did not do so.

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