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SEEMA MUSTAFA | 17 APRIL, 2015

DASSAULT REWARDED FOR FUDGING RAFALE PRICE, STILL NO CLARITY ON NEW DEAL


NEW DELHI: Dassault Aviation seems to have been ‘rewarded’, instead of being castigated,for misleading the Government of India on the price of the 126 medium multi-role combat aircraft that has held up negotiations for three years now.

A Request for Proposal that should have been scrapped after the anomalies in pricing came to light,had the Congress led government spending valuable time and added inflationary costs renegotiating it. And the BJP led government now clearing 36 Jet Fighters in ‘ready to fly’ condition, thereby giving a new lease of life to the near bankrupt French company.

The contract for the 126 fighter jets went to Dassault Aviation after a lengthy process, with the Indian Air Force getting a quiet international pat on the back for carrying out the trials with a high level of professionalism. The tender was floated in 2007 and the deal finalised after five shortlisted companies went through rigorous trials, that basically tested over 640 points of operation. Dassault Rafale and Eurofighter Typhoon were shortlisted.

The Ministry of Defence then took over the price negotiations, with Eurofighter submitting what sources said was a bid weighing kilos, while the French company put in a slim proposal. As is the procedure, both bids came with sealed envelopes carrying the price, and Dassault finally got the contract from the Ministry of Defence, as the L-1,lowest bidder.

The Americans who were in the race at the time appeared fairly confident of winning the contract for the medium multi-role combat aircraft. Boeing F/A-18E/F Super Hornet and Lockheed Martin’s F-16 Fighting Falcon were in the race, but were rejected. This led to a diplomatic sulk of sorts as it came on the heels of the impasse in the form of the Nuclear Liability Law that stalled the civilian nuclear energy agreement.The then Union Defence Minister A.K.Antony was rather self-congratulatory at the time and told this reporter that he had made sure that no lobbying or pressure worked into making a choice. The Air Force was left free to conduct the trials according to exacting professional requirements, he said.

However, Antony was clearly not prepared for what sources here described as a ‘fudge’ by Dassault Aviation. The negotiations by the MoD eventually disclosed that the French company had projected a totally false figure, leaving what it called 50 “miscellaneous” items out of the quoted price. The cost of these when added on escalated the bid dramatically from the initial $ nine billion to what is now being bandied about (inclusive of inflationary costs) at $22 billion.

Janes Defence weekly had reported at the time that the negotiations and the escalated price raised “critical issues regarding the incompetence or worse collusion of MoD officials and service headquarters in failing to conclusively evaluate bids and negotiate contracts, allowing vendors to strategically spring unanticipated and hugely expensive surprises after it was too late to pull out.”

The negotiations thus hit a rocky patch, and continued for three years since 2012 without a breakthrough until now when Prime Minister Narendra Modi stepped in and cleared the supply of 36 Rafale fighter jets in ‘ready to fly’ condition. Details of the deal struck between PM Modi and French President Francois Hollande in this government to government deal now remain shadowy to say the least. Little concrete information has come from the government, in on or off the record briefings, to clarify the contours of the agreement except for the fact that the Request for Proposal L-1 that gave the contract for the 126 fighter jets has probably been scrapped. But there is no answer as to what, if anything else, has been or is being negotiated.

Union Defence Minister Manohar Parrikar in an interview to the Daily Mail was unable to shed any light on the deal. He has made the following non points:

1. “The deal hasn’t been completed as yet”: so basically everything is up for grabs.

2. “Future course of action will be decided by both the governments”: that again makes it clear that there is no clarity on the number of fighters that will be bought, whether the contract for the remaining 90 fighters will go to Dassault; will these also be negotiated in ‘ready to fly condition which seems unlikely; will these be given back to HAL, again unlikely’; will these be contracted to a Dassault-private Indian company that remains the most likely option with the odds favouring the Ambanis who have all the paperwork in place. (The Citizen report);

3. “There were defects in the RFP”: the defence minister has repeated this several times in the short interview but not said what the defect was. As reported above this was on the price negotiated, that in effect takes Dassault out of the L-1 category; hence it is not clear why after misleading the Indian government,it has been bailed out by PM Modi;

4. “I feel the delivery will happen in 18 months”: the Minister “feels” so clearly this very important point has not been finalised as yet;

5. “If we need then we will take”: this was the response to a question whether there will be a shortage as the deal was for 126 MMRC and only 36 are being taken. Again a reflection of the confusion, wherein there has been no assessment as to how many aircraft are required. Now that the deal has been scrapped, the figure arrived at by the IAF as essential also seems to have been scrapped;

6. “The aircraft also costs quite a bit. It’s in Rs 1 lakh crore, plus the cost of maintenance”: the cost of maintenance is crucial now to the pricing; the contract has been awarded without this crucial point being negotiated with Dassault Aviation that has not added to its credibility with the earlier RPF bid.

And finally the admission that PM Modi’s “make in India’ has still to be factored in. Parrikar’s response to the question by Daily Mail “where do you find the possibility of Make in India into all this” was what appeared to a completely confused: “We will see after these 36 aircraft. The speed of LCA and Tejas needs to be augmented. If we do it, we can replace MiGs then. The companies can set up their units here.”

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