India poised to select medium fighter maker and possibly expand contract
The winner of the 's $12 billion Medium Multi-Role Combat Aircraft (MMRCA) fighter competition should soon emerge, as the government is set to formally begin the process of identifying the lowest bidder in early September.
Theand are the final contenders left in the race and Indian government officials have finalized how they will judge offset and industrial participation offers that are crucial in deciding which company will be chosen to supply the initial order for 126 fighters. However, a defense ministry official indicates that the air force wants contractual options to be exercised immediately, which would boost the buy to 189 fighters and the program value to almost $20 billion.
Air Chief Marshal (ret.) P.V. Naik revealed the impending source selection decision just before he retired July 31 and said a formula has been found to benchmark the offers to provide a like-for-like comparison. This is designed to determine what the government considers a reasonable cost, reflecting several factors such as pricing in other countries, known commercial bids and inflation.
The defense ministry's Technical Offsets Evaluation Committee has almost completed its review of the two offset packages and will make its report final shortly, according to government officials. The MMRCA competition has a 50% offsets requirement, running into at least $6 billion and acknowledged by industry observers to be one of the most challenging reinvestment propositions in recent aerospace contracting.
A key challenge is that India's aerospace industry is not considered mature enough to absorb all those offsets, putting pressure on the winner to work with companies to establish the capability to deliver on what is being promised, warns a European industry executive.
One building manager suggests that the offsets element is likely to simply be looked at as “compliant or non-compliant.” Officials from bothand have held multiple meetings with Indian offset managers, and both companies have expressed confidence that their packages meet what is required. However, that issue will be even more thorny if the option for more aircraft is exercised at the outset.
Even though the government says it has determined how to benchmark the two offers, industry watchers warn that there could still be hurdles. For example, the source selection has left the government with two of the most expensive aircraft in the competition, which will try the available budget—the/F, , MiG-35 and were eliminated in the April downselect.
“If the [defense ministry] has benchmarked realistically, it will almost definitely mean that the government will need more money to sign a contract for either the Typhoon or Rafale, even accounting for inflation. Is the ministry willing to go down that road?” asks a manager at Boeing.
Both Eurofighter and Dassault have publicly insisted that their bids are competitive and privately hope the government has taken several factors into consideration while arriving at their benchmark price, in particular that the aircraft are more capable and newer than some that were in the running.
There is concern, however, that if the government looks across all six competitors originally in the field, the benchmark price will be below that proffered by either Eurofighter or Dassault, which could lead to questions about how the source selection process should proceed.
Perhaps anticipating a rapid change of fortunes, the local MMRCA team offices of the four eliminated contenders remain fully staffed. Officials at all four acknowledge that while they have been given satisfactory debriefs on the downselect, they also believe that things are delicate enough in the final phase for them to remain in the country. “We are ready to respond to the government in any eventuality,” says a manager for Rosoboronexport, the Russian agency fronting the MiG-35 offer.officials have also suggested the competition could open again.
If the Indian government begins examining commercial bids next month, a lowest bidder could be named in November or December and a contract signed before the end of March.