India's Rafale Deal Negates RFP Exercise

The decision of the Indian and the French governments to enter into a government-to-government deal for procurement of Rafale fighter aircrafts by the IAF has actually negated the whole exercise of creating the most detailed RFP ever circulated.

Of course, the life cycle costing (LCC) mechanism that was developed for the discovery of the correct price of various offers. This was considered possibly the best system ever developed in any country. And a former IAF chief, Air Chief Marshal (retd) Pradeep Vasant Naik, had actually stated that left to the service, it would like to ‘patent’ the process.

In a way, Modi government’s decision to buy 36 Rafales – two squadrons worth – may alleviate the immediate need of the air force, but it would not make a major dent into the depleting combat strength of the service.

But the way, the Rafales are being bought in a government to government deal could not have augured well had it been like the Foreign Military Sales (FMS) deals struck by the New Delhi and Washington often. For, in these FMS deals the price quoted is often higher than what could be the price if there was competition between the vendors.

But the French, often known as hard negotiators who drive a hard bargain, as witnessed in the Mirage upgrade contract have promised to actually quote a lower price than the one under negotiation by Dassault with the MoD officials.

However, the fact that the maintenance contract will remain with the French manufacturer will keep the window open for more revenue spends.