Poland's Apache deal: True cost could reach $20 billion

The answer to how much the Apache helicopters cost Poland seems straightforward. For two years, information about the helicopters was accompanied by an amount approved by the State Department, which gave the go-ahead for the transaction.

However, this was not the final price but the maximum price approved by the American administration: the upper limit for the executive agreement, which, as shown by past practice, is usually significantly lower. That was also the case here.

The executive agreement (LOA, Letter of Acceptance) set the payment for the helicopters at $10 billion. But even this amount doesn't explain much. Why?

Military equipment orders usually come with information about their price, which leads to calculations where the value of the agreement is divided by the number of units acquired. This provides a value that is easy to compare in assessing whether Poland, the United Kingdom, or some other country paid more for a given weapon system. The problem is that such a comparison explains little.

This arises from the fact that equipment purchases typically include a logistics package, training, spare parts, and even weapons. This was also the case here—"96 Apache helicopters" actually includes nearly a hundred machines, along with an undisclosed stockpile of weapons for them, a parts package, and personnel training.

Already at this stage, the amount starts to grow because—although Poland bought a "training package" with the AH-64E to accelerate the readiness of Polish machines—there was also a separate agreement for training Polish pilots in the United States and the leasing of eight machines, which will allow further training in the country.

The avalanche of costs, however, occurs when considering not just the purchase price (even with the additional services package), but the operational cost calculated for the entire lifecycle of a given weapon. This includes not only training and overhauls but also the construction of infrastructure specific to the equipment type or MLU (mid-life upgrade), performed halfway through the equipment's lifecycle.

The modernization of Polish F-16s illustrates the high costs of these actions. In 2003, for 48 machines in the F-16C/D Block 52+ Advanced variant, Poland paid $3.5 billion. More than 20 years later, the MLU modernization package, which will upgrade Polish machines to the latest F-16V standard, was priced at (maximum) $7.3 billion.

This price includes not only the reconstruction of the airplanes themselves but also weapons necessary for conducting flight tests, spare parts, software support, and the logistics of various parts deliveries. Again, this makes it impossible to clearly indicate how much will be paid for the modernization of a single unit.

Australia, a few years ago, attempted to estimate the total costs of purchasing and operating attack helicopters while analyzing the justification for selecting a new attack helicopter or retaining the ones already in service—the contract was in competition with the AH-1Z Viper, EC665 Tiger ARH, and AH-64E. Ultimately, Canberra decided to retire 22 operated Tigers and purchase 29 AH-64E helicopters for $4 billion.

The Defence 24 service also presented a report on the total costs that Poland will incur in connection with the purchase of Apache helicopters, based on data disclosed by the British Ministry of Defence.

The United Kingdom, with 50 units of the AH-64E, estimates that acquiring (in this case, reconstructing from the AH-64D version) 50 helicopters will cost $2.3 billion, and the annual operating costs, excluding infrastructure and weapons costs, amount to about 1/30 of the purchase price.

Based on this data, Defence 24 states: "it can be estimated with a fairly high probability that the cost of maintaining the helicopters will be at least equal to their purchase cost and may even exceed it depending on the adopted exploitation model and the number of modernizations."

In practice, this means additional costs ranging from $10-20 billion (depending on whether Poland decides on MLU in the future), which—in the case of the upper limit—could reach $700 million annually. Therefore, negotiating favorable offset agreements or the widest possible range of overhauls and operational work carried out by Polish industry forces is crucial.

Thanks to these negotiations, Military Aviation Works No. 1 in Łódź will be able to conduct inspections and repairs of some AH-64E components. The Dęblin branch of WZL1 will gain competencies to overhaul the T-700-701D, CT7-2E1, and CT7-8E engines, used not only in Apaches but also in S-70i Black Hawk, AW101, or AW149 helicopters. This provides a chance that a significant part of the expenses related to the operation of the purchased helicopters will remain in the country.