Wednesday, March 6, 2019

Unravelling the Mystery of Vicious Anti-Rafale Campaign


Unravelling the Mystery of Vicious Anti-Rafale Campaign

(20 January 2019)

Major General Mrinal Suman



Hollowness and stridency of the anti-Rafale campaign has surprised all for its sheer brazenness and inconsistency. The government answers one point and the critics invent a new one to keep the pot boiling. Sample the shifting sands – due process was not followed; price paid is much more than that of the non-deal; number of aircraft has been reduced from the earlier 126 to 36; Ambani has been favoured by denying orders to HAL; Ambani has no experience in manufacturing aircraft; payments to HAL are being withheld to force engineers to quit and join Ambani company; and so on.

Before discussing the issue further, four facts need to be flagged here. One, Rafale’s selection cannot be questioned as it emerged winner after gruelling technical and commercial evaluations under the previous government. Two, the current order was placed through a government to government deal with no middleman/agent. Three,  no act of corruption or trail of slush money has been reported. Finally, even the Supreme Court has expressed its satisfaction with the correctness of the deal. If that be so, why this continuous baying and unseemly mud-slinging? This write-up endeavours to unravel this mystery.

A Request for Proposals (RFP) was issued in August 2007 for the procurement of 126 fighters – 18 to be bought in fully built up condition while the balance quantity of 108 was to be manufactured in India by the Hindustan Aeronautics Limited (HAL) under transfer of technology. Six manufactures submitted their proposals. After extensive trials, two platforms were found technically acceptable – Dassault’s Rafale and European Consortium’s Eurofighter. Finally, Rafale emerged winner (L1) due to its lower life-cycle cost and an announcement to that effect was duly made on 31 January 2012.

Shortly thereafter, negotiations commenced with L1 in due earnest. However, even after prolonged meetings, the deal could not be concluded. By 2014, talks had reached a total impasse with no signs of breakthrough. It became clear that the deal was dead for all purposes. The then Defence Minister Antony admitted so publicly. IAF was a worried force and made its disquiet known to the new government in no uncertain terms. While on a tour of France in April 2015, Prime Minister Narendra Modi announced India’s intent to place an order for 36 ‘ready-to-fly’ Rafale fighter jets to meet emergent requirements. It was to be a government to government deal and at terms better than those offered earlier. IAF heaved a sigh of relief as it was a desperate measure to boost its diminishing strength. After detailed negotiations, the deal was concluded in September 2016.

No questions were raised by anyone when the government terminated the stalled deal or when an intent to buy 36 aircraft in fly-away condition was announced or even when the contract was concluded in September 2016. The environment appreciated the urgency and found the government to government deal to be the best way forward.

Reasons for Non-conclusion of the Earlier Deal

It remains a mystery as to why a deal so very critical to India’s defence potential could not be concluded even after 28 months (Jan 2012 to May 2014) of intense negotiations. Nevertheless, a number of reasons are being cited in the media – Dassault’s reservations regarding HAL’s capability to absorb high technologies; refusal of Dassault to stand guarantee for the aircraft manufactured by HAL; and requirement of excessive man-hours by HAL, thereby escalating cost and delaying production schedule.

In addition, in early February 2014, the then Defence Minister Antony dropped a bomb by announcing, “There are complaints about the procedure of calculating the Life Cycle Cost and that issue is not yet settled”. He further added that the government had no funds to buy the fighters. Both the reasons were bizarre, to say the least. Rafale was declared L1 in January 2012 and no one questioned the methodology at that time. Why this belated reaction? Why was the farce of finalising contractual provisions (including transfer of technology to HAL) continued with Rafale for two years when the very basis of selecting Rafale was suspect? As regards non-availability of funds, no procurement proposal is ever initiated without assured availability of funds. Financial support is a pre-requisite. One wonders as to how could a sovereign nation carry on negotiations with a foreign defence manufacturer without committed funds. Was it just a sham exercise?
   
The latest press reports reveal that considerable pressure was being exerted by the losing competitor Eurofighter. Reportedly, a strategy paper for its promotion has been recovered that indicates involvement of Christian Michel and Guido Haschke. Many fear that the fighter deal was scuttled by vested interests who did not want India to buy Rafales. They wanted the case to be aborted and fresh bids invited. It is time-tested ploy used by many losing competitors. 

