New radar system in the works

May 10, 2012 by Journal of Telecommunications System and Management

BACK TO square one, the government is looking to acquire a new air traffic management system after terminating the contract for the purchase and installation of LEFCO.

Permanent secretary of the Communications Ministry Alekos Michaelides said yesterday the government, in collaboration with the Cyprus Telecommunications Authority (CyTA), is “exploring” air traffic control systems.

Michaelides said the government is looking at off-the-shelf systems that are “tried and tested.”

There would be no experimentation this time round, he added, alluding to the LEFCO debacle. The whole process, starting from the launch of tenders, would take three to four years.

In the meantime, said Michaelides, Civil Aviation would be upgrading its current primary traffic control system and is installing a new backup system. So the current infrastructure would ensure the smooth running of air traffic control for the next four to five years.

The contract to buy and install LEFCO was signed in 2003 and the system was initially earmarked for a September 2005 delivery. Its delivery had been delayed time and time again over technical and compatibility issues. LEFCO has cost taxpayers some €18 million without actually working, and this after a series of trial runs.

The government recently instructed CyTA, acting as subcontractor for the project on behalf of the state, to redeem the bank guarantee stipulated in the contract with the manufacturers of LEFCO, in the event of termination.

CyTA next proceeded to notify manufacturers Selex, an Italian company, of the termination of the contract. CyTA also informed the Bank of Cyprus to redeem the bank guarantee – worth some €18 million – on the contract.

But manufacturers Selex, an Italian company, filed for and obtained an injunction from a Milan court to halt the confiscation of the guarantee on the grounds that the contract was wrongfully terminated. As a result, the sub-guarantor of the guarantee, Italian bank HSDC, has blocked the transaction with the Bank of Cyprus.

Unless the Bank of Cyprus coughs up the money, taxpayers will have paid €18 million for nothing, although the true cost of the LEFCO project – including testing and man-hours—is believed to be closer to €30 million.

When Communications Minister Efthymios Flourentzos announced a month ago that the contract with LEFCO was being terminated, he also revealed intentions to order an administrative probe into the nine-year saga.

But yesterday, briefing MPs of the House Watchdog Committee, Flourentzou said that launching a probe now might jeopardize the ongoing court case in Italy concerning the €18 million bank guarantee. That’s presumably because any findings pointing to mismanagement on the Cypriot side may give legal ammunition to the manufacturers of LEFCO.

Flourentzos said, however, that an investigation has not been ruled out entirely.

Calling the whole LEFCO affair “a scandal,” DISY deputy Soteris Sampson said that he had been warning since 2003 that the manufacturers’ radar system was problematic.

“In 2003, even before the contract was awarded to Selex, I had revealed a report by Eurocontrol which stated that their radar system displayed problems when it was installed in another country. Yet despite these indications they [authorities at the time] still went ahead and awarded the contract to Selex,” Sampson told the Mail.