NEWDELHI: The commercial bids of two of the shortlisted vendors for the most coveted defence deals of the present time - 126 medium multi-role combat aircraft (MMRCA) for the Indian Air Force (IAF) worth $10.4 billion - were opened on Friday in the presence of the representatives of all the stakeholders, thus marking the final stage of the long procurement process. The announcement of lowest bidder will then take 6-8 weeks.
The sealed boxes containing piles of documents from the two companies - European consortium EADS’ Eurofighter Typhoon and French Dassault’s Rafale - were opened at the Air Headquarters in the capital in a meeting that began at around 3.30 pm on Friday. Sources confirmed that nearly the two-hour long meeting was attended by the members of Cost Negotiation Committee (CNC) and representatives of the two contenders.
“The announcement of lowest bidder (L1) will take 6-8 weeks as life cycle costs, maintenance cost, cost of spare parts will be calculated before fixing a price tag for the two aircrafts,” sources added.
This is the first time that life cycle cost has been included in the tender itself and it would mean the cost of operating the two aircraft for 40 years or 6,000 hours. Thereafter, the cost negotiations will start with the L1 on the basis of the benchmarked cost, an indicative figure arrived at by IAF after researching on 538 parameters. The offsets proposal of the two companies will also be scrutinised. As per the request of proposal (RFP), the winner is bound to invest 50 percent of the value of the deal in Indian defence industry as part of the offsets.
After this the proposal would go to Ministry of Finance for approval and followed by nod from Cabinet Committee on Security (CCS) before a contract is signed.
Also the estimated cost of the deal that was decided in 2007 at $10.4 billion is going to go further up owing to change in the currency exchange rates. As per the tender, IAF will be buying first 18 aircraft in fly-away condition and the rest will be manufactured by the Indian defence major Hindustan Aeronautics Ltd (HAL) under license from the vendor. The first aircraft is schedule to be inducted in 2017.
The slow paced acquisition process started in 2006 when IAF issued RfP. Initially there were six contenders, including two from the US - Lockheed Martin’s F-16IN Super Viper and Boeing’s F-18 Super Hornet, Swedish SAAB’s Gripen and Russian MiG-35. After a grueling two years of flight trial in the extreme climate zones likes the desert of Rajasthan and the high altitude Leh airfield, IAF zeroed in on Eurofighter and Rafale.