IN Scorpene Submarines - News & Discussions

Discussion in 'Indian Navy' started by LETHALFORCE, Aug 30, 2009.

  1. notinlove

    notinlove Regular Member

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    All i can do is be me, whoever that is.


    Ajai Shukla: No thanks, you're blacklisted!
    Ajai Shukla / New Delhi November 17, 2009, 0:19 IST

    Over this last decade, the Ministry of Defence (MoD) has “blacklisted” so many foreign arms corporations that the military’s modernisation plan has virtually stalled. The MoD “blacklist” is not a formal document; an arms vendor is mostly embargoed unofficially, when senior bureaucrats agree that it is playing dirty.
    The hit list reads like a who’s who of global weapons suppliers, including corporations with good records of delivering arms to India. Starting with Bofors in the late 1980s, the list grew to include Denel of South Africa; Israel Military Industries (IMI); Singapore Technologies Kinetic (STK); and now Thales of France. Earlier this year, the world’s biggest defence contractor, Lockheed Martin, was on the blacklist. Now another global giant, BAE Systems, seems headed there after problems with setting up an assembly line in HAL Bangalore for the Hawk jet trainer......
    Ajai Shukla: No thanks, you're blacklisted!
    i said m not sure .... :) .. don't go ballistic on me .. i just posted what i read(and its pretty recent also)...
     
  2. Sridhar

    Sridhar House keeper Moderator

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    Scorpene deal: PAC slams defence ministry

    BY :REDIFF
    Slamming the Defence Ministry over the nine-year delay in awarding contract to French firm Thales to build six Scorpene submarines in Mumbai a Parliamentary Committee on Wednesday said the indecisiveness resulted in cost overruns and undue favour to the vendor, besides adversely impacting Navy’s operational preparedness.
    Referring to a Comptroller and Auditor General (CAG) report for 2008 that rapped the Ministry for the delay, the Public Accounts Committee (PAC) also noted that this led to a cost escalation of the submarines by more than Rs 2,800 crore.
    The CAG report had observed that “despite the Indian Navy’s depleting force level, the Ministry took nine years to finalise a contract for the construction of the six submarines.” The PAC report in this regard was tabled in both Houses of Parliament today.
    The committee noted that due to the delay in the finalisation of the contract for as long as three years from 2002 to 2005, there had been an escalation in the price of submarines by more than Rs 2,800 crore and an additional Euro 27.05 million commitment on the procurement of missiles for the naval vessel.
    “Such indecisiveness and systemic flaws on the procurement of submarines led to time and cost overrun and undue favour to the vendor besides adversely impacting Navy’s operational preparedness,” the report said.
    The report said the cost overrun was primarily due to escalations of exchange rate variations and increase in cost of missiles, despite a discount of 1.03 per cent by the vendor.
    Seeking an explanation from the defence ministry for the delay in finalising the contract and for cost overruns, the PAC also expressed astonishment over its “inability” to quantify the exact financial loss from the Scorpene deal, also known as Project-75.
    Expressing concern over the Ministry accepting an “unproven” design of Scorpene, the report said “deviations in respect to prescribed parameters such as stability, speed, endurance, noise levels, manoeuvring performances of the submarine cannot be ruled out” and asked the Ministry to compel Thales to take corrective steps. Referring to the Ministry’s reply attributing the delay on forwarding of Cabinet Committee on Security (CCS) note to Finance Ministry for examination and reference to Central Vigilance Commission (CVC), followed by several rounds of deliberations, the report said the process was “too cumbersome” and asked it to dispense with the CVC route.
    “It (CVC route) is unnecessary and totally uncalled for and resultantly leads to unacceptable delays, as has happened in the instant case,” it added. Noting that the construction of the Scorpene at the Mumbai-based Mazagon Docks was very slow and consequently the delivery could be delayed, the PAC said the Ministry should have taken into account the “teething problems and the time taken for absorption of technology” before awarding contracts and indigenisation.
    What caused concern in the PAC was the “systemic deficiencies”, as corroborated by the defence secretary, who talked about “problems in the system, mindset and in the whole process” of procurement.


    http://idrw.org/?p=823#more-823
     
  3. nirmal

    nirmal Regular Member

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    Can anyone give any idea about the current production status of the scorpenes at MDL please?Is construction in progress or totally stalled?
     
