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Rafale Wins One As India Accepts Dassault’s Bid for MMRCA

The long running sage of India’s new fighter contract took a major step closer to completion yesterday as the Indian government announced that Dassault Rafale will be considered for the South East Asian country’s Medium Multi-Role Combat Aircraft (MMRCA) contract. In November there had been a decision to start the process to select the final winner of the contract with the choice between the Rafale and the Eurofighter Typhoon.

The MMRCA started over two years ago and companies from across the globe submitted bids. The original proposals came from America’s Lockheed Martin (LMT) and Boeing (BA) along with the two Western European contractors as well as Sweden’s SAAB and Russia’s MiG. A series of trails and evaluations were conducted along with analysis of the proposals and the decision was made in November to eliminate all but Dassault and Eurofighter.

The contract for 126 advanced fighters could be worth well over $10 billion including the cost of support, spares and engineering.

The next few months will see the Indian government negotiating the final terms of the contract including the key provision of offsets. Dassault is proposing to transfer the production capability for the aircraft to India with over 100 of the aircraft being at least partially manufactured and assembled there.

Previously India had relied primarily on British and Russian equipment while trying to invest in an indigenous arms capability. Recently they have realized that in order to gain access to more advanced technology they would need to buy U.S. and European weapons from less traditional suppliers. These have included transports and patrol aircraft from Boeing and Lockheed Martin as well as exploring helicopter and artillery buys from Western Europe.

India has always demanded strict offsets and investment in their economy and have had to adjust these rules to allow companies like Boeing and others from the U.S. to bid. Even so it is good business for a winning bidder to be able to set up production facilities in India as it allows access to that growing market.

The win is significant for Dassault which has struggled to find a buyer beyond the French military and faced issues with keeping their employees busy and revenues up. The Indian contract will aid in both.

Photo from Ronnie Macdonald’s flickr photostream.

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India Moves A Step Closer On Fighter Decision

As reported last month India’s Government announced on Friday that they have begun the final process for selecting the winner in the Medium Multi-Role Combat Aircraft (MMRCA) contract. This is to buy a modern, Western fighter aircraft to replace some aging Russian ones and supplement a modern fighter being jointly developed by India and Russia. After a lengthy contest the remaining two contenders are Eurofighter and France’s Dassault Rafael.

On the 4th the committee responsible for negotiating the price of the 126 aircraft and its life-cycle support received the final bids from the two companies. The estimated cost for the contract will be in the $10 billion range. The final review and negotiations leading to the choice of a winner should be completed by the end of 2011.

The contest began almost five years ago and proposals were received from six different companies. Two American; Lockheed Martin (LMT) and Boeing (BA); Sweden’s SAAB and Russia’s United Aircraft Corp. as well as the two Western European aircraft. Interestingly after the evaluation of the proposals and analysis of the aircraft’s capabilities all were eliminated but the Typhoon and Rafael. This was a blow to the U.S. who were hoping to be able to sell a modern fighter to India building upon two earlier contract negotiations for Boeing’s P-8 maritime patrol aircraft and Lockheed’s C-130J transport.

The U.S. after their aircraft had been eliminated had raised the idea of proposing a variant of the F-35 Joint Strike Fighter (JSF) for the contract but India did not entertain that. The JSF is currently in Low Rate Production and is the product of the U.S. and several other countries. Unlike the other six earlier bids it is a Fifth Generation aircraft.

This contract along with Brazil’s stalled contest are the only two major foriegn fighter sales currently available although Japan is planning to begin the process to buy a new aircraft. The major aerospace contractors are looking for these deals to make up for reduced spending by the U.S. and European governments due to budgetary pressures and the cut backs in Iraq and Afghanistan.

The winning of the Indian contract would be the first foreign sale of the Rafael which is only used by the French Air Force and Navy. The Eurofighter has been sold to Saudi Arabia. Both aircraft were used in the recent air campaign against Libya. Eurofighter would also like the sale as the European partners such as the U.K. and Germany are considering buying less Typhoons then they originally committed to due to funding shortfalls.

