Gaping holes in MMRCA elimination decision

The process leading up to the decision by the Indian Ministry of Defense to issue invitations to eliminate four of the six companies in the contest to win the Indian Air Force tender for 126 Medium Multi Role Combat Aircraft (MMRCA) has large holes in its standard of diligence.

The process leading up to the decision by the Indian Ministry of Defense to issue invitations to eliminate four of the six companies in the contest to win the Indian Air Force (IAF) tender for 126 Medium Multi Role Combat Aircraft (MMRCA) has large holes in its standard of diligence.

Only the the French Dassault’s Rafale and the European Eurofighter Typhoon were invited to extend their commercial bids, with the Russian MiG-35, the Swedish SAAB’s Gripen, Boeing’s F/A-18 Super Hornet and Lockheed Martin’s F-16, all left out of the contest.

While much has been written about this decision, the news of which was first broken by StratPost, questions have surfaced in the subsequent two weeks, that show crucial gaps in the diligence of the process followed by the ministry. Many of the issues arising from these questions have been earlier reported and analyzed by StratPost.

The tender process entailed the examination of the aircraft on offer on three key aspects. Firstly, the IAF was required to conduct a technical evaluation of the six aircraft, the report for which it submitted after completion last July.

And while the two selected aircraft may have performed the best according to the IAF’s report, at the end of a process which the IAF chief of staff Air Chief Marshal Pradeed Vasant Naik has often said he would like to have patented, Ajai Shukla has reported in the Business Standard that the Technical Oversight Committee, mandated to audit the evaluation process conducted by the IAF, still has to complete its work.

Unfortunately, this is not the only part of a tender process that has been subject to shortcuts or simply left incomplete. There is much more that remains to be desired from the process followed by the ministry, to qualify the decision as one that is strategic and the result of due process.

The defense procurement process is constructed to be strategic in nature. Not only does it look at the technical aspects of weapons and equipment, it also takes the issue of creation of indigenous capabilities for defense production into account. Considering the value of the order, the idea here, was, as much, to expand existing capabilities and get the best value for money.

This decision mandated an assessment of all aspects of the proposed procurement before the elimination that took place a little more than two weeks back. While the IAF test drove all six aircraft and submitted its assessment of their capabilities, it was the ministry’s responsibility to examine two key aspects of the proposed order: the issue of offsets and that of transfer of technology.

Offsets

The 50 per cent offset requirement of the tender requires the winning vendor to plow back half the value of the order into Indian defense industry. This is important as it has the potential to boost domestic industry beyond the capacities of the existing virtual monopolies exercised by government-owned defense companies, better known as Defense Public Sector Units (DPSUs).

The six vendors had originally submitted their offset proposals in July, 2008. And there the matter rested, until the IAF submitted its technical evaluation report, last summer.

It was only after that, in September, that the ministry woke up to the need to evaluate the respective offset proposals and decided to inform all the vendors of inadequacies in their proposals, for which prescriptions were promised. But even after repeated rescheduling, the ministry continued to dither on stipulating requirements for fresh offset proposals from vendors.

The Curious Case of the Missing Offset File

Early this year, it was reported that a file containing details of the offset proposals of some of the vendors was mislaid, and bizarrely, later found on the side of a major road in Delhi. This issue was later brushed aside by the Defense Minister, Arackaparambil Kurien Antony.

With the date of the expiry of the commercial bids looming once again, it attempted to cut-short the offset evaluation process by revising the Defense Procurement Procedure (DPP), to enable itself to issue invitations to offer offsets proposals to only those vendors validated as technically qualified by the respective service, and qualified to be invited for the opening of their respective commercial bids. To be able to apply it to the MMRCA tender, which is governed by the DPP of 2006, the ministry also intended to get approval from the Law Ministry to apply the changes with retrospective effect. This, however, did not transpire successfully.

