A dose of realism
The Rafale purchase controversy
- Published 27.12.17
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There is something about the procurement of military equipment from western commercial sources that generates public interest far greater than its financial or strategic content. The entire spectacle of open tendering, nail-biting selection, followed by endless negotiations - all played out in the public domain - does little justice to the very serious business of dealing with a weapon system for the battlefield which, in reality, should remain strictly confidential, if not totally secret. In rare cases of contracts approaching fruition, chances are that at some politically opportune time, they would also become the subject of political controversy with scarcely any concern about the adverse impact this will have on national security, the operational capability of the armed forces or, indeed, on their morale.
The latest to join this league is the truncated MMRCA purchase of 36 Rafale aircraft from Dassault Aviation against the Indian air force's requirement of 126 aircraft, a process that was initiated in 2007 as a commercial bid, but remained deadlocked till a new government took charge, scrapped it, and took a decision to go by the government-to-government route. Political opponents have now fired a salvo, alleging that the final contracted unit cost per aircraft was far greater than the one that had been negotiated by the previous government and that due procedures laid down had been violated. This, in turn, has generated a freewheeling public debate - much of it based on limited technical knowledge and perception rather than on hard facts.
As someone who has spent nearly a decade in Air HQ in the planning and procurement branch in various capacities, including its head as deputy chief of air staff, was part of the ministry of defence team that negotiated the Anglo-French Jaguar contract in the late 1970s (which, at the time, had more than its share of speculative media debate and corruption criticisms), observed at close range how the United Kingdom and the French military aerospace industries function and been a part of numerous MoD negotiating teams thereafter, one feels morally bound to inject some realism in this self-defeating debate. This is because whatever may be the political or moral compulsions driving it, at its very least it undermines the confidence that the IAF rank and file will have in its own military leadership and adversely affect morale. That is why the IAF chief has been constrained to take the unusual step of publicly stressing that it was a government-to-government contract, and that it was a better deal with lower cost implications than the earlier MMRCA contract negotiations.
Even in commercial contracts that relate to modern combat aircraft and associated weapons and systems, national governments and strategic security interests of both seller and buyer countries are invariably involved. National governments of aerospace suppliers hence keep a benign check on their own industries - to promote their international sales footprint - as also on their industrial practices to prevent diplomatic embarrassment. All suppliers also require that their costs are treated as 'commercially confident' information for the buyer only. In the event of such contracts being backed through a government-to-government understanding,these commitments take on a more formal role.
Unlike many stand-alone products, it is too simplistic a notion to calculate costs per aircraft, because without ground and test equipment, weapons, spares support, repair facilities and a host of other essentials, the aircraft has no utility as an operational weapon system . Any cost comparisons to be meaningful must hence be based on the total system cost on a like-to-like basis. If a realistic analysis were to be attempted comparing the earlier MMRCA proposal and the truncated renegotiated one, this would need a detailed cost-benefit analysis by a body of specialists, who, in the end, would still be left guessing about many subjective issues that have significant value in the operational domain but are not readily quantifiable in financial terms.
In this context, two examples merit mention, although there would be many more. According to Nitin A. Gokhale's book, Securing India the Modi Way: Pathankot, Surgical Strikes and More, Dassault Aviation is now contractually committed to provide performance-based logistic support for five years to two squadrons against the earlier proposal to support only one squadron. Further, it is committed to ensuring that a minimum of 75 per cent of the IAF fleet will always be available for operations. These contractual commitments are a major advantage and, to one's knowledge, have never been undertaken by any earlier supplier to the IAF, including the Hindustan Aeronautics Limited. For those looking for juicy headlines, these may be mundane issues, but for a combat force these have tremendous operational and support value and cannot be quantified in monetary terms. To reduce this debate to higher unit costs being paid without weighing in the operational returns not only exposes our hollow understanding of operational imperatives but is also an unfortunate political red herring that needs a swift burial.
This brings us to the issue of due procedures not being followed. The Bofors scandal has resulted in a defence procurement eco- system within the South Block where procrastination has became the norm. Few in the decision-making chain would venture to take decisions for fear of falling prey to allegations of wrongdoing. The bureaucratic shield for this is hence the defence procurement procedure, first issued in 2002 and now in its ninth edition. Rather than using this as a procedural guide, it is being treated as a policy cast in stone. In the complex world of defence trade, lack of flexibility on the part of those negotiating purchases is a sure recipe for stalling any acquisition proposal as there are innumerable variables. This explains why our armed forces are hopelessly behind in executing modernization plans.
Two fundamental errors were made by MoD while issuing the initial tender. First, the bidder was expected to take ownership for the 108 aircraft to be produced by HAL, a demand that is patently impractical. Second, competitive commercial bids were evaluated on the basis of production man-hours as indicated by bidders in their respective production environments without applying any multiplication factor in case of HAL manufacture (a factor that was even applied to earlier licence programmes like the Jaguar). In the event this was determined by HAL as 2.7 times and would have upset calculations that had led to the initial choice of the lowest bidder.
Instead of recognizing these lapses and making amends in a transparent way through policy intervention, the MoD let procedure prevail over operational imperative. To quote from Gokhale's book, "Parrikar told Modi it would be legally untenable to go through with the MMRCA contract since the process had been completely vitiated thanks to Antony's indecisiveness and a crucial oversight in the original terms of the contract."
The one exception to the Bofors syndrome thus far has been that at least it did not hamper government-to-government procurement contracts. This would explain how, since 1987, the armed forces have managed to retain some semblance of preparedness. It would now appear that even this last avenue for modernization is being targeted by an attack on this government-to-government Rafale programme.
We have a constitutional authority, the comptroller and auditor general of India, to look into the integrity of defence purchases. Having been at the receiving end of its audit of the Jaguar procurement decades ago, this writer can vouch for its thoroughness and professionalism. People's representatives would be fully justified in asking for a CAG audit if there are genuine doubts. But by raising this on the electoral battlefield, we have ended up compromising the cause of the real one. Indian democracy should be made of sterner stuff.
The author is a retired air marshal of the Indian Air Force.