Says decision on Rs 45,500-cr buy within weeks; also assures Mirage deal conclusion next month.
Electrifying aerospace vendors at Aero India 2011 here, Indian Air Force chief, Air Chief Marshal P V Naik announced today that New Delhi would decide within two weeks about which medium multi-role combat aircraft (MMRCA) it would buy, and actually sign the $10 billion (Rs 45,500 crore) contract by September.
“The CNC (Cost Negotiation Committee) is likely to start in a week or two. Taking that as the datum and giving (the CNC) another six-eight months, the contract is likely to be signed in September,” declared Naik.
The CNC is a group of officials that negotiates between the ministry of defence (MoD) and the winning vendor on a final price for the sale.
Naik’s boss, defence minister A K Antony, had stated here yesterday that the globally-watched contract would be finalised by the end of the next financial year, 2011-2012, i.e. by March 2012. By setting the deadline six months earlier, Naik appears to have put the MoD under pressure.
Asked by Business Standard for a clarification, Naik’s officiating deputy, Air Marshal R K Sharma, confirmed his chief’s announcement. He said the winning vendor would be issued an invitation within two weeks to appear for cost negotiations, while the CNC would actually meet within two months. An invitation to a vendor to appear in a CNC is tantamount to announcing the winner of a contract.
“The DAC (the MoD’s apex Defence Acquisition Council) will formalise the winner soon; we will then invite that company for negotiations,” said Sharma.
Six fighters are competing for the IAF contract: Boeing’s F/A-18 Super Hornet; Lockheed Martin’s F-16IN Super Viper; the MiG Corporation’s MiG-35; Saab’s Gripen NG; Dassault’s Rafale; and a four-nation European consortium’s Eurofighter. Executives from these companies say they are baffled by Naik’s announcement. Asked in late 2010 to rework their offset bids, and with no final date yet given for this, the MoD does not have a key element needed to decide a winner.
“Is the MoD going to decide the contract winner without examining the offset bids?” asks a bemused executive from one of the competing aircraft manufacturers.
‘Technical coaching’
While no answers were forthcoming, the air chief did explain why little appears to have happened since July 2010, when the IAF gave its flight trial evaluation report to the MoD. Naik revealed the last six months had gone by in explaining to the MoD the technical nuances of the flight trials.
“There have been a lot of queries and counter-queries [between the MoD and the IAF]. It is such a complicated deal, and there is so much of technical detail involved… so there was a lot of, shall we say, education to be done so that the report was clearly understood in all its manifestations,” explained Naik.
The air chief also voiced his apprehension that the contract could be delayed by “dissatisfied vendors (who) put a spoke in the wheel”, using allegations of wrongdoing to trigger long-running probes by investigation agencies.
Yesterday, a defensive Antony had announced that political considerations would play no role in deciding the winner. That seemed to suggest the Cabinet Committee on Security (CCS), which will be required to approve the contract after the CNC negotiates a final price, would merely rubber-stamp the IAF/MoD decision.
Other than the impending contract for 126 medium fighters to boost the IAF’s dwindling numbers, the IAF chief also announced the impending conclusion, “within this financial year”, of the contract to upgrade the air force’s 20-year-old fleet of 52 Mirage-2000 medium fighters. This upgrade, the subject of bitter negotiations between the IAF and French contractor Thales, will give the Mirage-2000 another 20 years of service life, by fitting on a new radar and a modern cockpit with state-of-the-art avionics and electronic warfare equipment.
While Thales had initially demanded $52 million per aircraft, the deal has been concluded, say IAF sources to Business Standard, at $39 million (Rs 177 crore) per aircraft.
