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India's HAL Faces Problems in Completion of Hawk Jet Trainer Production
October 16, 2009

As India Defence Online reports, India is still facing problems over the completion of the 66 Hawk Advanced Jet Trainer (AJT) Mk132 acquisition deal which was initiated in 2004. While the Indian Air Force (IAF) has received 24 aircraft in fly-away condition, the remaining 42 to be assembled by Hindustan Aeronautics Limited (HAL) have been delayed.

Due to the recent grounding of 120 basic trainers (HPT-32) by the Indian Air Force (IAF), India is feeling the pressure on the lack of trainer aircraft in its fleet. HAL had delivered the first locally-built Hawk to the IAF in August 2008. As of now, HAL has failed to deliver 12-15 aircraft by March 2009 and 25 by 2009 end which it had committed to the IAF. The current number of Hawk trainers built by HAL are only five.

While the IAF and the Indian Navy were mulling over the acquisition of another 57 Hawks, there has been no agreement on the price. Indian Air Chief Marshal P.V.Naik has clearly said that if BAE Systems does not agree with the Indian benchmark and its expectation, then India will look for other options. In fact, the IAF has issued a new request for information (RFI) to global trainer aircraft manufacturers and will be pursuing the acquisition deal on a fast-track basis. This has been a setback for BAE Systems since in the normal course, it would have got a go-ahead signal since it has an assembly line ready in India. BAE Systems are holding talks to get back the deal with India for the additional trainers.

As for the delays in the Hawk production in India, the IAF is blaming the state-owned HAL who is responsible for the hawk AJT. HAL has criticized BAE Systems of UK for failing to carry out its contract to transfer technology, design drawings, tools, manufacturing jigs and components essential for manufacturing the Hawk trainer in India. BAE Systems has denied any failure to fulfill its contractual obligations saying it has already supplied the spares 18 months ago and is willing to support HAL in any issue related to Hawk trainers.

BAE Systems had signed a $1.2-billion contract with India’s Ministry of Defence in 2004 to supply 24 ready-built Hawk-132 AJTs (which have been delivered) and transfer the technology for building another 42 in HAL, Bangalore.

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www.business-standard.com/india/news/ajai-shukla-stealing-lollipopsbabies/375103/
Ajai Shukla: Stealing lollipops from babies

India's military has long suffered from flawed, inconsistent contracting
Ajai Shukla
New Delhi
November 3, 2009

If India’s military eventually plumps for primarily American equipment, a major reason will be: soldiers, sailors and airmen are completely sick of being gypped through poorly-framed acquisition contracts that entirely favour the foreign suppliers.

Take India’s contract with BAE Systems, UK, for 66 Hawk Advanced Jet Trainers (AJTs), a billion-dollar procurement that took 18 years to finalise. That contract, it now emerges, was framed so poorly that today — with HAL Bangalore blaming BAE Systems for failing to properly transfer technology — India’s Ministry of Defence (MoD) can do nothing to twist BAE Systems’ tail.

The MoD now finds that the Hawk contract contains no provisions for liquidated damages in case BAE Systems defaults on its obligations. And, in an act of inexplicable generosity, India’s MoD paid BAE Systems an unprecedented “up-front” amount of 30 per cent of the contract value; such a payment seldom, if ever, exceeds 15 per cent. Now, with more jet trainers needed and the production line facing delays, fresh inquiries have gone out to global manufacturers, restarting procurement afresh.

Why do such fiascos routinely occur? Astonishingly, because the MoD does not have the legal experts needed for negotiating and framing complex defence contracts. The MoD’s forlorn Legal Cell, manned by 10-12 lawyers on deputation from the Ministry of Law, comes up during the framing of every defence contract against a battery of specialised contracting experts, an integral part of the establishment of every global arms vendor.

This year, the Indian MoD’s beleaguered and inadequate legal team will oversee capital expenditure of more than Rs 50,000 crore. When the MoD finalises its choice of medium multi-role combat aircraft (MMRCA), these less-than-legal-eagles will have to negotiate and frame a single contract worth Rs 50,000 crore. Supplementary contracts will be needed for governing offsets worth half that value again.

Within the MoD, alarm bells have long been sounding. The Solicitor General and the Attorney General have been approached for help in accessing top-class legal advice. But, so far, there has been no response.