The sale to India too would mark a breakthrough as they traditionally have bought Russian or domestic aircraft or with programs like the Hawk trainer manufactured them in India. The contract has stiff offset requirements and the winner will have to invest around $5 billion in the Indian economy. India’s offset and technology transfer rules have in the past made it hard especially for American companies to bid on their military contracts. This deal along with others are the result of modifications to those rules made in recent years.

This contract will see the first 18 aircraft built overseas and then the remainder manufactured in India.

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India To Announce New Fighter In November

The Indian Government yesterday stated that it had completed their evaluation of the offset reports submitted by the two bidders for their new fighter program. This will allow Eurofighter and Dassault to submit their final offers with a goal of announcing the winner in November.

The two Western European companies were chosen from among a total of six offerors to go on in the contest after a series of evaluations earlier this year. Lockheed Martin (LMT), Boeing (BA), MiG and SAAB had also proposed aircraft but their proposals were knocked out after a series of reviews and flight demonstrations.

Since Brazil’s contest for a similar combat aircraft has seemed to stall the Indian contract is one of the largest foreign sales available at about $10 billion and became very important as the U.S. and Europe plan to reduce their defense spending. With the U.S. focusing on the F-35 from Lockheed and countries like Great Britain, Germany and France ending their buys of the Eurofighter there has been little sales for other fighters. The Dassault Rafael and SAAB Gripen have not found another user other then the home nation as well which put pressure on them to try and keep their production line going.

The elimination of the two U.S. aircraft was also a surprise as India had been looking to that country for more equipment. This has included purchases of Boeing P-8I maritime patrol aircraft and C-17 transports. The choice not to have one of their fighters continue into the next round dealt a blow to the U.S. defense contractors hope of selling more to India.

When the decision is made it will mark the end to an over four year acquisition process with a hope that there will not be any corruption issues as has happened with so many Indian procurement programs in the past. The new fighter is a key component of the upgrading of the capabilities of India.

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Japan Reportedly Considering JSF for New Fighter

Currently there are two major fighter contests on-going as Brazil and India work to consider a new advanced fighter for their defense needs. Now it has been reported that Japan is interested in also starting a competition to add a later generation aircraft to its fleet of F-15J fighters. Sometime this month the country will want bids for 40 new aircraft.

In Brazil the discussion seems to be between the United States’ F/A-18 made by Boeing (BA) and the French company Dassault Rafael fighter. That contest continues to be delayed as Brazil faces some economic issues and re-thinks its commitment to spending so much money on defense items. One component of the contest that is key is the construction of manufacturing facilities in Brazil and the transfer of technology to help the South American country improve its aerospace industry.

In India the contest has reached a point where they downselected to only two bidders both European. After looking at proposals from Boeing, Lockheed Martin (LMT), MiG, Eurofighter and Dassault only the last two were chosen to proceed in the contest. The decision was a blow to the the American bidders as they had hoped this contract would offset potential reductions in U.S. defense spending.

Now the reports are that Japan will receive bids from Boeing, Lockheed and Eurofighter for their requirements. The Lockheed F-35 Joint Strike Fighter (JSF) is considered the front runner despite its cost and the current schedule issues the program is facing. This is primarily due to its more stealthy qualities over the earlier generation fighters.

The F-35 is in development and low rate production for the U.S. military, the U.K., Netherlands, Canada and Australia. Other foreign partners include Norway and Israel. The addition of Japan to the program would not be a big leap although they expect that the jet they order in the next few months would be in service by 2016. JSF production should be ramping up to higher quantities by then but any major cuts to the U.S. defense budget may affect production rates and quantities. If the JSF cannot meet the Japanese schedule they may end up considering one of the other options.

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EADS Enters into Agreement with Wipro to Get Ready for Fighter Production

As India moves forward with its contest for a new fighter to be made by a Western producer the potential suppliers are angling to get ready for the contract to start. The contest started over two years ago for the advanced aircraft and bids were received from six different suppliers. These included the American companies Boeing (BA) and Lockheed Martin (LMT), Russia’s MiG, Sweden’s SAAB, the multi-national consortium Eurofighter and France’s Dassault.

