Sunday, November 4, 2012

Procurement-Slow motion

DH- Nov 2012

While India has acknowledged it needs to move rapidly to replace its elderly service helicopter fleets, government red tape and protests by losing bidders are holding up acquisition efforts, reports Neelam Mathews.

India’s plans for modernising its military aviation capabilities, including big-ticket deals such as the Medium
Multi-Role Combat Aircraft requirement for 126 jets, also have a substantial rotarywing component, with the objective being to induct more than 900 helicopters within the next decade.
Demand for civil and military rotorcraft in India is projected to increase by an average of 6% annually, with a number of separate purchases being planned by the military, which recognises that acquisition needs to be done at a fast pace to replace a rapidly ageing fleet.
The purchase of an RSH has been deferred by the Indian government, much to the frustration of Eurocopter and Russian Helicopters. (Photo: Eurocopter)

However, the deadlines for a verdict on some 600 helicopters – which will be purchased under a variety of different programmes – remain hazy.
Second time lucky?
In a bid to establish transparency, India’s defence procurement has become bogged down by bureaucratic hassles and there are no incentives to make decisions in a hurry.The most glaring example of this is the RfP released – twice – for 197 Reconnaissance and Surveillance Helicopters (RSH) for the Indian Army and Indian Air Force (IAF) to replace 230 ageing HAL Chetaks (licence-built SA 316 Alouette IIIs) and Cheetahs (SE 3130 Alouette IIs).
Given that the production lines for these two types closed in France in the 1980s, the unavailability of spares has turned maintenance into a nightmare, according to an HAL official. The company is increasingly having to
cannibalise parts, leading to more aircraft being on the ground than in the air, while Eurocopter has kept rotor blade production open solely for the Indian market.
At the first attempt, the RSH tender process was derailed when the US ambassador to India spoke out against wrongful practices leading to a decision being made in favour of Eurocopter’s AS550 C3 Fennec instead of the competing Bell 407. Since then, there has been a 23% escalation in the cost of the programme because of the falling rupee.
A new RfP was issued for 197 RSHs – 64 for the IAF and 133 for the army, and trials have now been completed, with the single-engine AS550 C3 (again) and twin-engine Ka-226T emerging as finalists. Both contenders for the RSH have Turbomeca engines.
Abandon Ship
However, Defence Helicopter has learned that the project may be abandoned altogether in favour of government-owned HAL’s Light Utility Helicopter (LUH), based on its Dhruv Advanced Light Helicopter. The company has independently been awarded a contract for an additional 187 LUHs.
Given the company’s past record of missed deadlines and the fact that it is claimed to be developing around ten different aircraft without the necessary infrastructure to support them, there is scepticism about delivery dates, which have not been announced. In HAL’s defence, it could be argued that it has fully delivered
helicopter projects in the past.
Nevertheless, some doubts linger that the LUH programme will indeed move forward as promised. While the aircraft’s design is frozen, with a prototype due to fly this year, HAL is now facing issues with the gearbox, avionics and engine.
One Indian defence official, speaking to DH on condition of anonymity, stated: ‘HAL’s LUH  timeline will never fit the bill. Eurocopter or Kamov will deliver three years down the road [from the signing of the contract].’
HAL has floated a bid for 240 engines (plus 240 options) for the LUH. Turbomeca’s Ardiden 1H1, certified in India as the Shakti, is well suited to the requirements of the LUH programme, according to Philippe Couteaux, Turbomeca’s VP and general manager, airframers. ‘We have most of the development behind us,’ he said.
Anonymous Allegations
Meanwhile, aggrieved parties are believed to be attempting to stall the RSH project. A recent ten-page anonymous letter sent to Defence Minister AK Antony, which DH has viewed, cites ‘gross infirmities’ in the trials of the two RSH contenders. It mentions non-certification of both the helicopters by international regulatory agencies at the time of submission of bids, and argues that the ‘doctored’ general staff qualitative requirements were tailor-made for Eurocopter and Russian Helicopters to meet the performance targets for landing at high altitudes, despite there being no helipads at the height specified.
‘Presently the Cheetahs can also make three sorties without fuelling… Why is there no transfer of technology asked for?’ the letter queried. It also questioned the idea of having twin- and single-engine helicopters as
competitors, and queried why AgustaWestland,which offered the AW119, did not pass trials ‘when its deviations were marginal’.
‘The MoD is likely to carry [out] another investigation into this and this will delay the acquisition even further,’ said an army aviation official. The procurement, which would have cost $700 million in 2007, will now run to more than $1 billion.
Bigger Picture
Unlike more recent tenders, lifecycle costs are not built into the RSH bid. These include total technical support, integrated logistics, depot level maintenance and operational fuel bills – all of which add up to more than the cost of the original equipment purchase and are known to be much lower in modern aircraft.
In the case of the RSH project, the lowest bidder in terms of equipment is likely to win, and many are now predicting the Ka-226T will come out on top for this reason.
Recognising this, Chennai-based Sun Group’s founder and deputy chairman, Shiv Vikram Khemka – who is also an independent director on the board of Russian Helicopters – is believed to be looking at a partnership
with the Russian company for logistics and perhaps manufacturing to meet the 50% offset requirement that comes with the RSH deal. Khemka does not own any shares in Russian Helicopters.
The Sun-Russian Helicopters agreement – if it did materialise – could also be relevant to a bid for ten AEW helicopters required for the delayed aircraft carrier INS Vikramaditya. The Indian Navy currently uses several Kamov models, including nine Ka-28s and Ka-31s, which were temporarily grounded within two years of service due to an airframe defect. At the time, spare parts were difficult to procure.
Meanwhile, for the second time this year, the Indian Navy’s $1 billion tender for 16 Multi Role Helicopters (MRH) has been delayed following accusations by NH Industries (NHI) against the presumed lowest bidder, Sikorsky.

