Dog and Cat

India Gives Tata Power a Contract for Airfield Modernization

In one of the largest contracts given to a company outside their traditional government supported arms producers the Indian Air Force awarded Tata Power a roughly $225 million deal to upgrade at least thirty airfields’ infrastructures. This contract continues to illustrate India’s determination to modernize and improve their military capabilities overall.

As part of this effort India has been attempting to broaden their base of suppliers through modernizing their offset and formation of subsidiary companies and partnerships to allow contracts with the large U.S. and European defense contractors. In the past India has tended to use Russian, Great Britain and domestic sources for most of their weapon systems.

Recent contracts include the one with Boeing (BA) for P-8I maritime patrol aircraft as well as the new fighter currently in source selection which has attracted a slew of major foreign interest. India is also planning on awarding new helicopter and artillery contracts in the near future.

The contract is for Tata Power to upgrade the airfields to be able to support and operate the newer, modern aircraft that will be entering India’s inventory.

The contract with Tata Power also indicates attempts to broaden their supplier base as it is one of the largest contracts awarded to a domestic commercial company. If India is able to draw these companies into bidding on defense work it increases competition and ultimately their industrial base which will allow them to build and sustain an effective, modern military.

Tata Power is India’s largest utility which primarily provides electricity but also does design, development and fabrication of electronics which has included defense work in the past through their SED division.

Photo from cryogenic666′s flickr photostream.

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Pentagon Ordered to Buy American for Green Technology

One of the provisions contained in the Defense Authorization Bill for this fiscal year passed at the end of Congress’ lame duck session is one that extends the Buy American requirements for the Defense Department to solar panels. The rule makes the Pentagon only consider U.S. sources for this piece of “green technology” in their contracting efforts.

The Federal government procurement laws and regulations put a whole host of restrictions on contracts issued by the Pentagon for hardware, services and support. These include the Berry Amendment and Buy American Act. These are used to support U.S. industries by granting them privileged status and providing them a ready market.

The Berry Amendment for example requires prime contractors and their subcontractors to purchase or use food, clothing, tents, cotton, woven silk and other fibers or articles made out of them only from U.S. suppliers.

The Buy American Act has been in existence since the Thirties and requires preferences for American produced or manufactured goods.

While the U.S. Government should be supporting domestic sources at the same time it can force cost or schedule implications to a program. Especially with the change in the world’s economy over the last fifty years there may not be a domestic manufacturer or source for a product. The laws are waived in this case but that causes a potential schedule change or cost growth to a program. The domestic source may also be more expensive driving up the total cost of the procurement.

These kind of social engineering attempts within defense and government contracts are worthy but like the rules pertaining to small businesses or minority owned they may have a cost or efficiency affect. They are also vehicles that may be abused through companies selling non-U.S. material as U.S. made or taking advantage of the efforts to reward certain types of businesses. There have been many cases over time of companies pretending to meet certain criteria that they don’t thus gaining an advantage in sole source or direct contract awards.

The rule about using U.S. solar cells may have the same affect. The industry like so many others is turning to China and a great deal of the world’s production capacity is in that country. U.S. companies have been reducing their footprint and this may make it hard for the Pentagon to find a source capable of delivering the product on time or at the necessary cost.

This illustrates the issue where Congress wants to get the most for their defense dollars but at the same time by favoring a supplier may be forcing the Defense Department to buy something that they could get at a better price or in a more timely fashion.

Photo from sjsharktank’s flickr photostream.

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Boeing Unloads National Security Risks of “EADS”

Using the example of EADS (EADS:P) marketing a helicopter in Iran in 2005 Boeing (BA) is raising the idea that a successful EADS win of the KC-X might be a security risk. EADS North America of course has shot back that the issue is really not a part of this contest and that the U.S. Defense Department has not issues with their participation. It is really not a fair criticism in this situation. Boeing has certainly sold aircraft to many different nations some of whom are not friendly to the U.S. right now.

The idea of dual placed loyalties for a competitor such as EADS that is located overseas is not an uncommon criticism in these situations. Ideally there would be multiple domestic sources for any government contract but especially defense related ones. The problem is for the KC-X there is only two real world sources for this type of aircraft and only one is American. The real issue here is the decline of the U.S. industrial base over the last twenty-five years.

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