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MoD's mixed messages in medium fighter contest

August 13, 2009 04:56 IST

This weekend, two Boeing F/A-18 Super Hornet fighters will land in Bengaluru for flight trials by the Indian Air Force, an eight-month-long selection process, involving six different aircrafts, to zero in on a multi-role medium fighter for the IAF.

India's defence ministry (MoD) has billed this Rs 42,000 crore purchase, currently the world's biggest international arms tender, as also the world's most transparent. The MoD declares that the tender document specifies every detail of what the IAF needs, and whichever company meets those requirements, at the cheapest cost, will walk away with the order.

But now, contradictory messages are emerging; the mantra no longer seems to be "a specified capability for the cheapest price". Instead, MoD and IAF officers are apparently telling vendors like EADS — which has offered the high-priced and high-performance Eurofighter — that extra performance will win extra points.

Bernhard Gerwert, CEO Military Air Systems for EADS, travelled last week to Delhi to assess whether it was worth spending millions of dollars to put the Eurofighter through flight trials in India. If Eurofighter's superlative performance, superior in several respects than the Indian tender requirements, would win no extra credit, Gerwert was prepared to pull out of the competition.

But the MoD provided the reassurance he was looking for. A relieved Gerwert told Business Standard after his meetings, "The feedback that we have gotten after meetings in Delhi with the MoD and the IAF is that they will test more than just compliance with the tender. The IAF will take into account the performance excellence of each aircraft during flight trials."

After the relieved EADS team departed from Delhi on 7th August, Business Standard again asked senior IAF officials whether a fighter that demonstrated outstanding performance during flight-testing would win extra credits.

The IAF's answer was an unambiguous negative. "We will not be comparing the aircraft with one another. We have made out a "Compliance Matrix", and we will only require each fighter's performance to comply with what we have demanded in the RfP (Request for Proposals, or the tender). There are no extra points for having, say, 50% extra capability. Each contender just has to meet the IAF's laid down requirements."

This situation stems from the IAF's unusually broad definition of a medium fighter. This contest has brought into the arena a range of aircraft, with significant variations in performance — from the 14-tonne, single-engine Gripen to the 30-tonne, double-engine Super Hornet.

At the end of the flight-testing next May, predict experts, the IAF might have four or more aircraft that comply fully with the MoD's tender.

In that case, the cheapest bid will win, with the MoD evaluating costs on a "Life Cycle" basis. That includes all the costs over a 30-40 year life-cycle, adding the per unit purchase price to the costs of technology, indigenous manufacture, infrastructure, repair and maintenance, operating expenses, and a host of other hidden costs. The IAF calls it "Cost of Ownership"; this method of calculation is being adopted for the first time by India for a capital equipment purchase from abroad.

Western vendors, whose military equipment has traditionally had higher ticket prices, claim that the "Cost of Ownership" calculation will tilt the equation in their favour, especially when compared with Russian equipment that they accuse of being maintenance-heavy, demanding vast quantities of spares, and spending more time on the ground than in the air.

Ajai Shukla in New Delhi,