India Forces Fighter Rivals To Rebid
May 3, 2010
By Neelam Mathews
New Delhi
India has proved once again that it cannot push the pedal too hard for speedy procurement of a major weapon system. It has been forced to notify vendors seeking the coveted 126 Medium Multi-Role Combat Aircraft (MMRCA) award that they will need to rebid, prompting a schedule delay that might drive up costs.
The bidders represent the industry’s biggest fighter manufacturers—MiG Russian Aircraft Corp., Dassault, Eurofighter, Saab, Boeing and Lockheed Martin.
The vendors were expected to complete flight trials early last month, giving the Indian defense ministry time to complete its bid evaluation by April 28. Contract rules called for rebidding if that deadline was missed, pushing the start of the winnowing process to April 2011.
Downselect will probably name three finalists, although no specific number has been stated or schedule given. There also is no timeframe for when a winner will be chosen. Politics is partly responsible. The downselect will be reviewed by a parliamentary committee, and the possible lobbying could extend the selection process beyond next April.
As this year’s deadline approached, the Eurofighter Typhoon was still making its final flights and the Saab Gripen, the last candidate, was not even in India. Held up by other tasks for the Swedish air force, the aircraft is not expected until late May.
Ministry officials were not commenting last week about a re-bid. But the Indian air force does not see it as a setback. Its emphasis is on being able to evaluate all the contenders.
“Testing is done in various envelopes, and as long as the associated requirements are met, that is [what is] important to us,” says a senior air force official. “We’re hoping all tests will be over by May.” If so, the assessment process will take another two months to complete.
While this official acknowledges that delay-driven re-bids might drive costs up as much as 7%, he says that is not a prime issue for air force headquarters. Its focus is on aircraft capabilities. Pricing comes into play beyond the air force’s level.
Earlier this year, Defense Minister A.K. Antony acknowledged that India’s acquisition process has been notoriously slow. The Defense Procurement Procedures Act for 2010 is supposed to remedy this problem.
“The effort in this direction is already on,” he says. “We have to further reduce the delays.”
But the MMRCA program seems to contradict that assertion, since delays are likely to raise program costs and prevent the air force from putting the winner into service on schedule.
In extending bids by a year, the ministry is acting under 2006 procurement procedures, which allow bids to be revised up or down, says a spokesman. “It’s up to the [vendors] to decide. Besides, it shouldn’t matter [since] the bids will remain sealed, so nobody knows the other quotes.”
Some vendors are concerned that the delay will make bidding more volatile. They cite U.S. dollar fluctuations against the euro during the past year.
The final currency rate for the program will be frozen on the date bids are completed. Move that date ahead a year and the dollar might be considerably stronger, given the uncertainties that the euro is now facing with issues such as Greece’s debt crisis. If that is the case, bidders in euros may have an advantage, one financial analyst says.
Vendors are not commenting on what changes they might make to their bids.
As for the F/A-18E/F con*tender, Boeing Defense, Space & Security Vice President Vivek Lall’s diplomatic response is typical: “We are working to provide a compliant response in support of the deadline set,” he says.
Still, Antony says India is forging ahead with “refinement and evolution” of its bidding practices under the 2010 procurement act. “But at the same time we are spending money from the public exchequer. We have to make sure that every penny is spent judiciously.”
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India Forces Fighter Rivals To Rebid
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