Defence Ministry probing questions on life cycle cost of aircraft

There is some dispiriting news for French Defence Minister Jean-Yves Le Drian as he arrives in New Delhi to push the 126 fighter aircraft deal, said to be India’s biggest-ever military tender.

Given the state of play in the Defence Ministry, the deal is unlikely to be finalised before the end of September. By then the election season would have set in and no bureaucrat would want to sign the deal. In such an eventuality, the deal is likely to be decided by the next government, said highly placed sources.

Two letters by parliamentarians to Defence Minister A.K. Antony are responsible for the Defence Ministry now going through the contract papers with a fine toothcomb. The bigger spanner in the works is the former External Affairs Minister, Yashwant Sinha, questioning the “life cycle cost” criteria or the cost incurred during the service life of the aircraft. He also claimed two of the seven criteria mentioned in the Defence Procurement Policy were not applied to the tender.

The second letter, which like Mr. Sinha’s missive has been referred by Mr. Antony to Ministry officials, alleges manipulation of the entire tender process. Parliamentarian M. V. Mysoora Reddy’s “patriotic responsibility” forced him to speak out against the selection of a company that has not sold a single plane of this type to an overseas customer.

Mr. Antony sent both letters to officials for an enquiry. While Mr. Sinha’s allegations about life cycle costs are being looked into by Defence Finance officials who are finding it tough to do the calculations all over again, Mr. Reddy’s letter has been sent to the unit that evaluated bids submitted by all the five contestants. But the original team has since moved on and the new set of officials faces the daunting task of doing the calculations all over again. It is unlikely they will wrap up the reviews by the time the poll season informally rings in and bureaucrats could hesitate from taking fresh initiatives.

In such a situation, France will be looking for promises that the award of the tender to Dassault will not be reopened. A four-nation European consortium, which along with the Americans and the Russians lost to the French, has already offered to lower the price of its offering.But the French are not over-anxious. They are acutely familiar with the processes in the Indian Defence Ministry since their involvement began a few years after Independence and has continued apace since then. Moreover, they have a lot of pending projects in hand and will be contestants for two major tenders.

One port of call for the French Minister will be Gwalior that hosts Mirage fighters being currently upgraded by Dassault. France has also entered into an R&D tie-up for short range missiles, thus joining Russia and Israel, which are the only ones to have parted with technological knowhow while jointly designing and producing military hardware with India.

A mega project to construct French submarines is also on in Mumbai, though it has been hit by time and cost overruns.

Reliable sources said the Minister’s visit is not meant to finalise the contract and Paris would be willing to wait as long as it takes.

There are other complexities as well such as technology transfer issues and questions being raised over the price because of rupee devaluation and the French Defence Ministry’s decision to cut down on orders placed on Dassault for the same aircraft.

“There was never a tender of this size with so many complexities,” said the sources while pointing out that the virtual reopening of the tender file coupled with the time being taken to thrash out other issues may not be good news at least for Dassault that is facing tough times at a time of economic slowdown.

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