While much of the statement is a reiteration of existing positions, the defence ministry has provided a singular and unconvincing defence of why it did not ask for, or entertain, a competing commercial offer for the Eurofighter Typhoon pitched by Airbus.
The defence ministry said on Wednesday:
“In another effort to twist facts, the Government is asked why it did not conduct negotiations with a particular company representing a competing fighter aircraft. It seems to have been conveniently forgotten that the then Government itself had rejected that company’s unsolicited offer made days after closure of the bid process, declared Rafale (DA) as the L1 bidder and had commenced negotiations with it in February 2012.”
This is a true enough assertion, by itself, but fails to appreciate the accompanying context, either by accident or design, and results in a flawed understanding.
Central Vigilance Commission Rules
The reasons why the previous UPA government was in no position to entertain an unsolicited second Airbus offer for the Eurofighter Typhoon were the Central Vigilance Commission (CVC) rules that govern the conduct of government tenders in India.
Under these rules, once an L1 bid has been announced, the government is prohibited from soliciting or entertaining any revised competing bid from any other vendor. Even if the negotiations with the L1 vendor fail, the only alternative available to the government is to reissue the tender and hold the contest again, according to these rules.
“Negotiations shall be held with L-1 only,” says the 2005 CVC circular, which adds,”In case of L-1 backing out there should be re-tendering as per extant instructions.”
But these rules apply only to tenders.
Prime Minister Modi, in his announcement of the request for 36 Rafale aircraft, specified that this was under a ‘separate process’ and the IAF had issued no new tender.
Obviously, the government chose to conduct this separate process with the French government for the Rafale, because it had the IAF’s stamp of approval. In its statement on Wednesday, the defence ministry also justified the order, saying, “The aircraft had already been evaluated successfully by IAF during 2009-10.”
But readers will remember that the Eurofighter Typhoon fighter aircraft was also approved as technically qualified by the IAF.
And since this was a separate process, as explained by the prime minister, and not a tender, the CVC rules did not apply. The CVC prohibition that applied to MMRCA tender did not apply for this separate process.
Not only was the defence ministry in a position to entertain an Airbus offer for the Eurofighter Typhoon, under this separate process, they could have actively solicited an offer from them. While the UPA government was prohibited by CVC rules from entertaining an Airbus offer, there was nothing preventing the NDA government from doing so, when it decided to cancel the MMRCA tender.
Why this was not done remains a mystery, in spite of the lengthy defence offered by the defence ministry on Wednesday. And the defence minister is now in the unenviable position of having to defend something (not) done, much before she took office.
Incidentally, the CVC circular also says “In case of inability to obtain the desired results by way of reduction in rates and negotiations prove infructuous, satisfactory explanations are required to be recorded by the Committee who recommended the negotiations. The Committee shall be responsible for lack of application of mind in case its negotiations have only unnecessarily delayed the award of work/contract.” But this is another story, altogether.Separately, it may also be worthwhile noting that StratPost published a piece on the eve of Prime Minister Modi’s visit to Paris, titled India may need to walk away from Rafale to buy MMRCA.
Instead, what actually transpired was that the Indian government chose to walk away from the MMRCA to buy the Rafale.