  4. mani1090

    mani1090 New Member

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    DefMin Slammed for Delay, Cost Overruns of Scorpenes

    Slamming the Defence Ministry over the nine-year delay in awarding contract to French firm Thales to build six Scorpene submarines in Mumbai, a Parliamentary Committee today said the indecisiveness resulted in cost overruns and undue favour to the vendor, besides adversely impacting Navy's operational preparedness.

    Referring to a Comptroller and Auditor General (CAG) report for 2008 that rapped the Ministry for the delay, the Public Accounts Committee (PAC) also noted that this led to a cost escalation of the submarines by more than Rs 2,800 crore.

    The CAG report had observed that "despite the Indian Navy's depleting force level, the Ministry took nine years to finalise a contract for the construction of the six submarines."

    The PAC report in this regard was tabled in both Houses of Parliament today.

    The committee noted that due to the delay in the finalisation of the contract for as long as three years from 2002 to 2005, there had been an escalation in the price of submarines by more than Rs 2,800 crore and an additional Euro 27.05 million commitment on the procurement of missiles for the naval vessel.

    "Such indecisiveness and systemic flaws on the procurement of submarines led to time and cost overrun and undue favour to the vendor besides adversely impacting Navy's operational preparedness," the report said.

    The report said the cost overrun was primarily due to escalations of exchange rate variations and increase in cost of missiles, despite a discount of 1.03 per cent by the vendor.

    Seeking an explanation from the Defence Ministry for the delay in finalising the contract and for cost overruns, the PAC also expressed astonishment over its "inability" to quantify the exact financial loss from the Scorpene deal, also known as Project-75.

    Expressing concern over the Ministry accepting an "unproven" design of Scorpene, the report said "deviations in respect to prescribed parameters such as stability, speed, endurance, noise levels, manoeuvring performances of the submarine cannot be ruled out" and asked the Ministry to compel Thales to take corrective steps.

    Referring to the Ministry's reply attributing the delay on forwarding of Cabinet Committee on Security (CCS) note to Finance Ministry for examination and reference to Central Vigilance Commission (CVC), followed by several rounds of deliberations, the report said the process was "too cumbersome" and asked it to dispense with the CVC route.

    "It (CVC route) is unnecessary and totally uncalled for and resultantly leads to unacceptable delays, as has happened in the instant case," it added.

    Noting that the construction of the Scorpenes at the Mumbai-based Mazagon Docks was very slow and consequently the delivery could be delayed, the PAC said the Ministry should have taken into account the "teething problems and the time taken for absorption of technology" before awarding contracts and indigenisation.

    What caused concern in the PAC was the "systemic deficiencies", as corroborated by the Defence Secretary, who talked about "problems in the system, mindset and in the whole process" of procurement.

    Pointing out that Pakistan had acquired Augusta 90B submarines from the same French firm at a much faster rate than their Indian counterparts, the PAC said, "in the name of transparency, things should not be allowed to linger on for an indefinite period, which would ultimately prove detrimental to the interest of the nation."

    The Defence Ministry had also told the PAC that only Thales had responded to its tenders for the submarine construction out of the four firms to which letters of intent were issued and the French company had laid down conditions that only their combat suite should be selected for the submarines.

    Moreover, the tube-launched missiles for the submarines from US and Russia were not compatible with either the HDW submarines or the Scorpene submarines that the Navy would have in its fleet and only the French firm's was suitable, it had said.

    The Navy currently has a submarine fleet strength of 16 vessels of which 10 are of Russian-origin Kilo class, four are of HDW class and two are of Foxtrot class.

