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SOURCE: StratPost.

In the preceding part of this analysis, we explained how the analysis of the cost was fixed by the defence ministry’s Contract Negotiation Committee (CNC) to favour the Rafale bid.But the single most interesting data point to emerge from the report of the Comptroller and Auditor General (CAG) of India is a date.This date has never been mentioned in earlier media reports, though watered-down or dismissive references have been made to the import of what transpired on this date, which is outlined in complete detail in Volume II of the report.

What is almost startlingly significant is not only this detail, but even more, the fact of the date, itself. The date reveals what was known, to whom, and when. Further, certain inferences can be drawn, which in hindsight are inevitable, and scandalously damning.

The date is March 27, 2015.

But first, some context.

Background

In April 2011, the Indian Air Force (IAF) shortlist in the contest for 126 Medium Multi Role Combat Aircraft (MMRCA) was announced, eliminating four fighters and leaving the Rafale and the Eurofighter in the fray. The commercial bids for both the aircraft were opened in November 2011. The Rafale bid was declared L1 in January 2012.

In May 2012, Independent External Monitors were appointed to review the selection process, which they rubber-stamped with their approval in June 2012.

Apparently not satisfied with the validity of this process, Defence Minister A.K. Antony ‘directed that in order to derive complete assurance of the integrity of the procurement, the matter be again examined by a team of ministry officials’. As it would emerge, he was prescient.

Meanwhile, negotiations for 126 Rafale fighter aircraft carried on with Dassault, reaching a stalemate that continued through the new government that came to power in May 2014.

March 27, 2015

Until the defence ministry team appointed by Antony submitted its report almost a year later on March 27, 2015.

The CAG report outlines the findings of the defence ministry report of March, 2015, thusly:

“The team in its report submitted on 27 March 2015 concluded as follows:

• At the stage of TEC, the proposal of M/s DA was non-compliant to the RFP with respect to the ASQR, Warranty clause and option clause. The proposal of the vendor should have been rejected at the TEC stage itself.

• The acceptance of additional commercial proposal after bid submission date for capabilities, which were already prescribed in the RFP, was unprecedented and against the canons of financial propriety.

• The price bid of M/s DA, was non-compliant as it was incomplete and not in the prescribed format.

• The L-1 sub-committee had filled up the incomplete entries by culling out figures given elsewhere under different headings of the price bid. While doing so, the members of the committee made certain assumptions. Calculation of L1 based on incomplete commercial proposal and based on assumption was incorrect and as such determination of L1 was faulty and not as per laid down procedure

• M/s DA is not the L-1 and therefore contract cannot be concluded with them.

• The proposal of vendor, M/s EADS was also not compliant with the RFP.

Therefore, the committee recommended in March 2015 that the RFP for the procurement of MMRCA may be withdrawn.”

Two further facts should be noted here:

  1. At no point did the government reveal the timing and findings of this report anytime after its submission. The relative and contextual timing of this report has only been revealed by the CAG report in January 2019.
  2. Exactly two weeks after the submission of this report, on April 10, 2015 Prime Minister Narendra Modi announced a request for 36 Rafale fighters on an urgent basis and on better terms and conditions than those being offered for the MMRCA. This request was made before the MMRCA tender was withdrawn in June 2015.

Questions

Several questions arise in turn:

  1. Would the government have been in a position to pursue an order for 36 Rafale fighters if the findings of the report had been made public?

 

  • Did the idea of acquiring these 36 Rafale aircraft emerge only after March 27, 2015 and take shape in 14 days or was it already under consideration?
  • Was the defence ministry or the IAF involved in the decision-making on the idea for the 36 Rafale fighter aircraft after March 27, 2015 and before April 10, 2015?

 

Parts of this report have been reported variously in the media — most notably by Manu Pubby, and later dismissively admitted by both Defence Minister Nirmala Sitharaman and Finance Minister Arun Jaitley. Both have publicly questioned Antony as to why he had ordered the review, in response to the criticism of the order for 36 Rafale fighters over the last year.

As it turns out, the findings of the report are supported by the CAG and, most importantly, explain why the order for 126 Rafale MMRCA could never have been concluded and why.

The government suppressed this report, especially its date, even after parts of it had come out in public, because it would not have been able to then pursue the order for 36 Rafale fighters, especially, only two weeks after a categorical rejection of the L1 determination of the Rafale bid by the defence ministry’s own team of officials.

In fact, Defence Minister Nirmala Sitharaman has repeatedly defended the order for 36 Rafale aircraft by saying that it had been selected as L1. Her own ministry had already determined that it was not, actually, L1.

Nor did the government withdraw the tender in the two weeks before April 10, 2015 because that would have required public explanations and the exposure of the report, which would have prevented the government from announcing the request for the 36 Rafale fighters.

And Now?

The story of how an order for a French fighter was finally managed for the Indian Air Force (IAF), is only able to come out comprehensively and authoritatively now, because the CAG has authenticated historical facts for the official public record in its report that were of uncertain provenance in many instances.

It took almost two decades, but the votaries of a French fighter ultimately got their way, across three governments. Irrespective of the political party running the government, the system was bent to the will of the advocates of a French fighter. At some times, they attempted to persuade and cajole to set the objective, at other times they brazenly subverted and violated processes to boost their favourite and fix the contest. And then they finally paralyzed the process when it wasn’t going their way, only allowing it to be dumped when they were sure of getting the order another way.

Ultimately, the French got a single-source order (just as they’d wanted at the beginning) for the Rafale, with no competition, no annoyances like bank or sovereign guarantees or the possibility of arbitration in India and no need to build the fighter in India.

All said and done, the CAG says that the order for the 36 Rafale aircraft is 2.8% cheaper, with a delivery timeline that is one month quicker than what was being contemplated for the order for 126 Rafale fighter aircraft.

In spite of the Prime Minister’s announcement in Paris that the order for 36 Rafale fighters would be ‘on better terms’ than those being negotiated for the proposal for 126 Rafales, and an ‘urgent’ requirement, this is evidently not all that much of a better deal.

This process was obviously fixed to continuously benefit the French in a demonstration of running largesse that could only be the result of corruption by people inside and outside the government, comprising eye-watering favours and egregiously preferential treatment over almost two decades, playing the process and the system, by either attempting to go around the rules but later, flagrantly irrespective and seemingly contemptuously dismissive of, both, the Congress-led UPA and the BJP-led NDA governments.

The persistent benevolence shown to the French through these twenty years by key officials in the government raises enough troubling questions so as to warrant a criminal investigation.

But there are also other implications.

A careful reading of the CAG report by an intelligent mind is enough destroy any confidence or expectation that defence companies might have of an equitable and level playing field in an Indian defence competition.

This will have an impact on how the new MMRCA 2.0 fighter contest will play out. Can global manufacturers be reasonably expected to compete in good faith, given how the last contest was so obviously manipulated to aid Dassault? If Indian officials will act without regard for their own rules, can vendors be expected to abide by them?

While we wait for the Supreme Court to rule on the Rafale acquisition, concerns have already been raised about the integrity of the new competition.