Wait for LUH coming to an end

Issue: 12-2011By Air Marshal (Retd) B.K. Pandey

The long wait by the Indian Army to buy light utility helicopters (LUH) appears to be coming to an end as the government cleared a move to alter a key provision in the request for proposal (RFP). Defence Ministry sources said one of the stipulations of the RFP was the ‘cold soak test’, which required the contenders to park the machines overnight at an altitude of 5,000 metres or above and start-up next morning without external power. This test was not carried out as there is no helipad at such heights. Now that the amendment to the RFP dispensing with this requirement has been cleared by the Defence Acquisition Council, the stage is set for opening the commercial bids followed by negotiations with the lowest bidder.

The Indian Army has been using the fleet of the Hindustan Aeronautics Limited (HAL) manufactured Cheetahs and Chetaks whose induction had begun in the early 1970s, for logistic support to forward locations and communications. In view of the “urgent requirement” to replace this ageing fleet, the Ministry of Defence (MoD) floated a global tender for 197 utility helicopters in 2003. The companies competing for the contract were Bell Helicopter of the US, Eurocopter from Europe, Italy’s AgustaWestland, Russia’s Kamov and Kazan. After an elaborate process lasting four years, Eurocopter with its offer for the AS 550 C3 Fennec was identified as the preferred vendor with the Bell-407 in the second slot. However, despite the urgency, in December 2007, the $600 million ( Rs. 3,000 crore) deal for the 197 helicopters for the Indian Army was cancelled in the last minute. This rather extreme and somewhat jarring step was taken following an investigation in the wake of objections filed against the elimination of Bell Helicopter from the race. First, it was alleged that a representative of the company in India was related to a senior functionary in the evaluation committee, a situation that could have led to possible conflict of interest and would have violated the restriction imposed by the rules on middlemen in defence contracts. More importantly, there were irregularities detected in the process of evaluation of the selected machine. Instead of the AS550 C3 Fennec military version, Eurocopter had fielded the AS350 B3 Ecureil civil variant for trials at high altitudes. The argument by the selected vendor that the AS500 C3 was “exactly the same” as the AS350 B3 “in terms of airframe, systems, main gear box, rotor head, blades, engine and performance” as also denial of the involvement of a middleman were not entertained. In the bargain, the Indian Army turned out to be the loser and hopes of providing better logistic support soon to forward locations continued to remain a distant dream.

As redemption, a fresh tender $750 million ( Rs. 3,750 crore) for 197 helicopters (133 for the Army and 64 for the Indian Air Force) was floated at the end of July 2008. The total requirement of the armed forces had however been enhanced to 384 helicopters of which HAL was required to design and produce the balance 187 machines of the same class. Meanwhile, field trials were finally completed in December last year on the two machines remaining in the race, namely the Eurocopter AS-550 Fennec and the Russian Kamov-226 Sergei. Surprisingly, Bell Helicopter on whose behalf objections were filed in the initial tender did not participate in the second tender ostensibly on account of the high “offset” requirements.