Bulgaria's government terminated its contract with Israeli company Elbit Systems on the modernization of MI-24 and MI-17 helicopters.

The defense ministry released a statement Wednesday saying that the step was the only outcome after two rounds of failed negotiations.

Elbit Systems and Bulgaria's Defence Ministry signed the contract for the upgrade of the country's helicopters on December 2 2005. Enforced after tough opposition from the ousted bidders and two supreme court rulings, the Israelis committed to upgrade 18 Bulgarian helicopters for EUR 57.33 M in three years.

By the end of 2006, the Israelis had to complete the upgrade of one MI-24 and two MI-17 helicopters but none of it has been done.

On 21 February 2006, Elbit Systems signed a contract with TEREM aviation repair plant for upgrading the two helicopter series of Bulgarian Army.

Under the BGN 13 M contract the repair works will be executed in TEREM's branches in Sofia and Plovdiv. Some 300 employees will be involved in the repairs, the Israeli company then said.

The project for the modernization of the Bulgarian helicopters is one of all the 11 projects for upgrading of the Bulgarian army in line with the NATO standards.

The defense ministry in Sofia wanted that Elbit Systems reimburse a total of EUR 12 M plus forfeits of nearly EUR 3 M.