    Apart from the six Scorpene under construction at MDL at present, the Navy is looking for second line of submarine construction at another shipyard, which is yet to be finalised.

    As things stand today, the Navy is worried that its submarine fleet level will deplete by 30 per cent by 2015 and by 50 per cent by 2020, if there was a delay in delivery of the Scorpenes and the construction of the second line of submarines, as some of the older Foxtrot and HDW vessels would be decommissioned by then.
    clap
     
  5. youngindian

    youngindian Senior Member Senior Member

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    India's Scorpene submarine programme delayed

    Monday April 5, 2010

    India's controversial Scorpene submarine programme was first hit by technical delays, then it faced allegations of kickbacks, and later a CBI probe. Now, it's confirmed that the Rs 18,000 crore defence deal signed in 2005 will not be available to the Indian Navy before 2014.

    "We have had delays due to various reasons. I expect the first submarine to be delivered in four years time. That is 2014 - 2015. That's a delay of 2 - 2/12 years. There were certain issues to be addressed with the government and the owner. These issues have now been sorted out and we are placing orders for various equipments," said Retired Vice Admiral H S Malhi, Chairman and MD, Mazgaon Docks Limited.

    The impact of the delay could be serious because by 2012 the Indian Navy will be left with only nine of its 16 submarines; the others would be too old to use.

    And that's not all. The makers of the Scorpene, the Mazgaon Docks Limited, say the delivery of the first of the six submarines is dependent on when they get the various equipment they are still to order for. If that is delayed then for the Indian Navy and the country, it's going to be a long and tense wait.

    http://www.ndtv.com/news/india/indias-scorpene-submarine-programme-delayed-19255.php
     
  6. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    I suggest IN orders it now before the price goes up any more. Thats what you get when you wait.
     
  7. Rage

    Rage DFI TEAM Stars and Ambassadors

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    Good God! WTF is wrong with them?

    Anyone have a clue as to what "additional equipment" is ordered for, and for why it's been delayed? Perhaps Yusuf could help.

    This will be an eight year wait for the first sumbarine to go from contract negotiation to final induction. And even that is speculative, because of this [email protected] p^$$y government!
     
    Last edited: Apr 5, 2010
  8. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    It didn't say "additional" it said "various"... that includes sensors, propulsion, combat hardware, and weaponry for the vessels. India didn't sign early price agreements for the systems, they neglected the fact inflation in the defence sector is very high and that several years delay has seen the prices go beyond what they had allocated. GoI could easily have avoided this if they had signed a fixed inflation price contract. Note that the price could have been locked in as early as 2005.
     
  9. Rage

    Rage DFI TEAM Stars and Ambassadors

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    What is inflation in the defence sector like? Give me a ballpark figure for 2002/3-2005.

    On a more general note, I've heard that even while delays in procuring these "various components" occur, the MDL is moving ahead with fabricating the hulls for the other submarines, which will result in a delivery interval of 9 months, instead of every 12 months as planned before.

    The PAC (Public Accounts Committee) has said that the reason for the cost escalation was primarily due to "escalations of exchange rate variations and increase in cost of missiles". But this release from the P.I.B., Mar 2006, says that "as a result of the negotiations, the Government was also able to achieve several long-term concessions. These included the revision of the escalation formulae to the advantage of the Indian side by adjusting the fixed element in the ARMARIS contract and placing a cap on escalation in the MBDA contract. A cap was also placed on the Exchange Rate Variation (ERV) for calculation of profit for the Public Sector Undertaking, Mazagon Docks Limited (MDL)."

    http://pib.nic.in/release/release.asp?relid=16704&kwd=


    So, you tell me Armand, what's goin' on?
     
  10. gogbot

    gogbot Regular Member

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    sigh

    At least we are getting nuclear subs.

    and with this delay it is more than likely that IN will choose to lease a second nuclear sub from Russia as well.

