A $647 million end run around India's DPP?; additional background & structure; Rheinmetall's offering, ULH tests to start soon. (Feb 15/10)
India has marked over $4 billion worth of artillery projects to purchase several hundred new 155mm howitzers. They're intended to supplement India's dwindling artillery stocks, while out-ranging and out-shooting Pakistan's self-propelled M109 155mm guns. It seemed simple enough, and in the main towed artillery competition, BAE Systems Bofors had been competing against systems from Israel's Soltam and Denel of South Africa.
Unfortunately, that competition and related artillery procurements have mostly served as cautionary tales, years-long affair filled with legal drama, accusations of corruption, and more than one re-start. Meanwhile, India's stock of operational 155mm howitzers has dwindled to around 200. In 2007, a new towed howitzer RFP was issued, and the competition was expanded. Only to crash again in 2009. Is there an end in sight to any of these competitions? Or a potential winner?
Soltam Rascal
(click to view full)US-India Defense and Strategic Affairs reported on the competition in 2004, and noted that this was expected to be one of the first large defense procurement decisions made by India's new United Progressive Alliance government. The question became whether a decision could be made within that government's term(s) of office. The answer: no.
The saga is illustrative of the problems India's defense bureaucracy faced across all of its artillery competitions, as it atempts to field working products before its existing artillery systems expire.
After multiple firing trials and several years, India's towed artillery competition managed to end up without any competitors left standing. All 3 competitors (Bofors FH-77 B05, Soltam TIG 2002, Denel G5/2000) failed to meet India's accuracy specifications in 2003 trials, but all 3 improved their guns to compete again in 2004. There are reports that Soltam fell out of the race after its barrel burst during field trials, while South Africa's Denel was sidelined in 2004 and then eliminated in 2005, after the Indian government accused the manufacturer of corruption in another defense deal.
That created problems on 2 fronts. Denel's financial situation was deteriorating, and The Times of India reported that the contract may have been critical to the firm's financial survival. In hindsight, that concern was valid, but Denel managed to survive the loss. A win certainly would have made a significant difference, and might have allowed Denel to delay its major corporate restructuring and associated strategic rethinking for several years.
Bofors' FH-77B05:
Winner by default?
(click to view full)The other problem involved India's Ministry of Defence. India's defense procurement establishment has shown an extreme risk-averse behavior and Defense India observes that when a competition devolves to a single-vendor solution, the practice is often to re-tender.
The resulting dithering was relieved when allegations that Bofors had paid INR 640 million (about $16 million) in bribes to secure the order eliminated the last contender. Bofors Defence AB had been blacklisted by India before, after allegations of kickbacks in a 1987 deal during Rajiv Gandhi's regime. That scandal had derailed a planned 1,500 gun buy, reducing it to 410 FH-77B howitzers. Fortunately for India, those guns arrived in time to become an iconic feature of the 1999 Kargil War with Pakistan.
Those accused in the Bofors case would eventually have their day in court, and win. In April 2007, India re-opened its howitzer competition again, and the passage of time had created a number of changes in its requirements and options. By November 2009, however, the mere allegation of bribery had frozen the competition again, by leaving just 1 eligible contender.
Meanwhile, the support contract with Bofors for India's in-service howitzers expired in 2001, and India's stock was believed to sit at just 200 operational 155/39 caliber guns as of January 2009.
The Other Howitzer Competitions
The competition for Indian artillery is actually several competitions.
The competition covered in the previous section involves about $1.8 billion for 400 towed 155/52 artillery guns, to be followed by production of up to 1,180 in India. Current Status: Winter and summer trials planned in 2010. BAE Bofors' FH77 is currently competing against ST Engineering's FH-2000.
About $700 million for the ultra-light 155/39 howitzer competition, covering about 140 pieces. These would be portable, towed guns. As noted above, the competition
has started and stopped several times.
Current status: Government may be doing an end-run to buy the M777, as an emergency replacement for dwindling artillery. Main competitor is ST Engineering's Pegasus, which ran into problems over unproven corruption allegations.
About $800 million for about 100 155mm self-propelled tracked guns. The BHIM (Denel G-6 gun on Arjun tank chassis) winner was also terminated in 2006, when Denel was barred following a corruption case. Partner Bharat Earth Movers was the big loser. Another RFP in 2007 failed, as all firms were barred.
Current status: In limbo. Meanwhile, Pakistan began its own process in 2005, and bought 115 tracked M109A5 howitzers from the USA at a very cheap price.
About $900 million for 180 self-propelled wheeled guns.
Current status: Trials postponed to April 2010. RFP responses reported to leave Slovakia's 155/45 Zuzana system), vs. Germany's Rheinmetall RWG-52 155/52 system, uses the PzH-2000 turret.
Contracts and Key Events
Feb 15/10: The Wall Street Journal reports that BAE Systems Ltd. expects to start trials in India for its FH77 B05 towed howitzer by early March. That's a month or so behind the original February 2010 expectation for winter trials. The FH77 B05 would be manufactured and marketed in India by BAE's joint venture with Mahindra & Mahindra Ltd.
