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Thursday, August 11, 2011

MMRCA Updates

SOURCE: AVIATION WEEK


The winner of the Indian air force’s $12 billion Medium Multi-Role Combat Aircraft (MMRCA) fighter competition should soon emerge, as the government is set to formally begin the process of identifying the lowest bidder in early September.

The Eurofighter Typhoon and Dassault Rafale are the final contenders left in the race and Indian government officials have finalized how they will judge offset and industrial participation offers that are crucial in deciding which company will be chosen to supply the initial order for 126 fighters. However, a defense ministry official indicates that the air force wants contractual options to be exercised immediately, which would boost the buy to 189 fighters and the program value to almost $20 billion.

Air Chief Marshal (ret.) P.V. Naik revealed the impending source selection decision just before he retired July 31 and said a formula has been found to benchmark the offers to provide a like-for-like comparison. This is designed to determine what the government considers a reasonable cost, reflecting several factors such as pricing in other countries, known commercial bids and inflation.

The defense ministry’s Technical Offsets Evaluation Committee has almost completed its review of the two offset packages and will make its report final shortly, according to government officials. The MMRCA competition has a 50% offsets requirement, running into at least $6 billion and acknowledged by industry observers to be one of the most challenging reinvestment propositions in recent aerospace contracting.

A key challenge is that India’s aerospace industry is not considered mature enough to absorb all those offsets, putting pressure on the winner to work with companies to establish the capability to deliver on what is being promised, warns a European industry executive. 

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