No surprise: “Secret” technical evaluation in Indian MMRCA deal found on the street

The Times of India reports on the bizarre story of a confidential file found on the street:

Even as the race for the “mother of all defence deals” enters the last lap, two IAS (Indian Administrative Service) officers of the defence ministry are now under the scanner for the mysterious way in which a “secret” file connected to the $10.4 billion project to acquire 126 new fighters went missing and was then found by a roadside.

There is an intense battle currently in progress to win the $10 billion deal for 126 combat aircraft (MMRCA – medium multi-role combat aircraft) where the final decision is expected to be taken by March. As I have posted earlier, the technical and flight evaluations on the 6 contenders were conducted by the Indian Air Force and their highly confidential and secret report was submitted to the Ministry of Defence  by early November 2010. Many rumours circulated at the time and the word on the street was that the Eurofighter Typhoon had won the technical evaluation. However this evaluation is merely one (but important) stage in the decision making process. The strategic and financial evaluations are under way and political lobbying is building up.  Some of this lobbying is at the highest levels of government and no doubt the recent visits to India by Obama and Medvedev and Sarkozy were utilised fully.

For all the contenders the technical evaluation is what determines what is left to be done to win the contract. The details in the technical evaluation report are most important for a contender to know how to compensate for any perceived failings. I am quite sure that every contender has managed by now to obtain a copy of the technical evaluation report. (To obtain copies of confidential reports from Indian bureaucrats is not in the realm of the impossible. In my experience obtaining reports and confidential documents from clerks in government service is much more effective than any Freedom of Information application and are not subject to any redactions.) I am equally sure that all the six aircraft manufacturers would have by now developed their sales strategies and lobbying plans based on the their weaknesses as recorded in the report. But what may have been missed by some is that unofficial dissemination of the “confidential” report is an expected event. It may even have been a deliberate leakage of the report as part of the Government of India’s buying strategy.

The six are:

  1. Dassault, Rafale, France
  2. Eurofighter, Typhoon, UK, Italy, Germany and Spain
  3. Lockheed Martin, F-16IN Super Viper, US
  4. Boeing, F/A-18E/F Super Hornet, US
  5. Saab, JAS 39 Gripen, Sweden
  6. Mikoyan, MiG-35, Russia

Even though there are only 6 contenders, the number of lobbyists, sub-contractors and foreign embassy officials involved would have led to at least 100 copies of the report having been “sold” by various bureaucrats with access to the file. So I do not find it very surprising that one of the many “unsold” copies was abandoned somewhere. The value of such reports goes down sharply with time. It must have been at its most expensive immediately after it was submitted to government and before the many visits by various heads of state to Delhi. Again from my past experience of such things I would expect that the report probably had an initial “price” of around Rs 10 lakhs (about $20,000) but now some 2 months later, can probably be purchased for less than 1 lakh ($2,000).

Nobody is probably very bothered by this episode since the leakage of the report to the contenders is part of the game and already taken into consideration by the Government. In fact leakage of “perceived weaknesses” to a supplier is one of the best buying strategies to extract improvements in the supplier’s offer. The most senior bureaucrats in the Ministry of Defence are probably congratulating themselves for having managed to disseminate so many copies of the report before this particular slip-up.

But for now all the right noises will be made for public consumption. As the ToI reports:

Ordering an inquiry into the episode, defence minister A K Antony on Monday said he was “very clear that every officer has to be very careful at every stage” while dealing with the huge MMRCA (medium multi-role combat aircraft) project. “We have viewed the incident seriously…the inquiry is in progress,” he said. It was last week that the “secret” file, which was earlier submitted to the MoD by IAF, went missing and was then found later in the day near Khelgaon Marg in South Delhi.

MoD was tight-lipped about the incident but sources said the file was apparently lost by the bureaucrats, one an additional secretary-rank officer and the other a director, while being taken to the Bharat Electronics Limited guest-house on Khelgaon Marg. The file was found by a security guard who then got in touch with the authorities concerned.

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One Response to “No surprise: “Secret” technical evaluation in Indian MMRCA deal found on the street”

  1. Indian MMRCA decision in two weeks – Eurofighter Typhoon still leads « The k2p blog Says:

    […] Business Standard reports: Electrifying aerospace vendors at Aero India 2011 in Bangalore, Indian Air Force chief, Air Chief Marshall PV 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 US $10 billion contract by September. A panoramic view of Aero India 2011: image Broadsword ( “The CNC (Cost Negotiation Committee) is likely to start in a week or two. Taking that as the datum and giving [the CNC] another 6-8 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 and the winning vendor, a final price for the sale. Naik’s boss, defence minister AK Antony, had stated at Aero India 2011 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 for a clarification by Business Standard, Naik’s officiating deputy, Air Marshall RK Sharma, confirmed his chief’s announcement. Sharma clarified that 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 date yet given for resubmission, 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. ………. 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 that the Cabinet Committee on Security (CCS), which will be required to approval 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, which has been 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 US $52 million per aircraft, the deal has been concluded, say IAF sources to Business Standard, at US 39 million per aircraft. Related:… […]

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