The IAF's MRCA contract: A split contract

With the attention of competing companies and nations focused on the Indian Air Force's 126 medium range multi role combat aircraft (MRCA) tender, the request for proposal (RFP) - the initiating document for the entire acquisition process - is keenly awaited. In Part I and II of this series we have looked at other facets of the deal, such as the need for an MRCA contract for the IAF and the various contenders. In this third part we take a look at another talking point that has been thrown up over the last year and a half - the issue of a split contract.

The argument for a split contract has been broached keeping in mind the fact that series production of new aircraft, under the MRCA contract, will take time to take off. So, it is argued that it may make more sense to split the deal between two vendors, and also for a larger number of aircraft.

Two vendors or one…
"India will increase the number of Medium range Multi-Role Combat Aircraft (MMRCA) it plans to buy to 200, opening the door for more than one supplier, said Air Force and Ministry of Defence officials…

The official said the first batch of MMRCAs could be supplied by one vendor, and perhaps the second lot could be made in India under licensed production from the same or a different vendor…

Defence ministry sources said it will be difficult for the government to choose among the four vendors because political and strategic considerations must be weighed in addition to technical factors…."

22/11/2005
PTI report

Comment: This is a line of argument that keeps surfacing in the media now and then. It tries to sell the idea that the original order may be enhanced from 126 MRCA to 200, and further, that the order would be split between two vendors. The argument is that force levels in the IAF are at dangerously low levels and so a larger number of aircraft are required. Also, the need for induction of new aircraft is immediate and a single vendor would take time supplying the required numbers.

On the face of it the argument has merit on both grounds. Getting the production of technologically complex aircraft, such as those contemplated under the MRCA contract, is a time consuming task. So, with two vendors the IAF would presumably have the advantage of inducting aircraft in a shorter time frame as both vendors deliver their first lot of aircraft in quick time, and with local production and two vendors on the job, the flow of aircraft into IAF squadrons will be occur at a steady pace.

The Falcon's fear…
The unstated part of the argument, or rather the fear that it may be trying to disguise, is that the MRCA contract may already have already been 'tied up' by one of the competitors. So, as a sop to another 'major' competitor - for all the contenders are heavyweights and carry the full weight of their respective nations behind them - additional orders would be placed to mollify the 'losing' party.

Pursuing this line of thought, let us imagine that the Russian MiG-35 has the contract 'tied up', and so a US company is given the 'additional' order for 74 aircraft.

The tie-ups that the Russians have already entered into with HAL, with respect to the production of the RD-33 engines that power the existing fleet of MiG-29 aircraft, and a OVT version of which will power the MiG-35, would also have tightened the Russian grip over the MRCA contract. Also, the Indian Navy has already contracted for a MiG-29K naval version for the Admiral Gorshkov/INS Vikramaditya aircraft carrier.

Thrust vectoring engines, such as that which will power the MiG-35, already powers the Su-30MKI and so induction of a similar engine with the MiG-35 will not be much of a problem for HAL or the IAF, either in terms of engineering technology, or pilot familiarity with the flying characteristics of such a technology.

The MiG-35, in any case is the evolutionary end of the MiG-29 platform, a fighter that the IAF has been operating for well on two decades now. There is already a wealth of experience associated with this platform that is now extant within the force, something the MIG-35 can hope to capitalise on.

If the MiG-35 walks off with the contract - this leaves the Europeans, and the Americans, out in the cold. So they say tough luck and move on with their lives. They could do that, though it does not appear to a very likely scenario.

We need to keep in kind the fact that the Americans, in particular, hold a vital bargaining chip in their hands - the pending Indo-US nuclear deal. The most optimistic time estimate for this deal to be successfully realized places it at the end of the year. This is a long span of time for the Americans to keep turning the screws on South Block.

If the MRCA deal is a lollipop dangling in front of the noses of global arms companies, so is the Indo-US nuclear deal for New Delhi. Given its ramifications - at least the way it has been portrayed by analysts - the nuclear deal might even be something of a sword of Damocles hanging over New Delhi's head.

The seriousness with which the Americans have orchestrated their approach to this contract is difficult to overlook. Hype is the American way of doing things - it's their style. Nevertheless, the way they have opened up their stores, for us to take a walk through and admire the stuff awaiting our approval, is impressive - Patriots, AEGIS, AWACS, C-130Js - it's all ours for the asking, if we should want them.

Forget the small print, and the devil lying in wait there, the point is that the Americans are determined to plant the star spangled banner here - a country, where they count for nothing as far as defence relationships go.

Bear necessity…
Reverse the situation and see how it goes with the Russian MiG-35 losing out on the deal and being offered the sop of 74 'additional' aircraft. The Russians are India's long time strategic partners, and a brief, hostile, interlude at the time of Boris Yeltsin notwithstanding, are now back to being good friends all over again.

The MiG design bureau has a proud history, but the sad part of the story is that today the MiG RAC is without any orders -indeed it has been in this situation for a very long time. The only orders that it has are for 18 MiG-29Ks - an order, once again, placed by India. The MRCA contract, it is commonly stated, is the last hope for this design bureau to survive.

