Understood that Dassault knew that the RFP specified HAL as the business that was to undertake assembly. In fact, had the GOI accepted Dassault’s proposal to use Reliance (or Tata and L&T and Mahindra & Mahindra etc ), India would have gained an alternative to HAL for aircraft assembly. Importantly, a private entity alternative – which I imagine would be far more effective than a state owned company such as HAL in fulfilling future assembly contracts.

But by suggesting that Reliance be the primary integrator, Dassault made something else clear – it was more concerned about snagging more workshare. had a company like TASL, which has been in aerospace for a while, or M&M that has started an aerospace unit, been selected, it would at least sound reasonable. But Reliance? No way.

I never suggested that Dassault should not be penalised for non-adherence to terms. Agreed, it might not be possible to cover EVERYTHING in a contract. That is one reason why it is a good idea to do business with companies one believes will be reasonable when trying to resolve issues that are not covered in the contract by negotiation. I don’t know if Dassault falls into that category. Personally I suspect it does not. It’s a shame SAAB doesn’t make the Rafale, isn’t it?

Whatever be the issues, it is indeed best that the contract should cover those and make the recourse very clear. Dassault is hard-nosed and so is the MoD and any future disagreement will only lead to tedious, time-consuming and possibly acrimonious negotiations that will delay the deliveries.
Dassault believes that the business jet and CATIA business provides it with adequate revenues, which means it tends not to be very flexible on the terms of its military jet business. Saab, from whatever one can say based on openly available info, is quite flexible and amenable to negotiations. The French have negotiated and lost a couple of high profile deals with India in the past few years itself. Snecma-Kaveri and the Maitri SAM for e.g. But Thales has a long history of successfully executed projects and more are in the pipeline. Maybe it is an organizational culture, versus a national culture, but I can’t say for sure.

I agree that it would be simpler for Dassault to arrange TOT. It has a relationship with Rafale sub-contractors and is in a better position than GOI to ensure those sub-contractors adhere to their agreements. Of course each supplier can seek their own terms and conditions. That’s business! Dassault cannot dictate terms and conditions to suppliers. If they don’t like them, they won’t sign contracts. Same as Dassault and GOI – if either party does not find the terms and conditions of the Rafale deal acceptable, there will be no contract.

Glad we at least agree on this. they will obviously have to act as the facilitators for the contract negotiations between the larger suppliers like MBDA, Thales, Snecma and HAL. But naturally individual contracts will be signed with each of them, including offsets that each will have to negotiate separately.

http://eagle-rost.livejournal.com/281290.html

Damn- one of MiG’s test birds (a KUB) crashed. Pilots ejected, one injured critically.

sad news, especially the part about one of the pilots being in a coma. Pray he recovers fully.

Taiwan develops new missiles to counter China

South Korea offers KT-1 Woong Bee co-production to Paraguay

New Zealand accepts first ex-Aussie Super Seasprites from Kaman Aerospace

Was there ever any suggestion that HAL would be responsible for doing the OEM’s job? Dassault has to be responsible for that and I am sure that will be in the contract.

It is the OEM’s job to be in a position for timely transfer of TOT. Dassault has to be responsible for that and I am sure that will be in the contract.

Look, there are no clear reports as to exactly what is the liability clause that has been the subject of debate. Unlimited liability is definitely not been looked at, although this isn’t the first time I’ve heard of that clause being introduced in contracts. My own company once opted out of a big contract with a North American OEM thanks to an unlimited liability clause- smaller firms that needed the business opted to ignore the clause and signed the contract.

If an OEM does ensure that it is in a position for timely transfer of TOT but the recipient of that TOT is incompetent in doing its bit (buildings fail to be built within schedule, machines cannot be installed within schedule, competent personnel are not available because of delays in training, the recipient of the TOT creates delays through sluggish decision making etc) then the OEM is not responsible for the problems created.

This isn’t the first licence manufacture that HAL is attempting. A company that’s built 160+ Su-30MKIs, hundreds of MiG-21s, Jaguars, MiG-27s, Hawks, Gnats and Dornier Do-228s, apart from a host of helicopters is not completely incompetent. Agree that they’re not a great R&D facility, but licence manufacture is their bread and butter. Heck, HAL has the only non-French overhaul facility for the Mirage-2000, a Dassault product.

Apart from servicing and upgrading the 51 remaining Indian Airforce’s (IAF) Mirage 2000H/THs, HAL’s overhaul-division was described to ACIG the only installation outside France authorized by Dassault Aviation, to undertake major inspection on and materiel supply to Mirage 2000 fighters of global customers. According to personnel in the ‘Mirage’-shop at Bengaluru in early Feburary, Mirage-2000 operators like Peru, Egypt or Qatar and UAE have begun various level co-operations with HAL, since Dassault issued that licence back in March 1998.

nor is this the first time that Dassault is dealing with HAL. The Mirage-2000-5 upgrade will also be carried out by HAL at its facilities in Bangalore after ToT.