Recently as part of the contract evaluation process the Indian selection authorities made a decision to eliminate all of the aircraft but the two from Western Europe.

As part of this contract as with most Indian defense deals there are significant offset requirements that must be met. Actually to spur bids from Western companies who previously had found it hard to participate in contests the Government reduced their requirements from traditionally very high ones. Offsets require the winner to spend some percentage of the total contract value in the awarding country. Often it can be by buying parts, or paying for assembly work, or in some other business line as long as it meets the total requirement. Boeing (BA) has begun to do this as part of their contract for six P-8I maritime patrol aircraft.

Even though no winner has yet to be announced for the Medium Multi-Role Combat Aircraft (MMRCA) contract companies like EADS (EADS:P) who are part of the Eurofighter consortium that makes the Typhoon fighter have begun to position themselves if they do win. The company has announced a deal with Indian consortium Wipro to provide components to its subsidiary CESA.

Even if Eurofighter does not win the MMRCA contract this agreement will support EADS production of other aircraft and aerospace components if they want to use it. As with all of the large aviation contractors EADS is looking for expansion into Asia to be nearer emerging markets as well as perhaps to gain benefits of labor costs and available infrastructure.

As the decision on who will win this contract gets closer more of the companies involved in the production of the two contenders will be announcing deals like this. India’s policies require this investment and in the long run it only makes good business sense.

Photo from tony.evans Flickr photostream.

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India’s Order Extends Boeing’s C-17 Production

Boeing (BA) is facing the end of production for the C-17 strategic transport as the United States decided to not buy anymore of the aircraft despite its heavy use in supporting the fighting in Iraq and Afghanistan. Over the last few years Congress had increased the total number of aircraft being bought for the U.S. Air Force despite its and the Defense Department requests to stop procurement.

The C-17 has seen sales to overseas customers with Australia, the United Kingdom and some Gulf States purchasing the system. Even so Boeing could see the end of production and had begun to shut down its production line in Long Beach, CA. This facility gained when McDonnell-Douglas merged with Boeing in the Nineties was destined to close when the C-17 was finished as Boeing had no other work for it.

The company and its workers received good news today as it was announced that India had agreed to sign a contract for ten of the aircraft. Not only is the deal worth over $4 billion it will keep the production line open for one more year. This buys even more time for Boeing to find other customers for the aircraft or even convince the U.S. to procure more.

India has in the last few years turned to Western defense contractors for different systems including buying the P-8 maritime patrol aircraft from Boeing in two recent contracts. This is in a bid to upgrade their capabilities beyond what their domestic suppliers and the more traditional Russian and UK companies have been providing.

India currently has a new fighter in competition but recently down selected to just two offerings – France’s Rafael and Eurofighter’s Typhoon. The two American bidders along with MiG and SAAB did not make it through to the final round of the contest. Some saw this as a deliberate snub of America possibly related to policy towards Pakistan and the potentiality that if there was a conflict between India and its neighbor the U.S. might boycott of supplying either nation.

Boeing, though, may get a trifecta of contracts as India is still considering the AH-64 Apache as a contender for a new attack helicopter. The Defense Department has notified Congress of a potential $1.4 billion worth of helicopters, support and training.

India remains a market of great potential for the U.S. defense contractors as they face the possibility of cuts to the U.S. budget and the end of fighting in Iraq and Afghanistan with all the potential for reduced revenue and earnings. So far deals with India have been few-and-far between but today’s contract announcement is a step in the right direction.

Photo from kingair42’s Flickr photostream.

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India to Buy More P-8I Patrol Aircraft from Boeing

The United States Navy has been using the P-3C Orion as its primary patrol and anti-submarine aircraft for about forty years. This propeller driven aircraft was manufactured by Lockheed Martin (LMT). It is in the process of being replaced by the P-8A Poseidon aircraft based on Boeing’s (BA) 737 jet airliner.