As a last-ditch effort, Eurofighter submitted a fresh unsolicited bid to the Modi government on 04 July 2014, reducing its earlier commercial quote by 20 percent, making it lower than that of Rafale. However, there was no way a revised bid could be accepted by the government. The Defence Procurement Procedure does not permit it at all and rightly so. No deal can ever be finalised if the competing parties are allowed to keep underbidding each other after the commercial quotes are opened.

The Probity Angle

In early 2007, in an article by this author in the Indian Defence Review, the contours of the vulnerability map of India’s defence procurement procedure had been identified. This sort of mapping is considered crucial to identify stages where the system could be subjected to external influences and to indicate the degree of such vulnerability.

Here is a summary of the findings. Stages where the procedure was found to be vulnerable to unfair manipulation included initiation of proposal and allocation of priority; formulation of qualitative requirements; field trials; staff evaluation; determination of lowest bidder; acceptance and implementation of offset obligations; and grant of final approval. For various stages, degree of vulnerability to corruption was graded as least, moderate, considerable and maximum. Most revealingly, ‘grant of final approval’ was the only stage that got graded ‘maximum’, implying that it was most vulnerable to corrupt practices. Let me elaborate.

After concluding negotiations with L1, the Contract Negotiation Committee submits its report to the Defence Minister for acceptance by the competent financial authority (CFA). No deal can be concluded unless CFA accords sanction. CFA can hold-up a proposal indefinitely or raise incessant queries. He can even let a case lapse. Having gone through agonizing technical and commercial evaluations, the stakes for L1 are exceedingly high at this stage. The deal is within his reach. Consequently, he is extremely susceptible to arm-twisting and can be coerced to shell out bribe money. Environment is aware that huge amounts have to be paid to ‘buy’  CFA sanction and hence most vendors factor it in their initial commercial bid itself. Such bribes carry the taxonomy of ‘facilitation money’.

The fighter deal followed a similar path. Rafale was declared L1 on 31 January 2012.  It is apparent that the real reason for not signing the contract was either Dassault’s failure/refusal to oblige or gratuitous intervention by the Eurofighter. Hence, it was belatedly ‘discovered’ that the methodology adopted to determine L1 needed a relook, that too after discussing contractual minutiae with Rafale for over two years, Can there be a more ludicrous excuse to stall the case! Interestingly, the Eurofighter is already facing allegations of misdemeanour in its sales to many other countries.

Timing of the Criticism

As stated earlier, there was no criticism when Modi announced India’s intent to buy 36 aircraft nor when the deal was concluded in September 2016. On the contrary, many observers called it a masterstroke to meet emergent requirements of the Air Force. Suddenly, in November 2017, the deal came under flak and was termed a scam for non-adherence to procedure, escalated cost and promotion of a private company at the cost of HAL.

Timing of the anti-Rafale campaign is revealing. Two related developments need to be recounted here. First, there were reports in a section of media that the Air Force was considering procurement of two more squadrons of Rafale in a fly-away condition as an interim measure as the fresh case for 110 fighters would have taken unacceptably long to fructify. Incidentally, both Rafale and Eurofighter figure in the list of six vendors who have responded to the new Request for Information (RFI) wherein 15 percent fighters are to be bought in fully built condition and the balance to be indigenously manufactured through a Strategic Partner.

Secondly and more importantly, in January 2017, the Indian Navy issued a RFI for purchasing approximately 57 multi-role fighters for operation from aircraft carriers. It was hinted that the contract could grow bigger with additional procurements through the option clause. Four manufacturers have shown interest; Rafale is reported to be one of them. For India, it makes sense to opt for Rafale, provided it emerges the lowest technically acceptable bidder. Synergy of operations and commonality of infra-structural facilities will prove immensely beneficial.

The anti-Rafale campaign has become more strident of late. The sole aim is to prevent Rafale from bagging further orders. Some planted articles have gone to ridiculous limits, questioning suitability of Rafale for India. According to some presstitutes, Rafale is the wrong choice. Rafale was invited to participate in trials in August 2007 – wonder why it has taken these ‘learned people’ over a decade to get ‘enlightened’ about the unsuitability of Rafale!

In Conclusion

Let us look at some interesting aspects of the whole conundrum. Rafale is an excellent fighter aircraft. It has proved its mettle in wars. The Air Force selected it after gruelling competitive trials in which it emerged the winner.  India is purchasing it duly configured with latest add-ons as per its operational requirements. Purchase of two squadrons in a fly away condition was the quickest way to cover critical gaps in India’s air capabilities till a fresh case fructifies. The deal was a government to government contract with no middleman and decidedly on terms more favourable to India than those offered in the aborted case. There is no slush money.

