Most ‘extras’ in 36-Rafale contract were also specified in earlier tender

In buying 36 Rafale fighters from French vendor Dassault in September 2016, senior defence ministry sources indicate the Indian government is paying 40 per cent higher than the price quoted in 2012 for 126 Rafales. That deal was eventually aborted.

As Business Standard reported on Friday Dassault had quoted ^19.5 billion for 126 Rafale fighters, averaging ^155 million per aircraft. Before that deal could be finalised, the National Democratic Alliance (NDA) government purchased 36 Rafale fighters for ^7.85 billion in September 2016. In other words, ^217 per aircraft — 40 per cent higher than the earlier quote.

Defending the 2016 contract against charges of overpaying, the government argued the new price included — over the basic aircraft cost of ^3.3 billion — four additional elements not included in the Medium Multi-Role Combat Aircraft (MMRCA) tender. These are “India-specific enhancements” to the Rafale avionics to boost its combat capability (^1.7 billion), a weapons package (^700 million), additional spares (^1.8 billion) and logistical guarantees (^350 million).

Weapons package

Business Standard has carried out a detailed review of the request for proposal (RFP) for the MMRCA, issued on August 28, 2007. Contrary to the government’s argument, the 211-page document stipulates the supply of weapons, along with the first 18 aircraft. “It is essential that the direct flyaway aircraft be delivered with a full complement of weapons and the weapons package should be integral to the flyaway aircraft,” says the RFP.

Part 1 of the RFP specifies the missiles and bombs to be supplied, such as 336 Active Beyond Visual Range (BVR) missiles, 168 All Aspect Missiles, etc. A separate section ( Annexure IV to Appendix A) specifies the capabilities that the weapons must have.

The BVR missiles are required to have a range “greater than 60 km against targets flying at high altitude”. This range would point to a lesser missile than the 100 km-plusrange Meteor that MBDA is supplying with the 36 Rafales.

In the air-to-ground weapons category, the 2007 RFP specifies a “combination of stand-off weapons with ranges of 100-200 km… [and] a war head of more than 250 kg.” This may or may not cover the SCALP missile that is being supplied with the Rafale. While the 2016 contract may have incorporated a superior BVR missile like the Meteor, the 2007 RFP also clearly had a weapons component, which was factored into the ^19.5 billion price.

India specific enhancements

The government has argued that Indiaspecific enhancements have raised the Rafale’s price, including helmet mounted sights, radar warning receiver, radio altimeter, Doppler radar and cold start.

The 2007 RFP contains all of these elements. Annexures II and III to Appendix A specify a high-end avionics suite, including AESA radar, helmet mounted display sights, radar warning receiver, missile approach warning receiver and an airborne selfprotection jammer. Indian Air Force sources explain there were Indian specific enhancements in both the Rafale configurations. The 2016 avionics might have had marginally improved capabilities, but with no significant effect on price.

Spares and logistical guarantees Spares and maintenance were an integral part of the 2007 RFP and were included in the $19.5 billion tag. Appendix D to the RFP stipulates detailed requirements for spare parts and maintenance facilities needed to support 126 Rafales, operating from three bases. “The IAF would like to avoid dependence on the manufacturer in terms of factory repair. Thus all repairs… are to be carried out by this [Depot Level Maintenance Facility set up in India],” says the RFP.

The RFP specifies a detailed “Manufacturer’s Recommended List of Spares” (MRLS) needed to keep the 126 Rafales flying. “MRLS to sustain the equipment for a period of five years… will need to be provided.” This maintenance back up is priced into Dassault’s quote, in the same manner as in the 36Rafale contract.

The 2007 RFP also requires vendors to ensure a 75 per cent aircraft readiness across the fleet – a requirement that the government claims to have paid an extra Euro 350 million in the 2016 contract for 36 Rafales. Technology transfer

The greatest loss from replacing the 126Rafale proposal with the 2016 contract for 36 Rafales might not be the extra money paid, but the opportunity that India’s aerospace industry lost of obtaining access to critical aviation technologies and manufacturing skills. The Request for Proposals (RFP, or tender) that the IAF floated in 2007 for 126 medium multi-role combat aircraft (MMRCA), had detailed conditions that bound all competing vendors to transfer key aerospace technologies that would have proven invaluable to Indian scientists and technologies working on two futuristic fighter aircraft — the Advanced Medium Combat Aircraft (AMCA) and the Tejas Mark II. However, the ^7.85 billion purchase of 36 Rafales that Prime Minister Narendra Modi unexpectedly announced on April 10, 2015 in Paris made no provision for any design or manufacturing technology transfer. All that the IAF will get is fully built aircraft and the skills and technology to maintain them.

The 2007 RFP imposed stringent conditions for transfer of technology (ToT) — essential when 108 of the 126 aircraft bought are to be manufactured in India. The MMRCA procurement was based on guidelines issued by then Defence Minister AK Antony, who told the Defence Acquisition Council that the contract must give “Indian defence industries… an opportunity to grow to global scales.” The RFP is forthright in demanding ToT, with Annexure I to Appendix M stipulating “key technologies” for transfer.

(Part III: Offsets and Integrity Clause) More on busimess-standard.com