Indian Air Force

CAG Reveals Dassault Got Multiple Favors For Rafale In MMRCA

A Performance Report of CAG (Comptroller and Auditor General) which was tabled in Parliament (Lok sabha) named “Report 3 of 2019” contained about Capital Acquisition in the Indian Air Force. This report has actually given the Shocking revelations about how Dassault got many favors for Rafale at Multiple Steps in the MMRCA Tender. After reading the report one can even say that Rafale was deliberately pushed into the Indian Air Force by Hook or Crook.

The report is based on Pure Facts and none of this a hoax or rumor. CAG in a very reputed body in carrying out Audits and busting many lies of the government. The report is really long and tough to understand so I would try to give the CRUX of it, in as short as possible. The report is available in the public domain as well, so I am not going beyond the limits and not even breaking any secrecy of our IAF. Here, many places Name of aircraft is used instead of Dassault, so consider both as same.

So, without further ado, let’s begin and understand how much is the effect of the foreign forces in India. In Volume 2 of the Report, the whole procedure and tells us each step of Procurement with details.

Delay Due To IAF’s Instance To Procure Mirage 2000 II As MMRCA

A French Air Force Mirage 2000C

We all know the Poster Boy Mirage-2000 role in the Kargil war. Also, written the history of Mirage Procurement. 2 squadrons of Mirage, got a superior edge of PAF. Delighted with the performance of Mirage, IAF wanted them more as the squadron strength was falling down in 2000. IAF required Medium multirole aircraft, so it proposed the purchase of 126 Mirage II (Upgraded Version) in a way that 2 Squadrons purchased from Dassault and rest under ToT ( Transfer of Technology) to HAL. Which got rejected, as DPP 1992 restricted the single source procurement.

In March 2001, the proposal was given again to get Mirage with a cost-benefit analysis. It also said that Rafale, Eurofighter, F-35, etc are Costly adventures than Mirage. Again in December 2001 proposal was submitted, this time it was conveyed as repeat order of the 1982 purchase of Mirage. DPB (Defense Procurement Board) delayed this till January 2004 and discarded it also asking IAF to start tendering according to DPP 2002. So for 4 years, wether to do single-vendor procurement was just getting thought of.

Gathering Information By RFI (Request for Information) To Vendors

After AON (Acceptance of Necessity) and before RFP (Request to Proposal), RFI is done because it helps in drafting Quality requirements (QRs), Better drafting of RFP, and Benchmarking price, and budgetary requirements. January 2004 QRs were drafted and RFI was issued to 5 vendors. All vendors just gave basic details (Brochure type) in RFI even though many details were asked. So again RFI was issued and Eurofighter was added to the deal

Issues In The Framing Of QRs (Quality Requirements)

Delay summed up and AON was declared in June 2007 for 126 Aircraft. Here, 18 Flyaway and the rest of ToT to HAL. Here the QR’s Sent by IAF, none of 6 fighters were meeting them. Some QR’s were narrow and some were not clearly defined which should be Broad and realistic. Here, the QR’s were such that they told them to get the exact design or technology, instead of stating the user’s requirement. Due to this technical evaluation became hard, as some offered alternate technology or superior technology. Due to this L1 couldn’t be justified on the basis of it.

Issues In Technical And Trial Evaluation

The technical Evaluation started in May 2008, here the technical bid of Aircraft was evaluated with the QRs stated. The report was submitted and was found that 5 of 6 Aircraft didn’t meet the QRs. And Rafale was unable to meet 9 QRs as prescribed in RFP. Here, additional data was not provided as well, so TEC (Technical Evaluation Committee) rejected Rafale. Since many aircraft didn’t fulfill QRs, the TM(Air) [Technical Manager (Air)], told to obtain clarification from vendors and complete the QRs. Here, again Rafale was Rejected.

Here, TM(Air) sought clarification on March 12, 2009, on the Warranty and option Clause. Again clarification was obtained and again here Rafale was Rejected. Here, Rafale asked for additional commercial proposals to meet 6 QRs along with another package to meet the extra 3 QRs. Again for Warranty and Option Clause was not there so the Ministry Rejected Bid of Rafale. In April 2009, Ministry received SUO MOTO representation from Rafale stating it will modify its bid to meet all terms of the RFP. During this drama, Ministry realized that Dassault lied in Technical Bid it actually didn’t meet 14 QRs instead of 9. It was forwarded to IAF for examination by TEC. In May 2009, Suddenly Rafale meets all QRs according to RFP.

Here, the drama is, according to Para 35 of DPP 2006, a technical bid once submitted cannot be materially changed (only small changes are allowed) and no extra time should be given for that along with that the Price should remain fixes. But Dassault modified all of these. So again, a violation and Rafale should have been Rejected but it was not. Here, they Fulfilled the QRs by branding it as Indian Specific Enhancements (ISE) which were nothing. The other vendors had many of them In-built.

Cutting to FET (Field Evaluation Trails) and SER (Staff Evaluation Report), nowhere was done according to Trail Methodology by Air HQ but Rafale and Eurofighter cleared it based on Lab Presentation and how they will overcome some of the QRs. No field evaluation was done on these 2 aircraft. And other 4, were rejected on basis of “Growth Potential” and “Design Maturity”. If they were required, then these terms should have been mentioned in RFP but it wasn’t. And “Design Maturity” didn’t even have a definition, so the other 4 aircraft were purposefully rejected.

As per TEC, Rafale failed 14 QRs and per SEC 3 parameters were non-compliant, 1 was given a waiver and 2 were useless (not needed) but still noted satisfactory. The Ministry report stated that all the waivers were given from Raksha Mantri (A K Antony) and hence all QRs were fulfilled. So here an additional cost of 14 QRs and 4 Parameters of SEC was approved by Ministry. This means that bid was changed and Rafale should be Rejected but it wasn’t. Now here the parameters of SEC were waived by Raksha Mantri stating they will be discussed by CNC (Cabinet Negotiation Committee). We all know that Technical Matters are not discussed by CNC and also were not discussed actually.

