Sunday, 19 February 2012

Fighting about Indian defence procurement

The world is certainly richer for discussions on Indian defence procurement.  Recently I tweeted a bizarre report from the BBC on significant delays to Indian defence procurement which were likely be the outcome of an unsuccessful challenge over the age of one of the generals.  Separately I questioned how the Eurofighter consortium, of which the UK is a part, could be readmitted to the bidding.

By way of an update, the UK are part of a consortium bidding to build 127 fighter jets.  The bid is worth £7-10bn (reports vary) and if the UK bid isn't successful a thousands of jobs are at stake.  At the start of the month it was reported that the French (Rafale) were the preferred bidder and the UK bid would progress no further.  Cameron wasn't happy, claiming that the Eurofighter bid was lowest, it was unfair that we were out.  Cameron planned to do all in his power to get the Eurofighter bid readmitted to the competition.  I questioned how that could happen and the potential political and procurement implications of the readmission.

Yesterday, it was reported that all is not well with the Indian negotiating team. It appears that two of the senior officials have now gone public stating
that it was only assumed the French bid was the lowest-priced and that had not been validated. As a result they initially refused to sign the committee minutes until their reservations had been recorded.

The Times of India  meanwhile has reported that there is no going back, the Eurofighter bid is out and final negotiations with the French are underway.

This is all very messy:
  • Will the committee minutes be made public?
  • Will there be a challenge regarding the detailed comparative cost analysis of the Eurofigher and Rafale bids?  
  • What would be the justification for the appeal? 
  • Who would such an appeal be made to?  
  • Is price paramount?
  • What are the long-term quality and international sales implications if the Rafale fighters are considered more costly but deliver better performance? 
  • If an appeal is sustained will this create a difficult precedent for UK public procurement?
Messy it may be, but unlike the unhappy outcome of the General's challenge regarding his birthday, if the Eurofighter bid is successful this will be an early birthday present for Cameron, regardless of the precedent and implications for UK public procurement. I suppose that's one of the trade-offs political procurement has to live with.

Background reading
Smith, N. (2012) 'Indians question deal on French fighter jets', The Sunday Times, Section 3, Business, 19 February,  p.3.

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