Indian fighter deal vendors to revise prices

Days before the expiry of the commercial bids submitted by the six vendors vying to supply the Indian Air Force (IAF) with 126 Medium Multi Role Aircraft (MMRCA), the Indian Ministry of Defense has asked them to extend the validity of their existing commercial proposals or submit fresh commercial proposals altogether, allowing them to change the prices and associated financial terms and conditions for the respective aircraft offered to India. The renewed or revised commercial proposals are required to be valid for one year.

The original commercial proposals, submitted on April 28, 2008, were valid for 24 months and are due to lapse on Wednesday. “The ministry has asked the vendors to extend the validity of their commercial bids. They also have the option to change their commercial bids. They can increase or decrease the value of their bids,” said one source, who also added, “This has been done in accordance with Section 55(a) of the Defense Procurement Procedure (DPP).”

Interestingly, if a vendor chooses to submit fresh commercial proposals under Section 55(a), there is no way to determine whether the vendors have increased or decreased the values of their commercial proposals, since their original commercial proposals will be returned to them unopened.

[textbox rows=”15″]Section 55(a), Defense Procurement Procedure [Return of Commercial Offers]: Situations would arise when the validity of the commercial offers submitted by vendors expire before acceptance of staff evaluation report. In such cases, vendors would be given an option to either extend the validity of the commercial offer for a specified period (the period to be decided in consultation with SHQ) or to submit fresh commercial proposals. For cases where vendors want to submit fresh commercial proposal, their old proposals would be returned unopened to them by the Acquisition Managers. However, for the old cases where the RFP (Request For Proposal) is retracted after submission of the bids or a vendor is rejected at TEC (Technical Evaluation Committee)/Trial/Staff Evaluation Stage or a vendor unilaterally withdraws from the acquisition process, their commercial offers would be returned unopened to them by the Technical Managers.[/textbox]

US aviation and defense firm, Boeing, pitching its F/A-18 Super Hornet is likely to extend the validity of its existing commercial bid. Boeing said in a statement to StratPost, “The US Navy and Boeing have been requested by the MoD (Ministry of Defense) to extend the validity of the MMRCA proposal and are working to provide a compliant response in support of the deadline set by the MoD.”

Sweden’s Saab, offering the Gripen, also told StratPost it would be ‘extending its offer to the Indian Air Force’, while Lockheed Martin, with its F-16IN, indicated a revision of its commercial bid, saying, “The F-16IN team plans to update our commercial bid to ensure the best possible value to India on MMRCA.”

EADS, with its Eurofighter Typhoon in the fray, while saying it would ‘respond in accordance with the requirements of the Ministry of Defense’, did not clarify as to whether it would extend the validity of its commercial bid or submit an entirely fresh commercial proposal. Dassault, offering the Rafale to the IAF, too was not clear as to whether it would stick with its existing commercial proposal or revise its value.

The Russian Aircraft Corporation, offering the MiG-35, has not so far responded to queries posed by StratPost in this regard.

With the trials of the six aircraft in the MMRCA contest almost complete, industry sources say this is being seen as an opportunity to recalibrate the offer prices of the respective aircraft in accordance with the perceived performance in the trials, in an effort to present a more attractive deal.