Yet the criticism goes on unabated, albeit with newer allegations concocted at regular periodicity. Even when an allegation is duly rebutted with facts, the critics decline to debate the replies but keep harping on newer allegations. The sole aim is to keep throwing mud, in the fond hope that some of it would stick. Subjective stories are planted by the purchased media to raise questions about the sanctity of the procedure followed. Some of the media persons start casting aspersions on the quality of the system being procured. How low can one stoop!

Corruption must be exposed but it is anti-national to stall modernisation of the armed forces by resorting to witch-hunting with wild accusations to settle political scores. The decision-makers (political leaders, bureaucrats and the military brass) get deterred by  such a scenario. They consider it safer not to conclude any defence contract during their tenure lest they get hounded later in life for the decisions taken in good faith. Defence potential of the country should never be allowed to fall prey to political slugfest. That shall prove perilous.*****

Anti-Rafale Campaign: Press Stoops to Abysmal Depths


Anti-Rafale Campaign: Press Stoops to Abysmal Depths
Major General Mrinal Suman

For the evolution of healthy democratic practices, it is essential that the opposition keeps the government on its toes through unrelenting questioning of the policies and performance. However, such criticism should be objective and based on truth. False accusations invariably backfire and show the critics as unscruplous and untrustworthy entities. They lose their credibility and the public starts considering them to be ‘moles and plants’ of adversarial interests. Such a development does immense damage to the body politic and psyche of the nation. Two recent incidents are recalled here.

Alleged Waiver of Anti-Corruption Clauses in the Rafale Deal

Headlines of a newspaper dated 11 Feb 2019 screamed that the government made unprecedented concessions with regard to critical provisions for anti-corruption penalties and making payments through an escrow account in the Inter Government Agreement (IGA) signed between India and France on 23 September 2016.

The paper claims that the provisions of the Defence Procurement Procedure-2013 (DPP) were violated by not adhering to the mandatory Standard Contract Document, given at Chapter V of the procedure. It goes on to accuse the government of dropping clauses on “Penalty for use of Undue Influence, Agents/Agency Commission, and Access to Company Accounts” in the Supply Protocols which form part of the Standard Contract Document.

One does not know whether to pity the said newspaper for its sheer ignorance of the procedure or to slam it for malicious and unethical reporting. The paper has most dishonestly omitted to inform the readers that the Standard Contract Document is not applicable to IGA. It is yellow journalism and scandal-mongering at their worst. 

Para 60 of DPP unambiguously states, “The Standard Contract Document at Chapter V indicates the general conditions of contract that would be the guideline for all acquisitions.... However, for single vendor procurements, if there is a situation where Govt of India has entered into agreements with that vendor/country regarding specific contractual clauses, then the terms and conditions of such agreements would supersede the corresponding standard clauses of DPP 2013.”

Para 71 of DPP specifically refers to procurement proposals under IGA. It reads, “There may be occasions when procurements would have to be done from friendly foreign countries which may be necessitated due to geo-strategic advantages that are likely to accrue to our country. Such procurements would not classically follow the Standard Procurement Procedure and the Standard Contract Document but would be based on mutually agreed provisions by the Governments of both the countries.”

It needs to be recalled here that India has been buying defence equipment on government to government basis from Russia for decades. Similarly, starting with the purchase of AN/TPQ-37 Fire Finder counter-battery artillery radar sets in 2002, India has signed many major deals with the US government. No IGA has followed the Standard Contract Document and the agreements do not contain any so-called anti-corruption clauses. The foreign governments consider it an affront. They resent Indian government trying to occupy the high moral ground of being the paragon of honesty and treating other parties as devious connivers who need to be kept under the leash of anti-corruption clauses.

IGA is a solemn commitment between the two sovereigns, based on mutual trust. The very idea of one government asking the other to give undertaking on integrity issues is an anathema to international relations. Similarly, the point raised about sovereign guarantee is totally misplaced. No country gives that. It must be appreciated that the French government went out of its way to give a letter of comfort to satisfy Indian sceptics. 

The Case of the Infamous Note
A note initiated by Dy Secy (Air II) on 24 November 2015 has been published by the said paper to claim that PMO’s Office had been having parallel parlays on the Rafale deal. The note throws up many disturbing issues.

