July 10, 2015

Indian Navy officials accuse MoD of dragging feet in S-70B purchase

India's long-pending purchase of 16 Sikorsky S-70B Seahawk helicopters has hit a roadblock following delays by the Ministry of Defence (MoD) in signing the deal, according to India Navy (IN) sources.
They said the MoD's deferrals, first in shortlisting the S-70B and then in price negotiations, had led to an almost threefold cost escalation of the Multi-Role Helicopter (MRH) tender that was threatening the deal.
The sources told IHS Jane's that the MRH contract cost had increased from INR17.60 billion (USD276.91 million), an amount sanctioned by the MoD in 2007, to about INR52.80 billion.
The MoD's cost negotiation committee (CNC), which has been in talks with Sikorsky since late 2014, was unwilling to accept this increase, resulting in a stalemate, the sources said.
The contract includes the option of the IN acquiring eight more S-70Bs.
Official sources said Sikorsky, which had extended a bid submitted in 2008-09 at least four times, was now negotiating for a price increase linked to deliveries. The Sikorsky spokesman in New Delhi declined to comment.
Senior IN officers said this cost escalation could prove problematic as MoD officials, under pressure from the Ministry of Finance, were averse to revising contract costs upwards after they had been approved.
The IN desperately needs the S-70B - or an equivalent platform - to replace its ageing fleet of 24 Sea King Mk42/B/C and UH-3H helicopters and 13 Kamov Ka-28s. The latter are long overdue a mid-life upgrade.
To make good this overall shortfall, the IN is expected to issue a tender later this year to Indian companies for 123 multirole helicopters and for over 100 utility helicopters. The latter will replace the IN's obsolete, single-engine Chetak (Aerospatiale SA316 Alouette III) light utility helicopters.
The domestic manufacturers will be required to form joint ventures with overseas original equipment manufacturers (OEMs) to bid for both contracts.


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