Bangalore Air Show Bribery Scandal

The Deccan Herald broke the story of an IAF officer having extorted bribes from the French company Dassault for preferential display space for the Rafale at the Bangalore Air Show in February. While the officer is currently the subject of a court martial, the Dassault representative in India was reported to have been barred from IAF Headquarters for not having reported the matter to the IAF, before complaining to an official in the ministry.

The defense minister later issued warnings to the IAF against succumbing to ‘corrupt practices indulged by vested interests in the garb of aggressive marketing’.

Then, perhaps as result of pressure from Air Chief Marshal Naik, it suddenly gave the vendors two weeks to resubmit their offset proposals in the first week of April, something with which all six vendors complied.

But a day before the commercial bids of the six vendors were to expire, news broke of the decision to invite only two of the six vendors to extend the validity of their bids. The ministry says this decision was based purely on the technical evaluation report conducted by the IAF, submitted nine months back. If the four vendors failing to make the shortlist did so on the basis of the technical evaluation report, it remains unclear as to why the IAF and the ministry waited until a day before the expiry of the commercial bids to invite only two vendors to extend the validity of their bids. It seems obvious, this was done to present them with a fait accompli.

Presumably, the fresh offset proposals submitted by the six vendors at the end of this gestation period had no bearing on the decision. It seemed at the time that the ministry was planning to complete the offset evaluation process in two weeks, something it had failed to do in almost three years. It is now apparent that the request for the resubmission of offset proposals was a mere formality, intended to get the offset resubmission issue out of the way, since, it was a prerequisite for opening the commercial bids, it was required of all the vendors according to the DPP, and since knowledge of all of this was in the public domain.

After the decision was announced, the ministry said ‘offset negotiations’ were underway. This obviously questionable timing and the apparent bad faith of this act notwithstanding, the business of negotiating offsets is difficult to understand. The ministry has to evaluate the respective offset proposals and decide them to be compliant with the stipulated requirements, or otherwise. There is little to negotiate here.

Transfer of Technology

At the same time, a day after the decision was reported, the ministry also said that proposals for transfer of technology would be examined after the opening of the commercial bids.

Once commercial bids are opened, the lower of the two remaining bidders will be the evident winner of the order. It is difficult to be sure that the winner’s proposal for transfer of technology will be acceptable to India. Further, once the winning bid is apparent, the winner will have no incentive to provide competitive terms for transfer of technology.

Technology transfer is important as it is meant to ensure India gets access to the latest of combat aircraft technologies. Naturally, this transfer of technology and intellectual property will come at a cost. In the absence of any competition on the issue of technology transfer, with the lowest bid determined, the winner will have no incentive to either acquiesce to reasonable costs for the transfer nor have any reason to show any great readiness to transfer as much technology as India requires.

DPP, Transfer of Technology Guidelines, 1(j)

Although, not desirable, some of the components/ process specifically developed by the OEMs (Original Equipment Manufacturers) for use in the manufacture of licensed product may be classified by them as `Proprietary’ and not included within the scope of TOT offered to the Production Agency.

The deficit of logic in the process followed by the ministry is apparent. Even if we assume that the offset proposals of the two selected vendors will be found compliant, it is difficult to be sure that wranglings over costs and level of transfer of technology will not ensue after the opening of the commercial bids. There is no question it would have been wiser to assess the proposals for offsets and technology transfer before the announcement of the de facto shortlist.

Questions for the IAF, too

There are questions that can be asked of the IAF, too. There is broad, but private acknowledgement, by all stakeholders involved in the MMRCA tender process, that none of the six aircraft are actually completely compliant with the 643 parameters listed in the Air Staff Qualitative Requirements (ASQRs) of the IAF. It is difficult to understand how a distinction was made between the two aircraft getting passing marks and the four failing to make the grade. If it is a matter of comparative compliance, the DPP, for one, does not easily provide free passes.