BAE also reportedly expects to start trials for the M777 ultra-light howitzer in India by the end of 2010. Speaking at DefExpo 2010 in New Delhi, BAE Systems India (Services) Pvt. Ltd. VP and General Manager Mark Simpkins reportedly said that the initial M77 order "is likely to be for 145 units, which could increase to 1,000 units in the future."
Feb 15/10: As part of its DefExpo 2010 push, Rheinmetall Defence discusses its RWG-52 and RTG-52 candidates for India's self propelled programs.
Jan 28/10: Indian sources tell DID that that the M777 request could also become an attempt to sidestep India's paralyzing procurement bureaucracy. Single-vendor competitions are problematic when following India's Defence Procurement Procedures (DPP), but can reportedly be used for government-to-government foreign military sales deals, per Section 71 of the DPP 2008:
"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."
While ST Engineering's Pegasus is still an ultra-light howitzer contender, the question is whether the legal steps required to make that deal would take too long – even though nothing has been proven concerning the firm's conduct in India.
Jan 26/10: The US Defense Security Cooperation Agency announces [PDF] India's formal request to buy 145 M777 155mm Light-Weight Towed Howitzers with Laser Inertial Artillery Pointing Systems (LINAPS), warranties, spare and repair parts, support and test equipment, publications and technical documentation, maintenance, personnel training and training equipment, and U.S. Government and contractor technical assistance and support.
The estimated cost is $647 million, but a DSCA announcement is not a contract. In this case, it may not even be an intended sale. DSCA requests can be issued as a way of ensuring that the way is clear for a contract, if a competition continues, and if that vendor requiring American arms export approvals turns out to be the winner.
If the 9,700 pound/ 4,400 kg, part-titanium M777 should bypass the competition altogether, or win a re-started competition against the likes of ST Kinetics' Pegasus semi-mobile lightweight howitzer, the principal contractors will be BAE of Hattiesburg, MS; Watervliet Arsenal of Watervliet, NY; Seiler Instrument Company of St Louis, MO; Triumph Actuation Systems of Bloomfield, CT; Taylor Devices of North Tonawanda, NY; Hutchinson Industries of Trenton, NJ; and Selex in Edinburgh, United Kingdom.
Uncharacteristically for India, the DSCA says that there are no known offset agreements proposed in connection with this potential sale – another sign that India's DPP may be side-stepped. Implementation of this proposed sale will require annual trips to India involving up to 8 U.S. Government and contractor representatives for technical reviews/support, training, and in-country trials, over a period of approximately 2 years.
Jan 22/10: Singapore's ST Kinetics announces that it is keen to set up a manufacturing base in India, if it wins some of the 5 contracts it has bid for. The tenders comprise 2 artillery gun projects (ultra-light and towed howitzers), a light strike vehicle for the army, and 2 carbine rifle projects for internal security forces.
Jan 15/10: Singapore's ST Kinetics issues a release touting "the longest in-service 155 mm 52 Calibre towed Howitzer, the FH 2000," which is expected to enter field trials in February 2010. It also says that:
"The company is hopeful that the stalled [Indian] trial of the 155 mm calibre 39 Pegasus Lightweight Howitzer (LWH) will also recommence very shortly"¦. ST Kinetics plans to address India's strategic needs and is fielding tailored solutions to meet the requirements of the modernisation programmes of the armed forces. These include the iFH2000 155mm 52 Calibre Howitzer for the Towed Gun requirement and the Pegasus 155mm 39 Calibre Lightweight Howitzer for the Ultra Lightweight Howitzer program. ST Kinetics has also offered the SAR 21 Carbine with its proven reliability and performance.
Speaking at the Press Conference, Brig Gen Patrick Choy, Chief Marketing Officer, said "....The company is respected for its integrity, transparency and high standards of corporate governance. [The Pegasus 155mm / 39 howitzer].... is already in India in Gwalior and is awaiting a call to trials."
SLWH PegasusNov 23/09: India's MoD publicly confirms the blacklisting and terms for all 7 firms mentioned in the Defense News report:
"In regard to the tender cases of procurement/execution, where the tender process has already been started and where the companies mentioned in the FIR are figuring, each case should be dealt as per the tender conditions, keeping in view of the FIR in question. No tender should be awarded to the companies mentioned in the FIR unless the CBI investigation clears them totally."
Nov 12/09: Defense News reports that India's artillery competition is frozen yet again. Singapore Technologies has been disqualified, and under India's rules, competitions can't proceed with just one qualified vendor.
In June 2009, corruption charges filed against the former director-general of India's Ordnance Factory Board placed 7 firms on the "tainted" list, blacklisting them from defense contracts: Singapore Technologies, Israel's IMI, Poland's BVT, Singapore's Media Architects, and India's HYT Engg, T.S. Kishan and R.K. Machine Tools. The latest Indian MoD advisory will not allow them to participate in defense procurements, pending a full Central Bureau of Investigation (CBI) report.
