Crashed contract

Another defence deal joined a lengthening list of dubious contracts when the defence ministry recently scrapped a three-yearlong process to acquire 197 army helicopters. Earlier this year, the seven-year process for buying 180 towed artillery guns was restarted on technical grounds. Two years back, the contract to acquire self-propelled Howitzers from South Africa was scrapped after the arms firm Denel was found to have paid kickbacks.Never in recent times has the defence ministry spent so much effort defending itself. The latest kerfuffle was over the purchase of light utility helicopters to replace the single-engined Cheetahs which have formed the backbone of the army aviation carrying supplies and evacuating casualties from far-flung army posts including Siachen. Phasing out these choppers, inducted in the 1970s, has been long overdue. Eleven of these machines have crashed in the past seven years..preferred-source-banner{ margin-top: 10px; margin-bottom:10px;}Now, the process of their replacement has been delayed by another three years with the Ministry of Defence (MoD) scrapping negotiations with the European Aerospace and Defence Systems consortium to acquire 197 Fennec AS 550 choppers for $600 million (Rs 2,400 crore) on grounds of irregularities in the bidding process. The army plans to replace obsolete Cheetah helicoptersThe defence ministry had cleared trials of the AS 550 C3 Fennec with an Arriel 2B engine. But the army instead tested the civil variant—the AS 350 B3 Ecuriel fitted with the Arriel 2B 1 engine.“The deviation can be approved only by the defence minister after it goes through the Defence Procurement Board which was not done in this case,” says a senior defence official. The decision to scrap negotiations taken with the concurrence of the Central Vigilance Commission, is a severe indictment of the Indian Army which first floated a requirement to replace its ageing Chetak and Cheetahs in 2001. Why it was junkedThe army shortlisted the military variant, the AS 550 Fennec to replace its vintage Cheetahs and Chetaks, but conducted field trials using the helicopter’s civilian variant, the Ecuriel.Such deviations can only be approved by the defence minister after they go through the Defence Procurement Board. This procedure was not followed.The chopper deal also violates Defence Procurement Procedure, 2006, which states that a technical offer once submitted should not be materially changed later.Central Vigilance Commission found irregularities in the tendering process and advised the Government to scrap the contract.Trials of two short-listed contenders, the twin-engined Fennec and the Bell 407 Shen, began in 2004.With the army planning to buy new tanks, missiles and artillery systems worth $50 billion (Rs 2,00,000 crore) to modernise itself over the next decade, the MoD decision has questioned the army’s ability to select equipment. “The Indian Army’s equipment trials are the most stringent in the world—from the heat of the desert to the cold and high altitude of Siachen. But military imports are a political decision and the Government mayhave had much larger concerns in taking this particular decision,” says former deputy army chief Lt. General (retired) Raj Kadyan.It’s not clear if there were political compulsions but the scrapping of the contract raises questions about how the army allowed the trials with the civilian variant, a fact it had known since 2005. In correspondence with the army’s Directorate of Weapons and Equipment, Eurocopter representatives explained that differences in the military and civil variant—essentially the fitment of pods to carry guns and missiles—were very marginal. The army accepted this logic—which MOD says violates the defence procurement procedure—and allowed trials to continue on commercial variants of both the Bell 407 and Eurocopter, before selecting the Fennec.MoD has left it to the army to conduct an internal enquiry into the conduct of officials involved in the clearing trials. Officials say there is plenty of evidence to nail the guilty.In 2005, the army had disqualified the US-made Bell machine for not meeting two technical parameters laid down in the request for proposal—a threeaxis vector, a manoeuvre for adverse weather in high altitude and a hoist to lift loads of over 130 kg.Bell Helicopters had brought diplomatic and military pressure to bear and may have played a role in forcing the MoDs hand. “We have asked the defence ministry for transparency and a level-playing field,” said Lt. General Jeffrey B. Kohler, the then director of the Defence Security Cooperation Agency during a visit to Delhi.Evidently, the US concern was also dictated by market forces. The contract called for licenced production of 130 choppers in India by Hindustan Aeronatics Ltd. The winner would have got first-mover advantage in the Indian civilian helicopter market (there are only slight differences between the civil and military variants of both choppers) in the world’s fastest growing helicopter markets with orders worth over 500 machines in the next five years.France has lodged a strong diplomatic protest with the Indian envoy in Paris but seems eager to play down the incident ahead of French President Nicholas Sarkozy’s visit on the Republic Day next year. Eurocopter, which released a long statement explaining that the deal was above board, did not comment after the cancellation. With fresh tenders to be sent out shortly, the US and European firms will once again battle it out, but it is for the army to nab its black sheep.Published By: AtMigration Published On: Dec 13, 2007--- ENDS ---

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Crashed contract

The defence ministry scraps a helicopter contract after the army is found bending the rules to accommodate Eurocopter.

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