AESA Radar

When the issue of specific key requirements like the presence of an onboard Active Electronically Scanned Array (AESA) radar is examined, it is found that both the Eurofighter and the Gripen are sourcing this radar from the same company, Selex Galileo. While the former is to get the larger CAESAR (CAPTOR Active Electronically Scanned Array Radar), the Swedish fighter will receive the Raven. Both companies have tested their radars and are expected to have it operational soon. Likewise, Rafale has tested the Thales RBE2 AA and will have it operational soon.

But both US aircraft, the F/A-18 Super Hornet and the F-16 have operated AESA radars for many years, now. The Russians, too, have developed an acceptable AESA, the Zhuk Phazotron, which is already being considered for installation on the IAF’s Sukhoi-30 MKI aircraft.

So why them and not us, ask the four left out, only fractionally rhetorically and with indignation barely concealed behind caution and reserve.

Why are they quiet, so far?

There are reasons for this demeanor. All four have other pies in the oven. Boeing is expecting the order for ten C-17 Globemaster III heavy left aircraft to be signed and sealed before long, as well as a follow-on order of P-8I Long Range Maritime Reconnaissance (LRMR) aircraft. Lockheed Martin is hoping for a repeat order of C-130J Super Hercules aircraft. SAAB and the Russians, too, are pitching various pieces of equipment to India. So far, none of them have shown any signs of publicly taking issue with the MMRCA decision, not willing to go anywhere close to jeopardizing orders already on the horizon.

There is one other issue that could create problems for the ministry. The Contract Negotiation Committee (CNC) has to arrive at a benchmark of a reasonable price, internally, before the opening of commercial bids. This process will have to reconcile the funds cleared under the demand for grants approved by the Standing Committee on Defense of Parliament, after the Acceptance of Necessity for the MMRCA procurement, with the estimated costs of the two selected fighter aircraft, acknowledged to be the most expensive of the MMRCA-6. How the CNC intends to define reasonable remains unclear.

With the prospect of India being left with a Hobson’s choice on several counts, the soundness of the April 28th decision is in question. Even if the IAF completed its mandate as required and rendered its assessment, the absence of due process with respect to offsets and technology transfer will leave other stakeholders like Indian defense industry and research establishments short-changed and India with less than the best deal.

One hopes, naturally, this is not left to providence. But as things stand now, the decision shows a clear abdication of responsibility by the Ministry of Defense in completing due process that may have compromised the integrity and purpose of the tender.

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  1. It’s typical Indian shopper’s evaluation. The Russian’s aftersale
    service is unreliable. The Americans don’t sell or tell all and a buyer
    can never be sure of the merchandize or delivery. The Swede’s stuff is
    too cheap, so offers no pride for the owner. The Germans (and partners)
    would throw in extras just to spite the Americans. And, the French are
    shortlisted to let the competition know that the buyer’s decision may
    not necessarily be rational. 

  2.  Interesting article.
    RE IAF assessment: Probably the first time the IAF is going to get something that it  needs instead of what is on offer by the lowest bidder. Otherwise no need for all this dragged out process.In times gone by the MiG would have already been inducted on the merit of cost. This time the two most expensive and arguably the most capable are in the running.

    RE TOT: The Americans are out  because they don’t want to transfer the key technologies and whatever they do will come with strings attached. The Swedish technology is mostly American and from other sources so they cannot transfer it. The Russians don’t have much to offer in high end technology on the MiG-35,what is available is not mature. The French are ready to transfer the key technologies without any end user nonsense.The Eurofighter  consortium  is offering us to join the group.

    RE Offsets: This is probably the easiest criteria for the contestants to achieve. India is emerging as an important aerospace market both civil and military and along with that will come the industry. So no problems there. Also a Boeing/Airbus/Lockheed/EADS component manufactured in Bengaluru might just help the bottom-lines of the contending companies.

    I think we should be OK despite our mistrust of the MoD.
    Personal choice the Typhoon. It is the best air to air fighter of the lot. Excellent future growth potential. 
     

  3. “…Ajai Shukla has reported in the Business Standard that the Technical Oversight Committee, mandated to audit the evaluation process conducted by the IAF, still has to complete its work.”