    Bringing the total to 5 nuclear subs by the time the scopenes come of the line
     
  11. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    I still don't understand how we are buying Diesel-electric subs when we are making nuclear subs?? If anything the swedish A26 is definetly worth looking at if anything more goes wrong with the scorpene deal.
     
  12. ahmedsid

    ahmedsid Top Gun Senior Member

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    There is a lot of difference between a nuke sub and a diesel sub as you well know. Both of them serve a different purpose. Nuke subs are strategic assets used to complete the nuke triad, while Diesel subs will be for the attack roles. Nuke subs are inherently more noiser than their diesel counterparts, this is where diesel scores.

    We cant yet build a Diesel sub with AIP tech and all, even the Russians havent mastered that completely yet I think, Do correct me.
     
  13. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    I know the differences ahmed but my point was why are we able to build a more complicated nuclear submarine and not a less complicated diesel-electric sub?? by this point we should be making them indigenously. Russians have their kilos and Lada, as far as AIP goes the swedes are the most advanced in the world they have the next generation out with the A26 sub- sterling system,and a good sized deal would possibly even come with a TOT.
     
    Last edited: Apr 6, 2010
  14. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    Ballpark, 7-8% a year now, back then 4-5%.

    If India isn't going to waste time arguing about price, it can be delievered as the hulls come on line. The longer GoI waits, the more DCN will be able to get out of it. Time is of the essence and waiting only pushes the final price further.

    The price negotiations over the equipment and weapons has been in limbo since October 2005. India could never reach an agreement. Now they have no choice but to pay appreciated prices unless they want to delay this another two years.

    http://www.defenseworld.net/go/defensenews.jsp?id=4253&h=India%20%20additional%20$438%20million%20%20Project%2075%20Scorpene%20submarine%20program

    GoI needs to quit screwing around trying to scrimp on the cost escalation and come down to the real world. Defence prices don't increase at 3% a year, it is more like 8% and we aren't going to sell at a loss. The more low-balling from India just delays their submarines.
     
    Last edited: Apr 6, 2010
  15. Rage

    Rage DFI TEAM Stars and Ambassadors

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    7-8% (compounded) annually on $543 million for "contract supplied equipment packages" over the period October 2005-March 2010 results in a Future Value of $761.59 million and a cost difference of $218.59 million. So why is the renewed cost ($950 million) nearly double the original figure and the price difference ($950 - 543) $407 million?


    Obviously, time is of the essence. Our ability to field a goddamn Navy is at stake.


    That is an official source. Per the official source, the Government, as early as Mar 2006, was able to arrive at an agreement "as a result of the negotiations,... [and] achieve several long-term concessions. These included the revision of the escalation formulae to the advantage of the Indian side by adjusting the fixed element in the ARMARIS contract and placing a cap on escalation in the MBDA contract. A cap was also placed on the Exchange Rate Variation (ERV) for calculation of profit for the Public Sector Undertaking, Mazagon Docks Limited (MDL)."


    Let me break it down for you. With respect to specific components, the MoD created in 2007 a special category called "Mazagon Procured Materials", or "MPM", for which a kitty of some R2700 crores (of the total R.18,798 crore) was set aside to procure critical sub-systems such "the 'engine, the generators and special submarine steels". All this was to be sourced from Amaris, who insisted on a single vendor for performance guarantees to be valid. Now, ever since Amaris was taken over by DCNS in 2007, it has been demanding a new figure of close to R.4700 crores (€ 700 million) for these items, almost twice what was budgeted. Cost inflation compounded at a rate of 8% over three years for 2700 crore results in a price of R.3,401.22. Further, from the official source above, "the fixed element in the ARMARIS contract" was revised to a lower figure, resulting in a cost inflation of an even smaller amount. So, why is DCNS demanding R.4700 crore, and what explains the difference?
     
  16. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    We are talking about supplying equipment until 2014. Compound that inflation from 2005 and give us a figure.

    When Pakistan starts talking about rivaling India's submarine fleet by 2015, you know you have a problem.


