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Is India’s Defence Acquisition Process
Maturing?
While generally
this page seeks to put across overall trends in the region, this month an
important event in India’s defence acquisition process has led to focus on this
issue. As Rafale jet fighter fielded by French aviation major Dassault Aviation
was declared L1 or lowest bidder for the Medium Multi Role Combat Aircraft
(MMRCA) competition vis a vis the EADS, Euro fighter there is a need to examine
this landmark event in India’s defence acquisition process for this is the
first multi vendor combat asset acquisition by India. Some quick lessons for
defence policy and acquisition managers across the World may therefore be in
order.
Firstly
broadly speaking the MMRCA acquisition process seems to have followed the
Defence Procurement Procedure (DPP) as closely as is practicable. The DPP is a
nine step process which starts with Acceptance of necessity (AON), Tendering,
Technical Evaluation of bids, field trials, staff evaluation, technical
oversight, commercial negotiations, approval of competent authority and award
of contract or service order. The MMRCA process has successfully cleared the
first six steps and is slated to reach the final three which are as critical.
The trials in the case of India are important as these are held in diverse
terrain from hot deserts to extreme Himalayan high altitude.
Rafale
and Dassault Aviation will now have to navigate through the minefield of
financial bureaucracy with possibility of political pressure on India and
litigation. More over the losers that is the other five and not just the
Eurofighter are unlikely to take this in their sporting stride so to say though
for EADS having 46 percent of share in Dassault Aviation it may not really make
sense to raise a hue and cry. Here European politics with France emerging as a
preferred partner by India may come into play and some contretemps are already
evident.
If
four Eurofighter partner countries, UK, Germany, Spain and Italy are feeling
low today, the Americans, Russians and the Swedes had their share of gloom in
April when they could not make it to the commercial bid stage. While there was
political disappointment there were no efforts made to challenge the decision
of the Indian Air Force on technical rejection of their product implying that
the process was fairly transparent and deficiencies in their fighters were
accepted by the companies concerned. Thus the technical evaluation and field
trials stage seems to have been fairly satisfactory.
In
the commercial stage with a benchmark price established at various costing
levels, such as fly away, life cycle, maintenance and so on in a series of Ms
or M 1 to M 8 and bids having been opened in front of the respective company
executives transparency was again evident. Thus the buzz on the day of opening
of tenders was that Rafale was possibly priced lower than the Eurofighter. What
happens now may not be in the open domain for commercial negotiations will
remain opaque, yet that these would evidently follow the trend and be according
to the book can be assumed.
What
then is the take away for other acquisitions in the pipeline, firstly Indian
procurement process is linear thus offer the best product (or don’t bid at all)
and offer it at the best possible price if you are hoping to win a multi vendor
contract in India! Secondly political pressure is unlikely to work in a multi
vendor contract given sensitivity of defence acquisitions in internal politics
in India and finally master the acquisition manual.
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