A long time back India bailed out the Sukhoi design bureau from a similar predicament, with an order and advance payment for the untried, untested Su-30MKI. The Sukhoi bureau survived, and the rest is history. The Su-30 has gone on to become the most powerful and feared fighter platform in operation today, and design firm Sukhoi one of the major aerospace firms in the world.

The stakes are too high for MiG RAC- like Sukhoi, early on in time, it too may be dependant on the Indian MRCA order to pull it through.

A continental dish
If US companies, and the US establishment, along with the Russians are desperately keen to land the contract, so are some others. The Europeans, with the Eurofighter Typhoon, are desperate to break the stranglehold that Russia and Israel exercise over Indian defence contracts. They are also traditional competitors with the Americans and the Russians and would not appreciate getting edged out of this deal.

The Typhoon is a very capable aircraft, and its Tranche II version, which has just begun entering service this year onwards, takes care of the ground attack deficiencies of the Tranche I version.

The French Rafale is desperate for export orders. It has yet to sell a single Rafale anywhere in the world, other than to the 'home service,' the French air force and navy. Export orders for the very costly Rafale would also drive down its price, which is important not only for India, but also for the French. The French air force and navy have scaled down the number of Rafales that they wished to induct into their own forces because of the costs involved. An Indian order would not only boost Dassault's prospects, but also help out the French defence services from a tricky situation.

Sweden, with its Gripen fighter, that has traditionally remained neutral in world affairs and already has a deep economic relationship with this country. Through 'offset' requirements they can boost their economic and technological involvements with the country further.

However…
"He (Air Chief Marshal SP Tyagi) also declared that all the 126 fighters for the IAF would be purchased from a single vendor."

Dated 1/6/2006
PTI report

Comment: The recent order for 40 additional Su-30MKI, agreed upon during Russian president Vladimir Putin's visit in January this year, over and above the original contract for 140 of these aircraft, would appear to have shut the doors on argument regarding two vendors.

The cost of 40 of these additional Sukhoi's, which would be approximately double that of a MiG-35 or a new F-16, effectively covers the expense of putting out orders for 74 'additional' aircraft. So, no surprise really, the first reports trying to raise muck over the acquisition of additional 40 Su-30MKIs, on the grounds that it has the potential to violate 'offset clauses,' has already begun to appear in the national media.

The Indian air force, which already operates a menagerie of aircraft would presumably not be interested in adding to its logistical headaches by adding yet another variety of aircraft, particularly those with 'uncertain' lines of delivery.

The 'uncertain' bit refers to the United State of America, where an interesting court case is now coming up that alleges that four Indian nationals, including two Government officials, re-exported 'banned' items to India that could come in handy in the development of missile technology, amongst other things.

With India 'stealing' technology from the US anything can happen as a fall out - sanctions may get slapped once again. Imagine the amount of information a senior ex-RAW operative, Rabinder Singh, a fugitive from Indian justice, currently enjoying US hospitality along with his family, may have passed on to the CIA. He couldn't have been advising the CIA on the wheat growing abilities of Indian farmers when he was serving as their mole at RAW.

Indian intelligence agencies have, for long, spoken about the systematic targeting of senior Indian intelligence personnel by the US - a particularly friendly activity, considering the fact that most of them came in touch with the CIA and the DIA through 'training courses' conducted by these agencies as part of a campaign to involve 'strategic' partners in the global war on terror. 'Strategic partnership' with the holy warriors against terror is moving along expected lines, and India by now would know the distance it would like to travel with such partners.

Or…
Alternatively, the sale of the 'additional' 40 Su-30MKI aircraft is the 'extra' sale that reports are referring to. If so, with the 'additional' sale having already been made, the main contract for 126 fighters can now be offered to somebody else. Time to say, 'Tough luck Boris, and thank you for everything…' to the Russians, as far as the MRCA contract is concerned.

The 'Offset'
Discussion over the "offset" clause has tended to focus over the economic side of it, i.e. 30 per cent of the value of the contract. Unnamed government officials have tried - very fitfully it must be said - to stress that the offsets are really meant to ensure technology transfers in areas where we lack expertise. If so, then it is here that the RFP could make the game very clear, and sort out the real competitors from the also-rans.

India has gone through the experience of living in a regime of sanctions. It has also lived through the trauma of the collapse of the Soviet Union and its military supply lines. It is widely conjectured that the real reason for the high accident rate of the IAF MiG fighters was directly related to this phenomenon.

With supplies no longer available from regular sources, ministry of defence officials scoured the world's markets for supplies wherever it was available. A lot of 'junk' came through and was fitted on to aircraft and a spate of crashes followed. This is the reason that Russians officials allude to themselves, in an attempt to clear the reputation of their beloved MiG-21s, which came to be dubbed as the 'Flying Coffins' in this country.

The nature of the technology transfer that the RFP asks for will ensure a natural weeding out of contestants. Either they will agree to 'sensitive' technologies developed by them being passed on to India, or they will have to confess that they cannot ensure the delivery of technologies that they have developed or sourced from other countries.

Aircraft are no longer 'national' trophies that carry only 'national' technologies and colours. Any weapons 'platform,' be it an aircraft or a radar or a missile, is likely to carry a blend of technologies from other countries or cross-country consortiums. The RFP may well ensure an initial weeding out at the time of its issuance, as some contenders may find it tough, or even impossible, to meet Indian demands.