Fighter deal suspense continues

Eurofighter holds price edge: Source

The Ministry of Defence (MoD) has shortlisted European Consortium EADS’ Eurofighter and French firm Dassault’s Rafale for the estimated $10.4 billion deal, disqualifying the other contenders.

The MoD, on Friday last, opened the commercial bids of the two contenders clearing way for further negotiations before it announces the lowest bidder. According to well-placed sources, EADS, which is promoting the more advanced and thereby more expensive aircraft   is said to have quoted a lower price “unit flyaway cost.”

“This comes as a contradiction to all the assessments made in the past that Eurofighter is costly and that India might not purchase it due to cost pressures,” a source said.
The two aircraft were, according to Air Commodore B R Krishna, Commandant, Aircraft and Systems Testing Establishment, were “shortlisted after they complied with the 600-odd parameters laid down in the Air Staff Qualitative Requirements.” Sources, while adding that though there was not too much of a difference between the two quotes, however said: “This shows how important the deal is for countries involved in the promotion of the aircraft and with the European economy not exactly in a comfortable position, such deals have become more dearer.”

The vendors refused to comment on the matter as there is confidentiality agreement.  Speaking to Deccan Herald, MoD spokesperson Sitanshu Kar, without confirming anything said: “...This is just the unit cost, there is more work left before one could rejoice or feel otherwise. We have some of our best personnel looking  into the matter and the L-1 could be announced in another six to eight weeks.”

The MoD is busy with benchmarking and standardisation of costs, so that there are common parameters for the bidders. Kar said a Joint Director rank official from the Defence Accounts Department will head the deliberation of costs.

Given that India is, for the first time going to consider more than just the direct acquisition costs before selecting the lowest bidder, the MoD will also evaluate the life-cycle costs (keeping in mind a time span of 40 years of operation), cost of other aspects like the electronic warfare equipment, avionics et al.

And considering that the Hindustan Aeronautics Limited will manufacture the selected aircraft in the future,  transfer of technology costs will also be considered.