    I stopped reading after this. WHO is ajai Shukla? Bigger than the Raksha Mantri? Bigger than Air Chief Marshal? The guy wanted IAF to scrap M-MRCA and go for F-35. 

    He is a wanna-be defence analyst. 

  4. For sure If as said Tpyhoon comes up with thrust vectoring engine and its aesa radar is actuaaly having large range and advanced and fast as F-18 got then its a real deal but these projects are in pipeline while AESA radar will come by 2015 the chances of a thrust vectoring engine seems distant may be 2020?? as there is no project yet lol.Also euronation are seeing F-35 as their strike fighter so it furthers dump the chance.Any research will be on the cost of INR.

    Also tranche3 of typhoon doesn’t give anychance of future growth and will be the last to come out of factory.

    While aerodynamically rafale is superior and have huge growth potential in future and is relatively cheaper belongs to france IAF already have a infrastructure available for that.
    Typhoon will be a completely new thing and they will come by 2020 and IAF will need 6-7 years to completely master them.

    While typhoon belongs to four nation plus lots of american component in that it will be really hard bargain to get complete tech transferred.
    While France is more than ready to provide full access and experience with mirage and marut works in their favor.

    Also in future a much improved engine than m88 is on the card too.
    Also must be noticed that rafale provides such aerodynamics class with such a less powerful engine which typhoon don’t.
    So in future Rafale has more chance to improve on typhoon.Also if we see despite all the claims by typhoon consortium of its 82% chance against su-30mki or su35bm in aeroindia chow it was clearly acknowledged that su30mki is superior to it.

    So one can easily cancel all their big claims of typhoon killing 4.5 sukhoi over one lolz.

    Don’t go by what written on net rafale has a combat radius of 1800km compared to 1400km of typhoon and is aerodynamically superior with proven aesa radar and with better engine and growth potential it has can simply outdo the likes of typhoon which is too expensive at 110 million a piece while a F-35 cost around 140 million and pakfafgfaT-50 at around 105-110 million a piece.

    I think India should go for rafale at 10.4 billion dollar (typhoon will cost about 14 billion) and make a copy of it just like chinese do to in the Indian production line(tot in place and own production line in india a few changes can do that we don’t need to reverse engineer them like china and so will have better chance to improve on rafale which got superior design)Also its semi stealthy and france is developing to make it more stealthy and a few programs are successful too
    and will improve this more

    Also India
    There is no need to spend on tejas product we have achieved what we wanted now look for better and achieve rafale like tejas mk2 version or name it (rajiv gandhi sonia or rahul to appease congress for this project lolz). Also with plasma stealth in place we can make it more stealthy(we will get it from T-50 jv with russia)

    Also this will reduce the risk of failure of amca project and our dependence on foreign jets at such high end price.
    And with the best missile like meteor ASTRA R_&&AV (improved
    version) and Brahmos2 in pipeline with helena missile we have the best
    missiles in arsenal.

    India doesn’t have required level of tech to produce a world class engine and it will take atleast 20 years to be at top level so we can just go on to shift the manufacturing of al-31f engine in India as a part of fgfa deal with sukhoi.
    Or even work on their cryogenic engine core and develop a lighter more efficient engine in jv to produce thrust vector. This will further boost to our dependency on foreign engine for a few decade atleast till our own infrastructure is developed.

    produce 5-6 hundred something like that to support FGFA  and reducing the chinese no. game with high tech and increase number of jets.

    And please don’t force something like tejas on IAF.
    Mi-35 at 38 million are a better choice and they are terrific in dogfights just field it against f-16 and their tinbox jf-16 am sure all those tinbox will be out with minimum casualty.And with thrust vectoring it is best among all contenders(can’t say against rafale or typhoon as its pesaradar is not yet funstional) It is the fastest among all and the only one after typhoon to supercruise with weapon loaded though it is way faster than typhoon too and with thrust vector now can outsmart the very best in dogfight and will be stealthy upto 60 degree.

