Ministry posers tie down jet deal - Questions to competing vendors for one of the single-largest military orders

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  • Published 1.04.11
(From top) A Eurofighter Typhoon from the European Consortium, the French Dassault Aviation’s Rafale and the Lockheed Martin’s F-16 IN Super Viper

New Delhi, March 31: The Indian Air Force’s seven-year effort to buy 126 medium multi-role combat planes — one of the single-largest military orders in the world — is for now mired in a flurry of questions that the defence ministry has asked the competing vendors.

This could result in a delay in signing the contract even after the IAF has completed evaluating and ranking the six aircraft in the competition, a senior air headquarters source has said.

Last month, at the Aero India exhibition in Bangalore, Air Chief Marshal Pradeep Vasant Naik said: “The contract negotiation committee (CNC) is likely to start in a week or two and the contract is likely to be signed by September.”

Then on March 10 he said: “The cost negotiation for MMRCA will begin by the end of this month. I expect the contract to be signed before I retire from service in July this year.”

But today, on the last day of the current financial year, the air headquarters officer said there was no intimation from the Defence Acquisitions Council (DAC) on the choice of the aircraft.

Indeed, in the defence ministry itself, there are conflicting views on whether a CNC will at all be required.

Defence minister A.K. Antony insists that the acquisition of the aircraft be transparent and comply with the Defence Procurement Policy (DPP). The DPP allows for both — the formation of a CNC or the selection of major procurements “for strategic considerations” without the lengthier process of bargaining over the price.

Eight global powers are backing their respective companies in the high-stakes game to win the Indian Air Force order that looks set to top $ 12 billion.

The US is supporting Lockheed Martin and Boeing with the F-16IN Super Viper and the F/A-18E/F Super Hornet; the UK, Germany, Italy and Spain are backing the Eurofighter Typhoon; France has pitched Dassault Aviation’s Rafale; Sweden, the Saab Gripen and Russia the RAC MiG 35.

When Naik said in Bangalore that he expected the contract to be signed by September, he qualified it by adding that “dissatisfied vendors put a spoke in the wheel” — meaning that a losing contender may manipulate allegations that would lead to long-winded investigations and further hold-ups.

This is worrisome for the IAF because its fighter fleet is being steadily depleted.

The IAF has an “authorised” strength of 42 fighter squadrons. Unofficial sources say that it is making do with just 30 now and in three years that could come down to 27, blunting its numerical superiority over Pakistan’s (and considerably less than that of China’s).

The IAF completed the flight evaluation trials by a crack team of test pilots in Bangalore, Jaisalmer and Leh and the weapons’ firing trials in the manufacturers’ choice of ranges last year. It submitted its report and evaluation of the aircraft on nearly 600 counts in July.

The IAF officer said that the process required the flight evaluation trial (FET) report to be examined at first and then a study of the commercial, offset (re-investment) and transfer of technology offers. The ‘offset’ requirement for the contract lays down that the vendor must source and/or plough-back 50 per cent of the value of the order (of more than Rs 42,000 crore) from Indian companies.

The commercial bids are due to expire at the end of April this year. If a choice is not made by then, the bids will have to be re-submitted and the vendors will have to be asked to keep it valid for another year till April 2012.

The tender requires that deliveries of 18 of the 126 aircraft be made in “flyaway” condition. The balance 106 are to be manufactured under license and transfer of technology in India, inevitably with the defence public sector Hindustan Aeronautics Limited (HAL) in 36 to 48 months from the signing of the contract.

The Requests for Information (RFI) for the aircraft were first sent out in 2004.

Already, IAF headquarters has noted with concern, there have been disconcerting events that threaten the process of the procurement. In December, a file on the “offsets” proposal went missing till it was found on a South Delhi street.

Last month, the country manager of one of the possible vendors, Dassault Aviation (Rafale), was suspected of illegal liaisoning with an IAF officer in Bangalore.

The defence minister himself is uncomfortable with US Ambassador Timothy Roemer’s statement that the India-US strategic partnership hinged largely on an American company winning the contract. And a UK audit report has found that there is a shortage of spares that limits flying time of pilots on the Eurofighter Typhoon.

IAF sources say that while prudence demands that the decision be a studied one, they worry that the longer the process, the more there could be controversies even as the fighter fleet gets depleted.