There are currently P-8A aircraft being tested by the Navy and the first initial production aircraft is nearing completion. The P-3C has seen some use by U.S. allies and it is expected that the P-8A will also follow suit.

Right now though the only confirmed international customer is the Indian government. In the largest defense contract between that country and the United States they agreed two years ago to purchase eight of the aircraft to replace their fleet of Soviet designed and built Ilyushin aircraft.

India had traditionally purchased equipment from either the United Kingdom or Russia. Their rules on offsets and use of domestic corporations have made their market unattractive for U.S. and other Western companies but in the last few years as part of an attempt to upgrade their overall capability they have relaxed those rules. The deal for the “P-8I” is hopefully the foot in the door for other large contracts such as the new fighter currently undergoing source selection and potential helicopter contracts.

Now it has come out that India intends to increase the order to 12 aircraft. This will increase the total value of the contract to close to $3 billion. India is also looking at buying C-17 transports from Boeing. An order the company needs to keep their Long Beach, CA production line open for that aircraft.

Boeing is also competing its F/A-18 aircraft for the new fighter against a diverse group of competitors. Sweden’s SAAB (SAAB), Lockheed, Eurofighter, Russia’s MiG and France’s Dassault Aviation have also submitted proposals. The award has been dragged out and now may not occur until 2012.

India is seen as a market along with other Asian and Middle Eastern nations that may be turned to to balance declines in domestic defense spending expected in the U.S. and Europe. The P-8I is hoped to be the first of many such contracts.

Photo from Henrique Vicete’s flickr photostream.

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Foreign Fighter Contracts Not Materializing Soon

The Western defense contractors face a shrinking market right now domestically for advanced combat aircraft. The U.S. and many of its Allies are committed to Lockheed Martin’s (LMT) F-35 Joint Strike Fighter and that system will dominate their inventories for the next few decades. The U.S. ended production of the F-22 Raptor by Lockheed and Boeing (BA) and European nations have pretty much finished up ordering Eurofighter Typhoon’s with the United Kingdom even planning retiring some of their older aircraft due to budgetary pressures. France and Sweden have their own domestic aircraft in the Dassault Rafale and SAAB Gripen but have purchased as many of those as they really can.

All of these companies and countries have looked to overseas customers to sell these aircraft with the two biggest deals being for Brazil and India. Unfortunately these contract are not materializing in the near future and may now be pushed out a year or two.

India has planned major upgrades to its military through the purchase of advanced Western systems. This has included aircraft like C-130J transports from Lockheed and P-8I maritime patrol aircraft from Boeing (BA) but their cornerstone program was for over a hundred fighters. This contract has been going through the source selection with the competitors from the U.S., Europe and Russia demonstrating their aircraft and at one point was hoped to be awarded this summer. It is now being reported that this major contract won’t be decided until early in 2012.

Brazil has also been planning to expand and improve its military through some deals with overseas suppliers. They too would like to buy a new fighter and that contest has seemed to be between Boeing’s F/A-18 and the Rafale although SAAB bid as well. The original plan was to award this year but due to budget cuts the decision will now be postponed for at least twelve months. There are concerns that it may not happen at all as Brazil had to cut its defense spending significantly.

Finally Dassault had hoped that the U.A.E. might invest in the Rafale as well which so far has yet to find a foriegn buyer. The Emirates already operates French Mirage aircraft and the Rafale would be the logical extension of these. The big arms expo in the U.A.E., IDEX, came and went though without any announcement of a deal although a contract was awarded to upgrade Mirage aircraft worth about $30 million. Failure to win this contract would be a blow to France’s aggressive campaign to sell the fighter to new customers.

It had been hoped that these overseas sales would make up for the decline in U.S. and European defense spending and help keep production lines going and workers employed. Unfortunately they are not materializing as fast as hoped and this may affect different contractor’s plans. The Asian and South American markets were seen as key to keep the defense business going in the next several years. It may be that even these nations who were hoping to improve their military may not have the money necessarily to meet their original plans.