The complexity of a defence contract is virtually unparalleled. A “standard contract” is rarely feasible because the usage of each piece of equipment is radically different. Being an international contract, reaching agreement on arbitration is always difficult, especially considering confidentiality and non-disclosure arrangements. Defining force majeure is extremely important, especially when governments can invoke national interest during the execution of a contract. The MoD’s civil servants deal routinely with such issues, but without the benefit of solid legal advice.

India’s military has long suffered from flawed and inconsistent contracting, especially with Russian suppliers. Since the early 1980s, India’s strike corps — the tank units that would spearhead a thrust into Pakistan during war — have faced frustrating shortages of on-board fitment equipment that an ethical defence vendor would supply as a part of the contract. In an instance that generated much resentment, India’s first T-72 tanks were supplied by Russia without the tarpaulin covers that keep out dust and rain. When the military asked for tarpaulins, Russia demanded a supplementary contract, eventually supplying them at highly inflated prices.

In some contracts, especially those involving the supply of “strategically important” equipment, the vendor has the leverage to ignore his contractual obligations. Russia’s shakedown of India over the cost of the Gorshkov is an example of the limitations of any contract. Linking the Gorshkov sale with the transfer of nuclear submarine technology, Russia dismissed the initial price as “unreal, a mistake”, and demanded a renegotiated price. But, in most defence procurements, a good contract guarantees satisfactory supply as well as a healthy buyer-seller relationship.

US defence companies are confident that the experience of contracting with them — with no hidden costs, superb product support, and a “partnership” approach towards the Indian users — will make a big impact on the Indian military. So far, contracting with the US has been relatively smooth, but it is still too early to tell.

The MoD’s lack of capability in defence contracting is just one, especially worrisome, dimension of a broad systemic incompetence in procuring defence equipment. As a Group of Ministers in April 2000, numerous committees and, most recently, an excellent CAG report pointed out, the MoD has failed to put in place a functionally specialised acquisition organisation to handle a task that is clearly far beyond current capabilities.

But instead of a coherent system, procurement continues under 13 different agencies, each reporting to a different functional head. Contracts, after they are concluded, are managed by four different agencies with very little co-ordination among them.

ajaishukla.blogspot.com

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BAE Systems completes Indian hawk aircraft deliveries
Thursday, Nov 05, 2009
After completing a flight development contract for the Indian Air Force (IAF), BAE Systems has delivered the 24th and final UK built Indian Hawk.

Following a 3,000 mile journey across Europe, Africa and the Middle East, the aircraft, flown by BAE Systems test pilots, arrived safely at Air Force Station Bidar to join the rest of the Hawk fleet in delivering fast jet training to the IAF.

The aircraft, HT001, which was actually the first IAF Hawk to be built, has, for nearly three years served as a flight test platform and proving ground for the integration of new systems and capabilities onto the IAF Hawk fleet .

As well as development and acceptance flights, HT001 was also a key component in the programme which saw Indian Air Force flying instructors training to teach student pilots on the Hawk. This programme took place prior to the delivery of Hawks to India allowing the Indian training programme to start at the earliest opportunity.

Michael Christie, Senior Vice President, India for BAE Systems Military Air Solutions, said: “Hawk has brought a step change in pilot training capabilities for the IAF and this aircraft, which was the first India Hawk to be built, has been a key part of developing further capabilities for the Indian Air Force.

“During its time here at BAE Systems, HT001 has proven to be extremely reliable, delivering excellent service from its time as a training platform for Indian Air Force instructors, through to the on-time and to budget completion of the recent flight development programme.

“The first Hawk was delivered to the IAF in November 2007 and other than this final development aircraft, deliveries were completed in 2008. Whilst this marks the completion of aircraft deliveries by BAE Systems to the Indian Air Force, we continue to provide support services to the IAF, and work closely with our industrial partners, HAL, in meeting the fast jet training needs of the Indian Air Force.”

In arriving at Air Force Station Bidar, the home of the Indian Hawk fleet, HT001 becomes the 860th Hawk delivered across the globe.

About BAE Systems
BAE Systems is the premier global defence, security and aerospace company delivering a full range of products and services for air, land and naval forces, as well as advanced electronics, security, information technology solutions and customer support services. With approximately 105,000 employees worldwide, BAE Systems' sales exceeded £18.5 billion (US $34.4 billion) in 2008.

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