Learning from India's $750m helicopter procurement

It is sometimes useful to learn from international public procurement. We've looked at the Indian procurement of fighter jets in the past, but today provides another interesting opportunity. An opportunity for one simple lesson and something which may be transferable to the horsemeat saga. What also makes this story interesting is the sheer scale, $750m and the involvement of three countries, India, Italy and UK.

I'm not going to bore you with all the details as the key facts are easily found on the web, namely, big contract, suggestions of corruption in the award of the contract, and contract put on hold.

No, to me, what is much more interesting and provides the key lesson relates to the specification. If the informative Flightglobal is correct, the procurement process started in 2002. At that time the specification requirement for the helicopters to fly at 6,000m could only be met by one bidder. The Indian MOD however had the good sense to stop the procurement process and change the specification so that the operable height requirement was only 4,500m. This in turn meant others could bid.

I have long lost count of how many times I have seen specifications written in such a way that there is only one potential bidder. But I would not need very many fingers to count the occasions I have seen steps taken to establish if that single bid represented value for money - in other words ensuring that 'price is right' and forensically probing the justification for such a proprietary item. I can only assume the Indian MOD, in response to the first procurement round asked something to the effect of:

"Let's revisit this, on how many occasions would we require a helicopter to fly at 6,000m, do we need all the helicopters to fly at that height or just some, how much money could be saved and functional capability compromised if we reduced the flying height?"

That strikes me as a fairly reasonable set of questions to ask. Hold on though, why weren't those questions asked prior to going to the market the first time?

However, there is another piece for us to get our teeth into from the subsequent procurement process (the one currently on hold) and think review in the context of the horse meat fiasco which is currently seizing the UK.

The new helicopter procurement included an interesting integrity commitment to:

"take all measures necessary to prevent corrupt practices, unfair means and illegal activities during any stage of the bid or during any stage of the bid or during any pre-contract or post-contract stage."

Now, if such a clause had been inserted in all the food chain contracts which have been the discussion on horse meat, would we be faced with the current problem? I don't know but it is interesting to speculate.

P.S. 20 February 2013: All flight tests were held in the UK, in violation of all norms of the Defence Procurement Procedure (DPP) that makes it mandatory for all trials to be held in India.