    The thing that it lacks is advanced avionics defensive system and radar(may be pesa radar is as good as they claim to be but can’t match the likes of what an f-18 operate.)
    But Thanks to the infrastructure develop for tejas in avionics we can work on its avionics with integrating french and israeli avionics like we did for su-30mki and israeli elta mode radar
    and radar jammer it will be in its fullthrottle and as advanced as typhoon and much better in performance and giving Indian RD_93 engine production line here for all its production and future export too.Also we can assert Russia to stop giving engines for jf-17 then as they can’t give reason of financial condition of mig consort then.making pak to operate with chinese ws10 engine which are proven one for their performance haha.Leaving PAF 175-200 jets completely 3rd grade tinbos flying cobbins.
    And if You wish to spend on something expensive look at F-35 for future but cautiously.

    At end a fighter is as good as its capability to have best class of weaponry aerodynamics and IAF knows this better when we completely outclass the F-86 sabre with our small gnats aka sabre slayers (despite the fact that world used to mock at them at that time specially pakis , Though after 71 they for sure must be a crack of jock for themselves lolz)

    IAF Rocks.

  5. For sure If as said Tpyhoon comes up with thrust vectoring engine and
    its aesa radar is actuaaly having large range and advanced and fast as
    F-18 got then its a real deal but these projects are in pipeline while
    AESA radar will come by 2015 the chances of a thrust vectoring engine
    seems distant may be 2020?? as there is no project yet lol.Also euronation are seeing F-35 as their strike fighter so it furthers dump the chance.Any research will be on the cost of INR.

    Also tranche3 of typhoon doesn’t give anychance of future growth and will be the last to come out of factory.

    While aerodynamically rafale is superior and have huge growth potential
    in future and is relatively cheaper belongs to france IAF already have a
    infrastructure available for that.

    Typhoon will be a completely new thing and they will come by 2020 and IAF will need 6-7 years to completely master them.

    While typhoon belongs to four nation plus lots of american component in
    that it will be really hard bargain to get complete tech transferred.

    While France is more than ready to provide full access and experience with mirage and marut works in their favor.

    Also in future a much improved engine than m88 is on the card too.

    Also must be noticed that rafale provides such aerodynamics class with such a less powerful engine which typhoon don’t.

    So in future Rafale has more chance to improve on typhoon.Also if we see
    despite all the claims by typhoon consortium of its 82% chance against
    su-30mki or su35bm in aeroindia chow it was clearly acknowledged that
    su30mki is superior to it.

    So one can easily cancel all their big claims of typhoon killing 4.5 sukhoi over one lolz.

    Don’t go by what written on net rafale has a combat radius of 1800km
    compared to 1400km of typhoon and is aerodynamically superior with
    proven aesa radar and with better engine and growth potential it has can
    simply outdo the likes of typhoon which is too expensive at 110 million
    a piece while a F-35 cost around 140 million and pakfafgfaT-50 at
    around 105-110 million a piece.

    I think India should go for rafale at 10.4 billion dollar (typhoon will
    cost about 14 billion) and make a copy of it just like chinese do to in
    the Indian production line(tot in place and own production line in india
    a few changes can do that we don’t need to reverse engineer them like
    china and so will have better chance to improve on rafale which got
    superior design)Also its semi stealthy and france is developing to make
    it more stealthy and a few programs are successful too

    and will improve this more

    Also India

    There is no need to spend on tejas product we have achieved what we
    wanted now look for better and achieve rafale like tejas mk2 version or
    name it (rajiv gandhi sonia or rahul to appease congress for this
    project lolz). Also with plasma stealth in place we can make it more
    stealthy(we will get it from T-50 jv with russia)

    Also this will reduce the risk of failure of amca project and our dependence on foreign jets at such high end price.

    And with the best missile like meteor ASTRA R_&&AV (improved
    version) and Brahmos2 in pipeline with helena missile we have the best
    missiles in arsenal.

