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Tribune Exclusive
VVIP copter row casts shadow on another contract
* $1.2-bn contract for 16 multi-role choppers for Navy may run into trouble
* AgustaWestland is under scanner in both deals
Man Mohan
Our Roving Editor

The Navy wants NH90 — a twin-engined, multi-role military helicopter — for its sea and off-shore operations.

New Delhi, February 24
The alleged kickbacks controversy in the Rs 3,546-crore deal for 12 VVIP AW-101 helicopters has started casting a shadow over another mega $1.2 billion contract for 16 multi-role choppers for the Navy's sea and off-shore operations.

In both the deals, AgustaWestland, a British helicopter manufacturing subsidiary of two different European consortiums, is in the eye of the storm. Its rival in both the lucrative deals is the American firm Sikorsky, which is known for making Blackhawk and Seahawk gun ships.

For the VVIP helicopter deal, Sikorsky had offered its S-92 Superhawk. And for the naval deal (TM (M) /0025/ MRH/ 9918), the American firm has pitted its Seahawk (S-70B) against AgustaWestland's NH-90 machine.

A final decision in the naval deal is being awaited for long. Technical trials ended in 2011. In the global market, undue delay has led to the impression that this deal has drifted into rough weather.

The delay in procuring the naval helicopters is impacting the operational readiness of the Navy with some frontline ships are without their air assets and hence their inability to realise the full operational potential of the fleet at sea. The delay leads to cost overruns, technological obsolescence and leaves a vital maritime security gap.

As the Defence Ministry has made a move to scrap the VVIP helicopter contract and may 'blacklist' AgustaWestland for at least 10 years, the question that is being asked in South Block is whether it would lead to its 'exit' from the naval helicopters deal too.

If current circumstances lead to AgustaWestland's forced 'exit' from the naval deal, would the government grant the contract to Sikorsky, the only rival in the race, or the government would go for a fresh tender, the industry watchers wonder.

Defence experts feel that even if AgustaWestland is blacklisted, the government must open the naval deal's commercial bids.

"Otherwise, the government would be accused of deliberately allowing the Americans to pick up the contract unopposed, especially in view of AgustaWestland's several 'letter missiles' to the Defence Minister AK Antony and the Defence Secretary SK Sharma last year, alleging that the US firm was "granted waivers on a number of non-compliances with qualitative requirements."

The Tribune had procured all these letters and reported this issue in an exclusive report on July 9, 2012.

When contacted for comments on the VVIP and naval helicopters deals, Sikorsky refused to say anything on the plea that it is against their code of ethics and that they believe in buyer country's technical evaluation and procurement process.

The VVIP flying machines scandal has already claimed its first casualty. The Defence Ministry has deferred a decision on the joint Army-Indian Air Force procurement of 197 Advance Light Helicopters for search and rescue operations, a deal worth over Rs. 3,000 crore. Interestingly, in the Army-IAF contract, AgustaWestland withdrew in 2010, alleging that the deal was being processed in favour of the French-German combine Eurocopter.

The naval helicopters deal began rolling eight years ago. The tender was 're-issued' over three years ago. The deal has been hanging fire despite the conclusion of the technical trials in 2011. The opening of the commercial bids, for strange reasons, has been extended thrice. Now, it stands extended till March 31, 2013.

AgustaWestland is the British subsidiary of Italian conglomerate Finmeccanica which clinched the VVIP chopper deal. The Italian Treasury holds 30.2% of Finmeccanica's share capital.

AgustaWestland is also part of another European consortium, the NATO Helicopters Industries (NHI), which is pitted against Sikorsky in the naval deal. The NHI is a French company, wholly owned by Eurocopter, AgustaWestland and Fokker Aerostructures and provides the focal point for these companies for the naval NH90 programme. In the NHI, the firms of Italy, German, Spain, Finland and Australia also have stakes.

After the exposure of the kickbacks scam in the VVIP helicopters deal, questions are now being asked whether an extraordinary delay in opening of the commercial bids in the naval choppers contract is "deliberate" to bail out AgustaWestland.

Industry sources see it as a deliberate ploy to derail the whole project, and get the tender re-issued. A senior defence ministry official said, "Who knows that it was an attempt to get the tender re-issued with requirements tweaked to elbow out the unwanted as was done in the VVIP helicopters deal!"