Funnily enough, Dassault was all gung-ho about how 100% ToT would happen, despite fully knowing that HAL was the agency identified by the GoI as the prime integrator in India. Back then, winning the deal was the only thing on Dassault’s mind. Later on, once they won the evaluation and negotiations started, the tune changed somewhat. Dassault was looking to get Reliance Industries, a company that hasn’t even manufactured a gyrocopter, let alone a fighter, to become the prime industrial partner in India. So, its definitely not incompetence that they’re worried about, otherwise Reliance wouldn’t even enter the picture. There were and are, other private sector entities like Tata and L&T and Mahindra & Mahindra that actually have defence businesses. Reliance has nothing, not even a hangar. So why would they choose Reliance instead? Their first defence product ever and that would be a Rafale? Dassault was so confident that Reliance would be able to absorb all the technology that HAL, which has built hundreds of fighters cannot?

GOI is not paying the entire cost of the contract to the OEM up front. If the OEM does not perform according to the contract, payments can be witheld.

withhold contract payments and then let the entire Rafale fleet get grounded due to lack of OEM support while the GoI tries to negotiate with Dassault on how to set things right? After a contract has been signed that doesn’t penalise Dassault for non-adherence to terms? And then you’ll blame the GoI for not signing a water-tight contract and act like Dassault is this super ethical company that can do no wrong, and is merely sticking to whatever was contracted for.

If what you describe is the case, it looks like Pilatus is attempting to change the contract unilaterally.

Not necessarily change the contract, but since nothing explicit seems to have been there in the contract that prevents Pilatus from absolving itself of responsibility to be the sole agency dealing with HAL. Instead, it now wants HAL to go chase all those suppliers and sign contracts with each of them for maintenance and overhaul. I agree with Swerve that HAL has a reason to be antagonistic to the PC-7 MkII thanks to the HTT-40, but at the end of the day, Pilatus is making it much harder for HAL as well.

it is things like this which the MoD will have to ensure don’t happen. HAL shouldn’t have to deal with the hundreds of suppliers that Dassault uses for the Rafale. Rather, Dassault should take responsibility to be the sole authority that negotiates with HAL as the prime integrator of the Rafale, and assists it in signing all the hundreds of sub-contracts that will need to be signed with Dassault’s suppliers. Otherwise, each supplier can seek its own terms and conditions and bring the ToT process to a halt. And then who would be held responsible? HAL. Why should they alone assume all the risk that comes along with such a massive ToT package?

You do not understand. Dassault could transfer technology perfectly, set up a production line perfectly but would be responsible financially for defective management by HAL, defective work by HAL employees, delays in production caused by HAL. HAL is owned by the Indian state. The government of India wants a contract where Dassault pays the government of India if a company owned by the government of India fails to do its job properly. There is no incentive for HAL to do its job properly if there is no penalty for doing it badly. If India needs Rafales of quality construction delivered on schedule, this is the closest way I can think of to guarantee that it will not get Rafales of quality construction delivered on schedule. The question I ask is this: how can the government of India be so incredibly stupid?

In this context, I was suddenly reminded of how the Saab’s Lennart Sindahl, at the press conference on the Gripen E and F sale to Brazil, pointedly mentioned that it was Saab’s responsibility eventually to see to it that the airplanes were delivered on time and quality.

He said

Question: Will that take place further along, early 2020s, or will it advance very fast?

Lennart Sindahl (SAAB): We will start development of the two-seater now. However the deliveries will begin with the single-seater and the two-seat will come further down this five-year delivery schedule. And we will use quite a lot of the existing skills in Brazil, I mean as I mentioned earlier, it’s a very capable industrial base and a lot of companies around EMBRAER, but of course they will also further develop their skills by participating in this design.

But I would like to stress that it’s SAAB who is responsible to deliver the aircraft, it’s SAAB that is responsible for the quality and for the airworthiness of the aircraft, and of course, we will always keep together with Brazilian industry, make sure that we always have the same high quality of our products.

And somehow there are posters who would like to believe that Dassault somehow cannot be held accountable at all for delays in delivering Indian made Rafales- they are the OEM, they are the integrators for the various suppliers that work on the Rafale. How can HAL be the sole entity responsible for dealing with all these myriad suppliers that will need to transfer technology and ensure that it is done on time and on schedule? Dassault obviously has to be responsible for these.

Dassault AFAIK, isn’t being asked for a blank unlimited liability clause where they will be the only ones responsible for timely delivery and quality of HAL assembled and built Rafales – what is being asked is for it to ensure that ToT happens on time, since we have seen in multiple deals earlier, that the OEMs go slow on ToT once the contract is signed and then the GoI and MoD have nothing to do except keep sending rejoiners. This is just a way in which to make sure Dassault has its skin in the timely delivery of Indian-made Rafales as well. I don’t see anything wrong in that expectation from the GoI. Otherwise, what incentive does Dassault have to ensure that HAL gets all the help it needs to deliver on time and with the expected level of quality??

Already we’re seeing how Pilatus has shoved the responsibility of dealing with all its suppliers who supply various LRUs, for the PC-7 MkII’s maintenance contracts onto HAL, claiming that they merely integrate the LRUs and separate contracts would be required with all of those suppliers, which isn’t Pilatus’ responsibility. This after millions of Swiss francs were paid specifically for the maintenance contract with HAL. Now this hidden cost has emerged, which the MoD is not pleased about.

I, for one, would be very happy if the MoD goes through a very rigorous negotation and ensures that large hidden costs and contractual clause meanings don’t emerge later, which would delay the production of Indian made Rafales. each side will look out for its own and eventually will arrive at a mutually acceptable solution. Nothing wrong in that.