Losers struggle to divine New Delhi's intent on MMRCA contest downselect
Perhaps it should come as no surprise, given India's notoriety when it comes to defense procurement, that the downselect in its high-profile fighter competition has raised an unusual number of questions.
At issue is not so much who survived in the Medium Multirole Combat Aircraft (MMRCA) contest as how the downselect was conducted. Theand were rated highly before the field was winnowed, but the losing contenders—the F/A18F Super Hornet, F-16IN Super Viper, IN and MiG MiG-35—have many unanswered questions.
Boeing, Lockheed Martin andall have asked the government for a debriefing on why they were eliminated from the $12 billion competition to build at least 126 fighters. MiG did not join that appeal.
The defense ministry has made no public statement on the dramatic elimination, though officials on the acquisition team wonder what more information they can supply the losing vendors “over and above what we already have.”
Rather than namingand winners, the government asked them to extend the validity of their commercial bids till the end of the year and resubmit those documents by May 13. Bids expired at the end of April. The others were not asked to take that step.
The unusual procedure has some questioning what lies ahead. An official with one of the losing vendors says that “if the Typhoon and Rafale won this round on technical compliance and performance grounds, who says it'll play out the same way on price? These planes are not cheap.”
With the defense ministry opting to choose between two of the most expensive fighters in the competition, there is a sense that negotiations could still fail, in light of the Indian defense establishment's legendary sensitivity to unit price. “The known prices of the two final contenders could throw budgetary allocations for the MMRCA acquisition completely out of gear. The finance ministry won't like that one single bit,” agrees anofficer who observed field trials of the six aircraft at the Leh air base in the Himalayas.
Saab CEO Hakan Bushke is even more explicit. “We are still offering the Indian government the Gripen,” he said after the company noted it was not selected. In these processes, there can be changes of direction, he added.
A price war is also not being ruled out, in part because Dassault is eager to secure the first export order for Rafale and Eurofighter officials have signaled they will be aggressive in pursuing the deal.
As things stand, commercial bids of the two finalists will be reviewed and compared to a previously established benchmark price, with the offer closest to the figure deemed the lowest bidder. Discussions on the $4.75 billion in offsets will also take place.
The decision not to pick either of the U.S. competitors has also raised questions about whether New Delhi is sending Washington a political signal over technology transfer or other issues.
When asked if the Pentagon's policy on transferring sensitive electronics and sensor codes played a role in the decision, an Indian officer says, “The request for proposals is very clear about what technologies and software we expect to be fully transferred. If certain vendors have put forward bids which are not compliant with that requirement as a result of their home government's export and transfer policies, that is something the [defense ministry] has taken into account while making its decision.”
Washington has been intensely courting New Delhi not just for this deal, but more broadly to strengthen the bilateral relationship. In that vein, the U.S. offered what it considered heavy inducements in the realm of technology transfer on the MMRCA, although Indian officials were skeptical about some of the associated caveats.
The U.S. bidders are reluctant to complain too loudly, though, not wishing to upset a military customer with whom they have other commercial interests. For instance, India is buying Lockheed Martinand maritime patrol aircraft while also considering Boeing and Apache attack helicopters. Industry officials also believe the Boeing /F could still be a contender for a future Indian navy carrier aircraft requirement.
Indian officials are somewhat defensive about complaints that they have not been transparent and the MMRCA process has been confusing. “If there is a sense that this outcome was a surprise, then that is not correct,” says an officer on the defense ministry's acquisition team. “In the spirit of the process, each vendor was briefed in a highly transparent manner about their performance in technical and field evaluation trials as well as compliance at every step. The sharing of information was done in such a way that the vendors who lost definitely knew that they were not making it.”
Indian air force chief PV Naik also dismisses the notion that the surprise expressed by the losing vendors had anything to do with the process. “Whether anyone is happy or unhappy, we have done whatever we were asked to do by the government. If you select one aircraft, it always happens that the other side would be dissatisfied. There is nothing wrong with our process. It is a human feeling,” he says. Nevertheless, the MMRCA acquisition team has been instructed by Defense Minister AK Antony to ensure that dissatisfaction among the losing vendors does not translate into delays in the remainder of the process.