Photo from Jerry Gunner’s flickr photostream.

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India Begins Second Track for New Fighter

Since independence India has primarily relied on a mix of British and Russian equipment. Some of this is purchased direct from the suppliers but India has often established assembly facilities and shared manufacturing for some systems. This includes jet aircraft such as the MiG-27 and MiG-29 fighters acquired from Russia.

In the last two years as part of an attempt to rapidly upgrade the technological level of their weapon systems and to take advantage of the world armaments market India has been more willing to buy Western equipment direct. This includes maritime patrol aircraft and transports from U.S. contractors Boeing (BA) and Lockheed Martin (LMT) as well as working with Israeli and European companies.

One big contract that is winding its way through source selection is that for a new multi-role combat aircraft. India is reviewing proposals from Eurofighter, Rafael, SAAB, MiG, Boeing, and Northrop Grumman (NOC). These aircraft would most likely be made overseas but India does require offsets and investment in their economy.

This week India announced that it has signed a contract with the two Russian companies Sukhoi and Rosoboronexport to team with their own HAL to begin development of a new advanced fighter that would be based on the Russian T-50 aircraft but would be uniquely Indian. The initial contract is for about $295 million and would lead to the production of a fifth generation aircraft similar to the F-22 or Joint Strike Fighter.

The Indian military industry is taking on a tough project with this fighter program. These are about the most advanced systems to develop and put into production. This plan shows that India wants to improve its capabilities both in the air and with their industry. If they succeed they will have a viable aircraft both for their own use and for sales to other countries moving them onto the world stage in armaments production.

Photo from Jaiden’s flickr photostream.

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Eurofighter Benefits from Euro’s Fall in Indian Fighter Contest

The buffet that the European economy and common currency, the Euro, has been taken over the last several months due to the debt crisis in Greece and other countries is helping its defense contractors competing for international contracts. The decline in the Euro towards the dollar is now allowing pricing to be adjusted in a way to benefit Eurofighter and EADS.

The Indian government’s contest for a new fighter drew bids from all over the world. Both Boeing (BA) and Lockheed Martin (LMT) of the United States, Europe’s SAAB and Eurofighter as well as Russia’s MiG and France’s Rafael submitted initial bids. Now the competition has reached a point where new prices and information may be submitted. The decline in the Euro will help Eurofighter and Rafael by lowering their bids from the initial ones last year. The stronger dollar may make the U.S. companies prices go up but at least stay the same.

The Indian plan is to have a multiple part contract where aircraft are down selected based on demonstrated ability to meet requirements. Then another round of bids and analysis will be held to choose the best solution. The lower prices now available to the European competitors may push them into the second round and perhaps to victory.

With the perceived decline in the U.S. and European defense budgets coming in the near term the contests in India and Brazil especially have taken on importance with defense contractors looking for improved sales. All of the companies are hoping that foriegn sales will offset any cuts with home budgets. In the U.S. the focus on the F-35 Joint Strike Fighter (JSF) limits Boeing’s ability to sell aircraft beyond the last contract for F/A-18 Super Hornets for the Navy and Marine Corps. The sale of this aircraft to other countries will help maintain sales, revenues and profits.

The changes in exchange rates between currencies might also aid EADS in its bid for the new U.S. Air Force tanker. The decline in its costs for a France built aircraft may make its price more competitive and limit the need to build a facility in Mobile, AL.

Photo courtesy of Shandcehm’s flickr photostream.

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Algeria Struggles With Russian Arms

The former Soviet Union used to provide weapons to its proxy states and allies across the world for almost nothing. They did this as a way to reward them and also to allow them to fight their wars for them. Many times the weapon systems were stripped down versions of their own aircraft with less capable engines, electronics and weapon systems. Some countries like North Vietnam did receive the best that the USSR could supply to help them in their wars.

Since the break up of the Soviet Union the new Russia has seen a huge decrease in the size of their military and industrial base. They have attempted to increase the overall technology level of their weapons but have had limited funds to invest. The Russian Government has attempted to sell modern systems overseas to help fund their procurements and provide R&D dollars. To this end the MiG and Sukhoi fighters have often been exported and are contenders in India’s new fighter programs.

