A diplomatic spat between France and Poland has resulted following the latter’s decision to hand over a US$3.5bn helicopter deal that was mooted to be in the bag for France’s Airbus to rival US company Lockheed Martin.

In April 2015, Poland selected Airbus Helicopters’ bid to modernise its helicopter fleet with 50 new H225M caracal multi-roles. The provisional deal was signed by the former government and opposed by the current ruling party, Law and Justice (PiS). Earlier this month, new prime minister Beata Szydło, who has been in power since October 2015, scrapped the deal and awarded the contract to Lockheed Martin for black hawks instead, citing poor value in terms of offset work for locals.

France and Airbus have reacted with fury. The French government has said it will review its defense relationship with Poland, and François Hollande cancelled a presidential visit to Warsaw that was scheduled for October 13.

Meanwhile, Airbus has written an open letter to the Polish prime minister and threatened to seek ‘remedies’ for misleading processes and allegations regarding its bid. The company argues that its offer would have generated more value in Poland than the revenues that would have been generated for Airbus Helicopters through the contract. It says the project would have led to the creation of 3800 jobs in Lodz, Radom and Deblin.

Airbus says it offered offset contract above the net value of the supply contract for the 50 helicopters, which was valued at PLN10.8bn.

“The ministry of development required Airbus Helicopters not only to compensate this [net] value through offset, but also to compensate an additional 23% corresponding to Polish VAT, to stay in Poland, leading to a total offset value of PLN13.4bn,” says the letter. “Although compensation of a value added tax through offset is not standard practice, Airbus Helicopters agreed to compensate this gross value.”

Further Airbus adds that its plans would have transformed the maintenance plant in Lodz into a “world-class” production facility.

Poland says that Lockheed and Italy’s Leonardo, which also lost out to Airbus in the original bidding, will now be asked to supply helicopters from their existing plants in Poland. Speaking during a visit to a helicopter repair factory following the announcement, Szydlo said the award had previously ignored the capabilities of Lockheed’s Sikorsky plant in Mielec and Leonardo’s Swidnik facility. The current government wants the army to be equipped with Polish made kit, she added.