    India doesn’t have required level of tech to produce a world class
    engine and it will take atleast 20 years to be at top level so we can
    just go on to shift the manufacturing of al-31f engine in India as a
    part of fgfa deal with sukhoi.

    Or even work on their cryogenic engine core and develop a lighter more
    efficient engine in jv to produce thrust vector. This will further boost
    to our dependency on foreign engine for a few decade atleast till our
    own infrastructure is developed.

    produce 5-6 hundred something like that to support FGFA  and reducing
    the chinese no. game with high tech and increase number of jets.

    And please don’t force something like tejas on IAF.

    Mi-35 at 38 million are a better choice and they are terrific in
    dogfights just field it against f-16 and their tinbox jf-16 am sure all
    those tinbox will be out with minimum casualty.And with thrust vectoring
    it is best among all contenders(can’t say against rafale or typhoon as
    its pesaradar is not yet funstional) It is the fastest among all and the
    only one after typhoon to supercruise with weapon loaded though it is
    way faster than typhoon too and with thrust vector now can outsmart the
    very best in dogfight and will be stealthy upto 60 degree.

    The thing that it lacks is advanced avionics defensive system and
    radar(may be pesa radar is as good as they claim to be but can’t match
    the likes of what an f-18 operate.)

    But Thanks to the infrastructure develop for tejas in avionics we can
    work on its avionics with integrating french and israeli avionics like
    we did for su-30mki and israeli elta mode radar

    and radar jammer it will be in its fullthrottle and as advanced as
    typhoon and much better in performance and giving Indian RD_93 engine
    production line here for all its production and future export too.Also
    we can assert Russia to stop giving engines for jf-17 then as they can’t
    give reason of financial condition of mig consort then.making pak to
    operate with chinese ws10 engine which are proven one for their
    performance haha.Leaving PAF 175-200 jets completely 3rd grade tinbos
    flying cobbins.

    And if You wish to spend on something expensive look at F-35 for future but cautiously.

    At end a fighter is as good as its capability to have best class of
    weaponry aerodynamics and IAF knows this better when we completely
    outclass the F-86 sabre with our small gnats aka sabre slayers (despite
    the fact that world used to mock at them at that time specially pakis ,
    Though after 71 they for sure must be a crack of jock for themselves
    lolz)

    IAF Rocks.

  6. Your article is completely justified and full of facts as a mig-35 when tested was under development it’s still is while Typhoon os pitched for its supercruise ability mig-35 is faster by mile ahead.
    F-16 and gripen got nothing new except the aesa radar that both F-18 and F-16 have.But with AMCA on pipeline F-18 doesn’t sound good considering it’s not a air superiority fighter like mig 35 typhoon or rafale.
    By eliminating mig35 IAF gives chance for rafale and typhoon too to increase up their final bid (a lower end fighter jet like mig35 would have given them a setback to lower down and comes with lucrative offer.)

    Though technically we must admit that these european giants are superior as there is no f-15e on the offering and they are too complicated to maintain while F-16 with no future and F-18 on technical ground  were out. Similarity of gripen with Tejas and American component in it was enough to put them down.

    Mig-35 removal was too harsh on that beauty out of russian inventory as it was stil in deneloping phase then.

    But I guess it was out to make a early statement to Russia then because of their delayed delivery of sukhoi30mki gorshkov mig29mk and navy’s frigates .

    But it would have been better to out them after taking full advantage of it by keeping them up with the final phase to put pressure in European giant to lower their bid further.

    And then awarding a deal to mig as a bailout package from india as friendship to pressurize them and take hands away from jf-17 supply of Rd33 engines.

    Dunno when these politicians will get brain or field a strategist for these deals as themselves they incompetent to do that.

    And just ask them when will be IAF ready with those planes when they are going to comeout by only 2020.

    Are they preparing for 2030 war with china when these planes will lose the tech edge they have now lolz??

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