One thing that has not been debated enough here is how to interpret the M2K upgrade deal with the MMRCA competition?

Just forget for a second all this debate about technical evaluation or L1 (you can find contradicting arguments and it this debate never ends)…

In my opinion upgrading indian M2K fleet and not going with the rafale would be totally illogical. To overlook all the potential synergies (common electronics, weapons, and facilities) would be very surprising.

The IAF has already a lot of aircrafts types in its inventory, going for the rafale looks the easiest and less risky option in that context, especially with the possibility to get the naval variant of this aircraft. It is also the aircraft that can be delivered the faster.

That can create very nice rationalization and synergies in the long run and a landmark to build a more homogeneous fleet with the Indian Navy. In short the rafale can fit better and more easily in the Indian armed forces.

Signing this upgrade deal also means that the IAF still wants to deal with Dassault, and that the relation of trust has not been altered. Conversely dealing with the typhoon consortium might appear as a less comfortable option.

To sum up, I believe that if the two aircrafts are close technically and in terms of costs that might be the factor that could favor the rafale in the last run-up.

According to DSI rafale radar has 1001 modules. I would like to stress that this same magazine revealed long ago that the typhoon had 1421 modules, we learned a year or two latter that it was 1427. I my opinion I’ll trust DSI.

Another aspect that might be less “measurable” is that going for a traditionnal first teer fighter jet supplier like dassault might be percieved as more reassuring/ less risky, just in the continuity of the current supplier/customer relationship. If the offers are eventually close that can be the little “plus” that can make the deal tilit toward the rafale.

Never downplay these small but important reasons on top of that is purely measurable. Many of our clients prefer to stay with my firm not because we are cheaper but because they know how we work and we have good inter-personnal relationship with the management. Most of the deals are won thanks to net-working and reputation, more rarely on measurable criteria.

After all many of those who are evaluating the offers/aircrafts have probably worked in a way or another with the mirage 2000 (aircraft or program). The M2K has a good reputation in the IAF and the good stories must be known by many.

Unlike Quadbike I believe the technical evaluation could have a weight in the final decision if bids are close which should favor the rafale if we are to believe lattest reports.

Besides it seems that Typhoon Gmbh has almost no margin left to negotiate and that’s not good neither for india and nor for the partner nations.

From experience I saw several industrial deals having to record huge “losses at completion” because they were too gready in their bidding (price dumping). That resulted in endless claims and a lot of fees for lawyers and auditors (forensic service, what I did). I noticed that even people from the top management with decades of experience in their industry can make big mistakes in the appreciation of the profitability of a deal. In one case that I encountered they made irrealistic offers as a ticket to enter on a new market. As they were tight for the next 20 years and loosing several millions a year they asked for our services to make a case in a court to try to re-negotiate some specific parts of the contract.

It is very difficult to forecast your costs and profits in long terms contracts especially in that kind of deal which are very political and one shot (not recurring so you don’t have historical datas). It is not good both for the supplier and customer when their is an unstainable situation for one of them.

I am certain that Indian MoD will closely look if Typhoon Gmbh offer is “risky/sustainable”.

The fact that the rafale did not made as big sacrifices as the Typhoon can be interpreted positively and might even be an asset for India as they should have more margin left and thus being a more solid supplier which is of critical importance is such strategic deal where your will be stuck with your suppliers for decades. Conversely ending a negociation “naked” might look at a sign of distress…

Rafale and Eurofighter side by side in India
La Tribune , Nov 6

Commercial offerings of both companies would be very close to each other.

Manufacturers of both fighters still competing to equip the 126 aircraft the Indian Air Force (Air Force), Rafale ( Dassault Aviation ) and Eurofighter ( EADS , BAE Systems and Italy’s Finmeccanica), are engaged in a big commercial battle to reign in the Indian skies. According to several sources, the offers of Dassault Aviation and the European consortium would be very close to each other. What is already a big surprise, the Rafale was generally much cheaper (10% to 15% on average) than the Eurofighter in previous tenders in which they were competing one against the other.

The three industrial partners in the Eurofighter program would therefore have made great efforts on the price of the unit to stay competitive with the Rafale […]. “They have accepted monstrous sacrifices,” says one industrialist. “The two manufacturers will see much clearer at the end of the week after a week of work and comparison of the bids,” said another industrialist interviewed by “La Tribune” (see below) . However, even if the commercial offerings are really close, the Rafale keep an advantage operationally and technically. Trials of the Indian Air Force placed (it) ahead of Eurofighter.

Colossal challenge

Another trend that seems to emerge is that both offers are superior to the original budget agreed by New Delhi, estimated at $ 11 billion (8 billion euros). According to the Indian press, quoting an anonymous government officials, the Ministry of Defence would have almost doubled it to about $ 20 billion (14.5 billion euros), in particualr to take into account related contracts to support the aircrafts.

http://www.latribune.fr/entreprises-finance/industrie/aeronautique-defense/20111106trib000662040/rafale-et-eurofighter-au-coude-a-coude-en-inde.html

So now we can see clearer why the unit price was so close to the rafale in the indian bid ! It seems that Dassault is playing it smart and doesn’t feel the need to diminish its margins to win the deal !:)

another piece of “news”/info

one of the negatives that could possibly go against the consortium is that it sources parts, components or sub-systems from more than 100 countries. And a delay by any one or more could affect the supply of critical spares that could lead to the fleet getting grounded.