Oct 7/09: Indian Express reports that:
"The government may have decided to let Ottavio Quattrocchi off the hook, but the Bofors ghost continues to haunt the armed forces, with several key artillery modernisation programmes put in the limbo due to wrongdoing charges levelled against three major international manufacturers."
March 12/09: The Singapore Straits Times reports that India has picked ST Kinetics' "Pegasus" semi-mobile light howitzer for its $1 billion, 145-gun ultralight howitzer competition. At 5,000 kg/ 11,000 pounds, the 155mm/39 caliber Pegasus SLWH is not quite as light as BAE Systems' M777. What it does have, is an unusual feature that allows the towed gun to be moved limited distances, at up to 12 km/h, under its own power. This is a very useful feature when trying to sidestep return fire cued by artillery tracking radars.
Unlike the 155/52 caliber competition for larger and heavier howitzers, the "ultralight" competition reportedly contains no clauses requiring manufacture in India.
Singapore was also sent an RFP for the 155/52 caliber competition, which the Straits-Times reports could involve up to 400 foreign-made and 1,180 domestically-produced howitzers. ST Kinetics's other products include the 155/52 FH2000 towed field howitzer, and the Primus 155/39 caliber 28.5-ton tracked self-propelled howitzer. Singapore Straits-Times.
Jan 14/09: An anonymous Army official tells Indian reporters that:
"The procurement process for the towed and light howitzer is proceeding as planned. Bids have been received from all the vendors and trials of the guns are planned in February or March [of 2009].... The trials for self-propelled howitzers are planned in May-June [2009]."
According to the IANS report, the initial contract involves 180 guns, but the eventual contract is to include up to 400 guns, thanks to transfer of technology to build the howitzers in India. Of these, 140 will be light howitzers that will be spread over 7 regiments. They will still be 155/52 caliber, just lighter thanks to advances in metallurgy and design. The remaining 260 guns will be towed and self-propelled variants. IANS via India Defence | Hindustan Times.
April 4/07: Re-tender is exactly what happened. Sujan Dutta of The Calcutta Telegraph reports that India has reopened its artillery competitions entirely, refloating 2 global RFPs to 12 makers of 155mm/52 calibre self-propelled guns. The Indian Army reportedly proposes to buy 400 systems at the outset: 180 tracked and 220 wheeled.
The first new tender was for wheeled guns, with an RFP floated in early March 2007. The second tender for tracked guns was floated at the end of the month. Expected competitors include BAE Land Systems USA (M109A6 Paladin possible for tracked), BAE Bofors (FH77B towed, Archer wheeled), France's Nexter (Caesar wheeled), Rheinmetall (Zuzana wheeled from Kerametal in Slovakia, possibly PzH-2000 for tracked), Korea's Samsung Techwin (K9 for tracked), and Israel's Soltam (Atmos 2000 for wheeled, Rascal for tracked).
In making its decision to re-float the RFP, the cabinet committee on security reportedly concluded that:
A single-vendor situation must be avoided;
South Africa's Denel had emerged as the single vendor for the tracked version, but they were blacklisted in 2005 on another deal;
The process delays of 5 years since the first tender have been so great that the field as a whole has advanced since then;
The standards for the selection of the guns need to be revised; and
India's defence procurement policy has been revised in the interim, and the RFP should reflect that.
G6 Base, Bleeding?Jan 16/06: A new scandal is swirling around re-opened allegations of kick-backs involving Bofors, and complicity by the current government in covering them up.
Jan 13/06: The Press Trust of India (PTI) reports that Army Chief General J J Singh has ordered a 4th round of extensive trials for the guns, in which only the Bofors and Soltam guns will be taking part. He said the two contending 155mm/52 caliber guns would be evaluated through summer and winter trials, with the winner inducted by 2007.
DID thought that was a bit optimistic...
Jan 12/06: The Times of India reports that India's UPA government has floated new global tenders for collaboration in the Nalanda ordnance factory project to manufacture 155mm Bi-Modular Charge Systems (BMCS) for India's artillery. See this link from BAE's SWS Defence for a more in-depth look at a particular BMCS solution.
South Africa's Denel had been picked, but the blacklisting stemming from the anti-material rifles' deal is having further ripple effects. The winner of this competition will be well positioned for any follow-on orders involving India's new howitzers.
July 28/05: South African competitor Denel is blacklisted from Indian defense contracts by the Ministry of Defence, as a result of the CBI's bribery investigation.
June 15/04: Madison Government Affairs, summarizing Defense News:
"The Indian Army will choose among three foreign contenders for a $2 billion purchase of about 400 155mm self-propelled howitzers after field trials in the Rajasthan desert later this month, an Indian Defence Ministry official said. The candidates are the Swedish SWS Defense AB FH77B05 L52, the Israeli Soltam TIG 2002 and the South African Denel G5/2000 gun. All three failed to meet India's accuracy specifications in last year's trials; all three improved their guns to compete again this year, said an Indian Army official from the artillery directorate"
http://www.defenseindustrydaily.com/murky-competition-for-2b-india-howitzer-order-may-end-soon-0805/