Price Evaluation

After Rafale and Eurofighter were selected, their bids of price were getting evaluated. The bids were opened in November 2011 by CNC. And the formulas used by them were not correct in cost. Also, both of the bids were non-compliant to RFP (Due to various reasons). This should have lead to rejection of both as per rule in RFP to reject when not submitted properly. But Ministry intervened and told they were correct. Here, CNC decided all the costs as per their formulas. And hence, a favor to both.

Also, the benchmark price set in April 2011 (before bids) was totally unrealistic. Here, the benchmark price is considered the total cost of aircraft over its lifetime. It was found that the price of Rafale was much more than the benchmark and Eurofighter was even more than Rafale. Now here, as bids were submitted in a total of 7 parameters which had an effect on the cost of aircraft over a lifetime. And in Jan 2012 Rafale was the “L1” bidder.

But controversy here is, the Audit says that the Rafale didn’t submit the bid as per RFP and Eurofighter did is exactly as prescribed in RFP. So, here Rafale should have been rejected and Eurofighter should have won. Rafale Didn’t submit a bid in 7 parameters, it just submitted the deal in 2 parameters. Here the L1 Sub Committee used its own formulas and did many calculations much wrong in order to favor rafale in all 7 parameters.

Giving here an example:- One sub-parameter was the capital expenditure for local production. This was included in Eurofighter but since Rafale’s bid didn’t have it, the L1 Sub-committee assumed the amount to Zero (0). Now, a fool doesn’t even do that. One can directly see that if that price was not included, it didn’t follow the RFP, and Rafale should have been rejected. But here, not only he was not rejected but had an extra advantage of many millions by such ridiculous assumptions and formulas of the L1 Sub Committee. Here, I am seriously concerned since I don’t think it as a mistake, I am fully convinced it was deliberately done. As this didn’t happen in this sub-parameter, it happened over other parameters as well.

Adding to all this, every time, the ministry was intervening, if there a setback in the bid of Rafale. So yes, it was from the top brass as well.

Contract Negotiation

As now L1 bidder is declared, now its time for contact negotiation. Here, comes the manpower issue. For the full deal, Rafale quoted 31.2 Million Man-hours and Eurofighter quoted 25.5 Million Man Hours. There was a factor which stated the conversion of French man-hours to Indian one (For HAL, and it was decided during benchmarking). The value of it was 2.7. So now 31.2 * 2.7 Million man-hours. Doing this calculation CNC came to know that, due to this conversion, the whole deal cost was inflated to Billions of Dollars. And after inflation, Rafale is no longer the L1 Bidder. Along with this RFP stated that after ToT, the company has to assure the quality of India Made Aircraft by HAL. Means Dassault had to ensure for Rafale made by HAL under ToT. Which Dassault clearly rejected.

Now here, they didn’t fulfill the RFP, so rejection of aircraft should have been done. And the calculation of Sub-Committee was wrong in manhours leading to a change of L1 bidder. And due to this, all these negotiations came to a stalemate. 5 years after the bid and 3 years of negotiation yielded no results.

Complaints were filed by many MP (Member of Parliament) due to irregularities in-process and price evaluation. So, the Defense minister set up the committee of Independent monitors in June 2012. They submitted back a report, presumably on inputs from the ministry, and stated that there is no problem in the deal. However other was also made of Ministry officials to derive complete assurance of the deal. And that team submitted the report in 2015 (Here, the Government changed from UPA to NDA)

They said all about that Dassault should have got rejected by the TEC stage itself. Also stated that the bid was totally incomplete and also pointing at officials of the L1 Sub-Committee. The decision was since Rafale is not L1 a deal shouldn’t be concluded with them. And Since Eurofighter even was non-compliant to RFP a deal should not be even done with them.

Hence, the committee recommended of Withdrawl of MMRCA. Here, no progress was made since 2000 and even after 15 years nothing was concluded. This deal was to be done to replenish squadron strength but that didn’t happen. Due to this, currently, we are on brink of 2 front war and instead of 42, we have 31 Squadrons.

After, knowing this mess, we can understand why the UPA government didn’t sign the deal and why the NDA government had to scrap the deal. And, if the deal was that good as said by UPA, then why wasn’t it signed in 2012 itself? Not inclining to any government.

So, after canceling this deal, the NDA made a G2G (Government to Government) of 36 Rafale in flyaway condition. This was done for handling the depleting strength of IAF squadrons. When compared to the deal of 18 Aircraft (As in MMRCA 18 would come in flyaway, rest would be ToT) it is actually 2.86 percent Cheaper. This shows that lessons from the previous government were taken seriously. Each detail of this deal is also covered in the report.

Conclusion

Here, this article is not inclined to any government. It just shows everything based on the facts where are given. CAG is actually a body that threw the light on this but still, this report is not known by many people. One needs to see here, that we need to improve our procurement process and also see over the sub-committees which sometimes favors some companies and harms the whole procurement process.

“All’s well if Ends well” is just a line. In end, we got a good aircraft that is superior to all aircraft of our neighbors. But had been a correct deal made, we would have been making the same in India. In the end would just say, “Past is to be forgotten, but at the same time, lessons must be learned, else the History wouldn’t fail to repeat”. The reason for saying this MMRCA 2.0 is coming very soon. If the same thing happened, then the future of IAF is to be DOOMED.

To read the Full report Click Here

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Nirav Kotak

A Mechanical Engineer and a Defense Enthusiast wanting to share knowledge and learn more from others as well.

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