I don’t understand- how could they make the mistake of failing to include tooling costs? Or is that excuse a cover for something else? Why doesn’t the government want to consider rengotiations? However costly they might be, I’m sure that any Hawk deal benefits would outweigh the costs.
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Date Posted: 11-Mar-2004
JANE’S DEFENCE WEEKLY – MARCH 17, 2004
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Signature on Hawk trainer for India faces delay
RAHUL BEDI JDW Correspondent
New Delhi
An accounting “oversight” could “adversely affect” India’s $1.63 billion dollar purchase of 66 BAE Systems Hawk advanced jet trainers (AJTs) that took nearly two decades to negotiate, according to Indian sources (JDW 10 September 2003).
India’s Ministry of Defence (MoD) declined to comment on the controversy, but admitted that discussions to “talk things through” to try and conclude the contract “soon”, were continuing with BAE officials in Delhi. BAE officials would only say that negotiations were continuing and further comment was not appropriate.
Official sources said the “lapse” responsible for delaying the deal stemmed from a failure to include tooling costs to locally build 42 trainers at Hindustan Aeronautics Ltd’s (HAL’s) Bangalore plant in the unsigned contracts. These charges could vary from $15 million to $50 million and could seriously jeopardise the AJT purchase.
In the proposed trainer purchase announced in September 2003, 24 of 66 Hawk 115Y AJTs were to have been acquired in fly-away condition and the rest constructed under licence by HAL.
The Times of India newspaper, quoting unnamed sources, declared that if the AJT contract was not finalised by14 March, BAE would not hold to the agreed prices and the entire deal would have to be renegotiated.
Officials said such an eventuality would “considerably” delay the deal as India faces summer elections and a new administration would assume office only by mid-May.
“It is highly unlikely that renegotiating the Hawk deal would be high on the new government’s list of priorities,” a military official said.
Defence sources said the charges for man-hours of design work needed for tooling to indigenously construct the Hawk were omitted from the proposal placed before the Cabinet Committee on Security (CCS) that cleared the deal. The omission reportedly occurred because of the “unduly long time” lag between March 2002, when the MoD-BAE price Negotiation Committee (PNC) finalised costs, and the CCS met to approve the purchase.
Some key officials involved in the deal retired in the 18 months it took between the PNC and CCS approval and were replaced by new incumbents who did not spot the mistake, sources said.
The Times of India reported that BAE had specified the tooling required but the “assumption was that with its vast army of design specialists, HAL would do the [tooling] job in-house with design and technical drawings obtained from BAE”.
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March 11, 2004 at 11:13 pm