Why did Dy Secy (Air II), who had nothing to do with the Rafale deal initiate such a note? As shown in the organisation tree below, there are three well-defined verticals in the Department of Defence of the Defence Ministry, each under an Additional Secretary level officer.

Addl Secy-I deals with revenue expenditure and routine administrative matters of the three services. He has nothing whatsoever to do with capital procurements, not even remotely. Dy Secy (Air II) comes under JS (Air). His channel of reporting is through JS (Air) and Addl Secy-I. Indian bureaucracu is notorious for guarding its turf aggressively and brooks no interference from intruders. Why was Dy Secy (Air II) allowed to meddle in capital procurements?

The Acquisition Wing under DG Acq is the executive arm of the Defence Acquisition Council and is responsible for the acquisition of new weaponry and defence systems. Contract Negotiating Committee (CNC) is constituted under the aegis of DG Acq. As per Appendix B of DPP-2013, the standard composition of CNC consists of Acquisition Manager, Technical Manager, Finance Manager, Advisor (Cost), Quality Control Officer,  User Representative, Repair Agency Representative and Representative of Contract Management Branch at the Service Headquarters. Most members are of Jt Secy level. There is no representative of Addl Secy-I.

Normally, Acquisition Manager heads CNC. However, DG Acqn may nominate a service officer to head CNC with the approval of the Defence Minister. In the case of the Rafale deal, Air Marshal SPB Sinha, an officer with outstanding credentials and impeccable probity record was hand picked to head CNC. The country could not have selected a more suitable officer.

The question arises as to what prompted Dy Secy (Air II), a much too junior an officer, to meddle in the matters that did not concern him at all? Was it done at someone’s behest? Was it a part of a well-orchestrated campaign to derail the Rafale deal?

Further, why did Dy Secy (Air II) not follow the laid-down chain of correspondence? Why did he bypass his own Jt Secy and Addl Secy-I to address the note directly to the Jt Secy of the Acqn Wing with whom he had no dealings whatsoever?

More importantly, why did the Acq Manager, DG Acquisition and Def Secy not question Dy Secy (Air II) for his locus standi in the matter? Was this issue beyond the competence of these bureaucrats or were they a party to the malicious plot or did they lack courage to tick him off for interfering in matters that did not concern him. Instead they took serious cognizance of the note.

Surprisingly, quite unlike the functioning of the lethargic Indian bureaucracy, the note moved with abnormal speed. Jt Secy of the Acqn Wing and DG Acqn saw the note on the day it was initiated, i.e 24 November 2015. What was the hurry? Was any higher-up overseeing and expediting the move of the file?

Perhaps the most strange aspect of the whole affair is the fact that a junior officer in MoD could have the audicity to fault the functioning of PMO’s office and accusing it of weakening the negotiating position of MoD. India bureaucracy is notorious for its spinelessness and sycophancy. No junior officer will ever dare to use such harsh language for PMO’s office. Something is certainly amiss.

Finally

It is apparent even to the laypersons that a deliberate and concerted campaign is being carried out to tarnish the image of the government and to prevent it from placing repeat orders on Dassault. The schemers pretend to smell a rat where none exist. In fact, they are attempting to plant a rat to discredit the Rafale deal. It becomes worse when a reputed media house is seen as an unprincipled, unethical and villainous rogue, masquerading as a champion of probity in public affairs.

It must be conceded that in a major procurement of this nature, all officials involved tend to offer their considered opinion and advice to make the deal rock solid. It is their duty and they are fully justified to suggest various safeguards. The final decision making powers lie in the hands of the Cabinet Committee on Security (CCS). It is for CCS and other empowered entities to weigh all suggestions and take the final call.

India bureaucracy is like a quagmire. Every bureaucrat has mastered the art of playing safe by putting up incongruous and infructuous notings on files that can stall the process for ever. If the decision makers get cowed down, no proposal will ever fructify. As the Rafale deal shows, only a strong leader like Modi could have overcome the impediments created by the vested interests and the grossly spineless bureaucracy. 
  
To criticise and fault the government is fully justified provided the facts support allegations. It is grossly unfair to invent wild allegations, in the hope that some accusations may stick. There has been no trail or even a hint of any sleaze money in the Rafale deal so far. There were no middlemen or agents. In fact, it should be considered a master stroke by the Indian government to make up critical deficiencies of the Air Force in an expeditious, diligent and far-sighted manner.*****