    "Rs. 2,160 crores towards other items to be acquired during the project period for which only preliminary steps have been taken. No contract or contracts have been signed for the items under this head"


    I'm assuming those are the items that weren't signed. 2160 crore is about $543 million.

    You are still missing sensors which include sonar, hyrophones, and radar. Still missing optics and communications for the mast head. The contract signed at the start didn't include MESMA AIP. Whatever the actual systems are, 2160 crore worth didn't get finalised, and now you have to pay $950 million for the oversight.
     
  17. pavanvenkatesh

    pavanvenkatesh Regular Member

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    Sad sad state of affairs all thanx to the MOD & def.minister a.k.anthony his system of procurement has led to delays of many of critical equipments needed he is not fit to be a def.minister, his fanatic obsession with clean image has cost so much in terms of delays the MoD procurement system now is neither transperent or efficient nor does it encourage the pvt companies nor public co's but the price is being paid by our armed forces even pakistan has acquired agoshta subs and we are still in a process of acquiring
     
  18. Rage

    Rage DFI TEAM Stars and Ambassadors

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    Certainement non. The escalated cost is as of the date of signing of the contract, which is the reported figure India will have to pay if it signs now, 2010. It does not figure future inflation. Technicians working on the Project estimate that once a price is fixed and a contract signed, it will be 33-36 months before the items are delivered to MDL and fitted on the Scorpene, in any case.

    Ergo, compounded inflation as of 2010. Now, what explains a cost escalation of nearly double that original figure?


    Obviously.



    This is the quote in context.

    "[T]he total value of all contracts signed for the Scorpene project is Rs. 13,085 crores out of the sanction accorded for Rs. 18,798 crores towards the project. Out of the balance amount of Rs. 5,713 crores, Rs. 3,553 crores is for payments towards taxes and Rs. 2,160 crores towards other items to be acquired during the project period for which only preliminary steps have been taken."

    Precisement.

    That is excatly what I was referring to in the first paragraph. This:

    "7-8% (compounded) annually on $543 million for "contract supplied equipment packages" over the period October 2005-March 2010 results in a Future Value of $761.59 million and a cost difference of $218.59 million. So why is the renewed cost ($950 million) nearly double the original figure and the price difference ($950 - 543) $407 million?"

    Explain to me that near doubling of cost ($543 to $950 mln) due to "defense sector inflation", keeping in mind what I just told you: that the cost escalation and renewed cost for the contract was as of the date reported, and of potential signing, 2010.


    What? what and what?

    The Scorpene submarines contract is broken down into the following four components: A contract with ARMARIS, for "transfer of technology, combat systems and construction design" and construction materials totalling to R.6,135 crore; a contract with MBDA, for Exocet missiles, which would total to R.1,062 crore; a contract with MDL,which in turn would contract out to DCNS, for R.5888 crore "for the indigenous construction of the submarines", of which a kitty of R.2700 crore was kept for the procurement of "critical submarine systems such as the engine, the generators and special submarine steels" from DCNS. All of these totalled to a cost of R.13,085 crore, out of a sanctioned cost of R.18,798 crore as of 2005, of which the balance was to be used to procure systems such as "sensors, which include sonar, hyrophones, and radar" and "optics and communications for the mast head".

    I am merely referring to one component, not even talking about the others: which includes only the contract for the procurement of "critical submarine systems such as the engine, the generators and special submarine steels" from DCNS.

    Why is the new cost for that component nearly double the original figure (R.2700 to R.4700 crores), quoted by DCNS after a three-year interval? What 'exchange rate variations', arbitrage, inflation or agency commissions account for such a steep cost escalation?
     
    Last edited: Apr 6, 2010
  19. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    Already told you bra, take it or leave it.
     
  20. Rage

    Rage DFI TEAM Stars and Ambassadors

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    You haven't told me anything bra, I just want a sensible answer that makes economic sense.

    The truth is, when you figure it out, that this is not just about the GoI's incompetence, it's about something deeper as well: monopoly power.
     

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