It is now reported that Algeria is having problems with their advanced MiG-29 fighter aircraft ordered back in 2007. The thirty-four aircraft were part of a much larger arms deal signed as a way for Russia to forgive some of Algeria’s debt. Algeria supposedly returned the fifteen aircraft delivered and canceled the remaining ones due to poor performance and quality.

According to a Russian investigation the problem has been that one of the sub-contractors for the aircraft provided not new parts but ones that had been recycled from old aircraft. This has been an issue in the past in all countries with aircraft production and repair. It is a scam that may often happen with new part prices being paid for old, reconditioned parts. This problem led to the issues with Algeria ending their order.

The problem faced by Russia is that it needs the good will of its customers to keep the money flowing as without the foriegn funds it might not be able to keep sustaining parts of its arms industry. There is just not enough domestic business. Russia has been using some of its oil revenue to modernize their military but still needs to keep up its foriegn sales.

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India Rejects Rafale For New Fighter

Update — Flight International is reporting that India says it has not ruled out any competitor in the program.

The Indian Air Force is looking to purchase an advanced fighter to add to their inventory. Six foreign companies had submitted bids for the 126 aircraft order. Now word comes that the French proposed Dassault Rafale was eliminated from the competition. The Indianexpress.com reports that publicly it was stated the aircraft did not meet certain “qualitative” requirements. It was also said that the proposal submitted showed the aircraft did not meet some of the technical requirements for the program. This means that the contest will continue with Boeing, Lockheed Martin, SAAB, MiG and Eurofighter participation for now.

The deal is one of several that India is proceeding with in an attempt to upgrade the technical capability of their armed forces. In the past the country had tended to buy from Russia or England. India has also spent the last several years developing an indigenous arms industry. Although lately they have turned to outside sources to include Israel and the U.S. for advanced weapons.

Currently there are several nations looking at buying advanced fighters. The Rafale has not been bid for many as most of the competition has been between the F/A-18G, SAAB Gripen, F-35 JSF and the Eurofighter Typhoon. The Indian contract is certainly one of the largest percolating.

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Aero India International Show Attracts Fighter Bidders

The six companies that submitted proposals for India’s new Medium Multi-role Combat Aircraft (MMRCA) contract will all be in attendance at the Aero India International Show. The Economic Times reports that the competitors for the potential $10 billion contract will be at the show along with a host of other U.S. and European companies. Boeing, Lockheed, EADS, SAAB, Dassault and MiG all submitted proposals for the program. The theme of the show will be business activity between Indian and foreign companies. This contract is now one of the largest for tactical aircraft out for bid, and the companies will be touting their wares at the show.

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India moves to limit middlemen in contracts

India already loosened their offset requirements leading to progress on the new fighter contract. Now the government moved to limit the use of Indian representatives or “agents” in helping the foreign companies with their bid. The six teams that submitted proposals are moving to line up Indian companies to support their fabrication and delivery of the aircraft. By limiting these agents the Indian government hopes to make the process more open and increase the ability of non-Indian companies to use their industry.

See Central Chronicle for more.

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Six bids for India’s new advanced fighter

With the decision here to relax the off set provisions required for work on Indian defense contracts India received six new proposals for their new advanced fighter aircraft, the MMRCA. See a story here. Boeing, Lockheed Martin, EADS, MiG, SAAB and D’Assault submitted proposals. Aircraft from these companies are currently under evaluation with a decision to be made in the next several months.

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6 proposals for India’s new fighter

Six companies submitted bids for India’s new fighter acquisition. See a story here. As expected both Boeing and Lockheed submitted bids as well as MiG, SAAB, Aerospatiale and the Eurofighter Typhoon. This goal is to narrow the competition to two or three of the proposals and then choose a winner with first aircraft due in 2011.  This means that SAAB has bid on this and the Norwegian buy in less then a week.

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