Analysts say India will be making its choice based on the best available technology, and commercial and offset proposals by the vendors.

“Both are European-manufactured, so there is no question of strategic implications (that) there would have been if the competition was between Russian and US companies,” said Deba Mohanty, an analyst with Delhi-based Observer Research Foundation. “I think the most important consideration will not be political or strategic in that sense. It will be based solely on the satisfaction of the end-user—the Indian Air Force.”

Former foreign secretary Lalit Mansingh concurred. “I think the only message that is being sent out is that India has reached a stage where it can buy the best technology. India can choose quality and not go in for bargains. There is also the transfer of technology. I think India will choose the best technology and the vendor who allows for substantial manufacture of the aircraft in India under the transfer of technology clauses,” he said.

Former IAF chief Fali H. Major said the very fact that the two are shortlisted means they are both good machines and now it is only a question of costs. “As far the Indian Air Force is concerned, it does not really matter,” he said. “In my reckoning, it (choosing the winner) should happen in the next one or two months.”

Major said he does not agree that the MMRCA purchase should be scrapped for the fifth-generation joint strike fighter F-35, offered by the US to India this week.“I don’t subscribe to that,” he said, adding that this could be the view of some “vested interests”. “Because there is an FGFA (fifth-generation fighter aircraft) programme with Russia, we already have the agreement and you cannot compare the two (fighter jets),” Major said.

Europe versus France contest begins for world’s biggest combat aircraft deal
Times of India , Nov 5

Now, battle-lines for the Europe versus France contest, after elimination of US and Russia in earlier rounds, have been clearly drawn. India on Friday opened the financial bids of the two fighters left in the fray for the world’s biggest combat aircraft deal, but promptly declared it would take at least two-three weeks to declare the eventual winner since tons of data had to be computed.

For all its promises of “full transparency” in the medium multi-role combat aircraft ( MMRCA) contract to acquire 126 fighters, likely to be the single biggest defence deal in the run-up to the 2014 polls with its overall value set to exceed $20 billion, the defence ministry refused to say anything concrete.

Sources, however, said the “unit flyaway cost” or “direct acquisition cost” of each Eurofighter Typhoon was “higher” than the French Rafale fighter, both of which fall in the $80-$110 million bracket, much costlier than the American, Russian and Swedish jets earlier eliminated after exhaustive technical evaluation by IAF pilots.

But the unit flyaway cost will not be the only factor to determine the lowest bidder (L-1). The MoD will also take into account “life-cycle costs” or the cost of operating the fighters over a 40-year period, with 6,000 hours of flying.

Besides, there are costs of the transfer of technology (ToT) since the first 18 jets will be bought from abroad in a flyaway condition, while the rest 108 will be manufactured in India, under licence, by Hindustan Aeronautics Ltd.

“The bids were opened today in front of the Indian contract negotiating committee, comprising MoD, IAF, finance, production and quality assurance officials, as well as representatives from French Dassault and EADS (backed by UK, Germany, Spain and Italy). It will take a few weeks to examine and evaluate their commercial proposals to arrive at a verifiable cost model to determine the L-1,” said an official.

IAF wants the actual contract to be inked by January-February to ensure the delivery of first 18 jets begins by early-2015 to stem its fast-eroding combat edge, with HAL beginning the manufacturing of the rest 108 from early-2017 onwards. “The first jet built by HAL should roll out in early-2017,” said an official.

India is also likely to go in for another 63 fighters after the first 126, if the timelines for the under-development Tejas LCA (light combat aircraft) and the stealth Indo-Russian FGFA (fifth-generation fighter aircraft) projects are not met.

The 5% reference could be true : most of the aircrafts are manufactured in India after all, but it should be stressed that the origin is still obscure and that all those articles just copy pasted the original source that started the rumor. I really doubt that they all cross-checked this source. That’s the typical mechanism of an inflating rumor : many articles repeat themselves and a buzz is created around. Common wisdom would be a wait and see attitude.

The above article does not mention the so called 5% difference and might suggest that the difference is more important especially if rafale is around 80million$ and typhoon 110m$. I am not saying it actually is but it should make everyone more cautious.

Then it must also be stressed that the unit price debate does not take into account life cycle costs and all the necessary package that goes with the aircraft.

My intuition is that it should also favor the rafale (smaller aircrafts, smaller improved engines (ECO program now developed) less moving parts so less hydraulic systems and less maintenance needed, common facilities with the M2K and common weapons. That’s why I am still reasonably confident that overall the rafale offer will be the L1 with a relatively comfortable margin.

The question is also what role will political influence will play. If I believe that the rafale makes more sense at a strategic level for india it is true that 4 states backing the typhoon is an advantage in terms of negotiation power (4 head of states, 4 ministry of defense) and lobbying.

In the end you can find good reasons to go for both aircrafts and it is still unclear what factor will prevail L1 or political.

I’ll be on a business trip for the next days so I’ll keep an eye on this thread but it will be more difficult for me to participate. Have fun here !

There is more to share when you are two than five and considering Typhoon nation partners lack of enthusiasm for upgrades and taking their orders being part of the consortium is more about sharing the costs than the profits.

to jwcook : that’s your opinion but it is only an opinion and I don’t share it. In this case I prefer to discuss issues that have or had a real echo in the press or specialized press. Not speculation from an individual.