The helicopters are to replace the navy’s fleet of Westland Sea Kings and carry out ASW and surveillance roles. The validity of the proposals by Sikorsky (fielding the S-70B Seahawk) and NHI (fielding the NH90) have now been extended by six months until the end of December, when commercial bids will be opened.
NHI has been consistent in writing to the Indian MoD alleging non-compliance by Sikorsky, and pointing to perceived irregularities in the field evaluation trials.
In a letter to the ministry, NHI business director Julien Negrel asked that prior to being called in for commercial negotiations, NHI should be ‘provided with a written confirmation of the non-compliance waivers granted to Sikorsky’s Seahawk and that they will equally apply to the [NH90]’.
‘Once this information is received, NHI requests a 30-day grace period in order to review its NH90 proposal based on these reduced qualitative requirements,’ the letter stated.
Interestingly, when Sikorsky lost a 12-aircraft VVIP transport helicopter contract (bidding the S-92) to AgustaWestland’s AW101, it also wrote to the MoD asking for an enquiry, which the minister said was ‘looked into’.
‘Any time you find a company about to get a contract, the competitor raises the alarm,’ retired Indian Chief of Naval Staff Nirmal Verma told DH.
Separate Programme
A separate RfP is also on the cards for 75 Naval MRHs (NMRH), for which the Sikorsky/Lockheed
Martin MH-60 – which was not eligible to participate in the MRH tender under the US FMS process – is expected to be a contender.
‘We are very interested in that programme [NMRH]’, Lockheed Martin’s director of naval helicopter programmes, Tom Kane, confirmed to DH, adding that discussions were ongoing with Sikorsky about whether an MH-60R or S version would be offered.
‘There is no aircraft that can beat us on capability, cost and reliability. We’re extremely competitive today and have established a training curriculum. We can ramp up production by 15-20 a year in addition to the 24 we build every year for the US Navy,’ he stated.
Sikorsky and Lockheed Martin, the mission systems integrator, are under a five-year contract to deliver 139 ‘Romeos’ through 2013 to the USN. There are, however, issues related to technology transfer that will need to be addressed in India. A 30% offset clause is also a concern for many, as India’s policy in this area continues to evolve and interpretations often remain vague. Major bidders are expecting the NMRH RfP
to be released by the end of the year. ‘It can take some time because of [lack of] funding,’ Verma said. While he stressed that the 9-12.5t class NMRH would be an independent tender and not connected to the 16-aircraft MRH project, some company representatives are not fully convinced.
It is worth noting that while foreign OEMs are normally mandated to partner with government-owned companies such as HAL on defence manufacturing projects, a scheme has now been initiated to encourage the Indian private sector to participate. It envisages sending out an RfP for three pilot projects – one each for
the army, navy and air force – which will exclude government companies from participating.
The tender for 75 NMRHs is expected to be released to private industry only.
In August, the navy issued a tender for 56 Light Utility Helicopters (with a maximum weight of 4,500kg) that must be a twin-engine, four-seat aircraft with folding rotor blades, to replace its fleet of HAL Chetaks
RfPs were sent to eight OEMs, including HAL, with bids due on 7 January 2013 and the winning type expected to enter service by 2016. AgustaWestland (AW139), Bell, Eurocopter (AS565 MB) and Russian Helicopters are among those who were also sent the RfP.
The role envisaged includes SAR, transport and surveillance. The aircraft will also be required to carry light torpedoes and depth charges and a mount for 12.7mm machine guns or two rocket launchers on either side.
Meanwhile, deliveries of 80 Mi-17s to the IAF are taking place as part of a follow-on order to the procurement of 139 aircraft completed several years ago. This is expected to be followed by a further order for 59 examples, which will most likely occur during Russian President Vladimir Putin’s visit to India in November.
Apache Victory
The IAF’ Chief ACM NAK Browne also confirmed the procurement of 22 AH-64 Apache attack helicopters, which will have both air-to-ground and air-to-air roles with the service. ‘Yes, the Apache is final now… The two sides are at present negotiating the contract,’ he told Indian media recently. The Mi-28 was the losing bidder.
The Apache package includes 245 air-to-air Stinger missiles and 56 launchers. ‘The Stinger complements the advanced performance of the Apache by providing the IAF with a critical air-to-air defence capability,’ said a Raytheon official to an Indian newswire service.
Bids are also expected to open soon for 15 heavylift helicopters, Browne said. Currently at the stage of being evaluated for lifecycle costs, the project pits the Boeing CH-47F against the Mil Mi-26T2.
‘Boeing’s heavy lifter is expected to be cheaper in maintenance and operating costs than the Russian model. The project is being cleared fast because there is no helicopter in the military capable of lifting heavy guns to
the high-altitude sector,’ said one official on the condition of anonymity. DH

1 comment:

  1. Interesting article. India’s plans for Adapting to modern needs or typically by installing modern equipment its military flying capabilities, including big-ticket deals such as the Medium. India’s Aerospace defence acquisition has become bogged down by bureaucratic Harass and there are no incentives to make conclusion in a rush. The project has been closed since there was no such helicopters made to lift heavy guns to the highest altitude.

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