The bids made by the six defense vendors in response to the RFP (Request for Proposal) for the 126 Medium Multi Role Combat Aircraft (MMRCA) contest of the Indian Air Force (IAF) are subject to be changed or revised because the terms of the bids are valid only for two years and could lead to cost escalations, even before the winner is selected.
The vendors, Boeing, Lockheed Martin, Saab, Dassault, Eurofighter and MiG had submitted their bids last year, the terms of which are valid for two years and will expire by mid-2010.
“We submitted our proposal on April 28th, 2009. That proposal will expire on April 28th, 2010,” says Orville Prins, Lockheed Martin’s Vice President of Business Development in India, adding, “There could be a cost escalation afterward. I don’t know. It’s possible that the Indian Air Force might ask for an extension of the terms of the proposal.” The order is already estimated to be worth $ 10 billion.
The flight trials of the six aircraft were initiated by the IAF earlier this month and are likely to take a little less than a year to complete. With the final decision to be taken only after an expected lengthy price negotiation subsequently, it is likely that the terms of the bids made by the six companies would have expired before such time, by the middle of next year.
Interestingly, Lockheed Martin for one has planned for this eventuality have made the proposal in the anticipation that the order will expire. We accommodate the fact that it wasn’t going to be decided by then,” says Prins, also indicating that some of the six vendors might keep their price unchanged or even lower them to make their bids more attractive, once the flight trials are complete and the terms of the proposals submitted have officially expired.
Incidentally, the MMRCA requirements also insist on a warranty, any failure of which would result in financial penalties on the vendor.