India scraps multi-million dollar helicopter deal

New Delhi, Dec 6: India has scrapped a 600-million-dollar deal for 197 helicopters from European Aerospace and Defence Systems(EADS) and directed the Army to float a fresh request for proposal (RFP) for the choppers, top defence sources here said today.

The deal has been cancelled because of irregularities in evaluation of Eurocopter, the sources said.

EADS had offered India AS550 C3 Fennec military version with an Arriel 2B engine but instead sent AS350 B3 Ecureil civilian variant with Ariel 2B 1 engine for trial.

The sources said Defence Ministry had given permission for the trial of the AS550 C3 model with an Ariel 2B engine, whereas no clearance of the Ministry was taken for trial of AS550 B3 model with an Ariel 2B 1 engine.

Describing it a "deviation", the sources said it could be approved only by the Defence Minister after it was processed by the Defence Procurement Board (DPB), which was not done in this case.

The procurement of a helicopter other than the one approved by the Defence Acquisition Council(DAC) is not permissible under Defence Procurement Policy-2006, which specifies that " a technical offer once submitted should not be materially changed subsequently."

The sources said once these discrepancies came to the notice of the Defence Ministry, it referred the matter to Central Vigilance Commission (CVC) which agreed with the Ministry that there were "major deviations from the approved parameters in terms of both engines and platforms." In view of this, the Ministry has now directed the Army to float a fresh RFP for the helicopters.

The Indian Army had floated its requirement for the new helicopters in 2004 but revised this to incorporate an offset clause under which 30 per cent of the contracted amount would have to be reinvested in the country.

The evaluation trials had concluded about a year ago and the price negotiation process, which had been underway since then, was extended till July "to ensure proper procedures were adhered to," the sources said.

Sixty of the helicopters were to be purchased in a flyaway condition, while the remaining 137 were to be manufactured by Hindustan Aeronautics Limited (HAL) at its Bangalore facility under a transfer of technology (ToT) agreement.

Initially there were five contenders in the fray: Eurocopter, Bell, Italy's Agusta, and Russia's Kamov and Kazan. The list was then narrowed down to the Eurocopter AS 550 C3 Fennec and the Bell-407.

The Bell-407 dropped out last year after the machine it sent for evaluation could not perform a three-axis vector, an essential requirement for flying in areas like the Siachen Glacier in Jammu and Kashmir.

The three-axis vector enables the helicopter to perform a 'U' like manoeuvre to navigate adverse weather conditions in mountainous areas.

UNI