Why the Ministry of Defense prefers to buy weapons through intergovernmental agreements

The Indian Navy is said to be keen to enter into an Intergovernmental Agreement (IGA) with the United States or France to acquire 26 fighter jets for its native aircraft carrier, INS Vikrant, which is due to enter into service despite the expectation of the installation of its aviation flight complex which is necessary for the operation of its combat air weapon.

Boeing’s F/A-18E/F ‘Super Hornet’ fighters and Dassault’s Rafale-M (Navy) fighters are vying for the Navy’s requirement of 18 carrier-borne multi-role fighters and eight two-seat trainers to operate off Vikrant.

These requirements could eventually reach a total of 57 platforms, consistent with previous Navy projections.

The American and French fighters had recently demonstrated their operational capabilities from the shore test facility at INS Hansa, the navy air base in Goa. The Navy is currently evaluating their performance to determine their suitability, after which it will begin the formal bidding process to acquire the aircraft, possibly through an IGA, or other similar arrangement, for various reasons detailed below.

The closest thing the U.S. government comes to an IGA are tenders conducted exclusively through its Foreign Military Sales (FMS) program, which is administered by the Cooperation Agency. Security and Defense Policy (DSCA) under the overall aegis of the Pentagon and on the advice of the US State Department, as a means of enhancing Washington’s diplomatic and strategic reach around the world.

The Indian Defense Acquisition Procedure 2020 (DAP2020) – and the manuals that preceded it – allow acquisition through both IGA and FMS for the purposes of gaining a geostrategic advantage or imperatives of strategic partnerships, or both. Military, technological, economic, diplomatic and political advantages are also the “main factors” for New Delhi to enter into such deals for its military purchases. In fact, IGAs and their variants like FMS have for several years been Delhi’s preferred mode of import for major military platforms and various weapon systems.

All purchases from the former Soviet Union, and later Russia, since the mid-1960s have followed the IGA route, with the Indian Ministry of Defense (MoD) dealing directly with Rosobornexport (ROE), the sole procurement agency. ‘State of Moscow for the export and import of dual-use defense products, technologies and services. For decades, this arrangement worked well, despite periodic problems, and was solely responsible for the efficient building of India’s arsenal and increasing its capacity for war.

The bulk of US defense procurement from 2002 onwards, worth around $20 billion, was also done through the FMS route and more recently, in 2016, the Indian Air Force (IAF ) acquired 36 French Dassault Rafale fighters via an IGA, whose deliveries are nearing completion.

Department of Defense officials as well as the Armed Forces are “comfortable” with adopting the IGA model, especially the FMS, for a variety of reasons, of which expediency is the primary one. Ironically, even for them, the DAP2020 – and all its previous manifestations – has always been far too complicated in its processes, making them reluctant to make decisions when something goes wrong. Numerous corruption scandals in recent years involving Department of Defense and military officials – some of which remain unproven – have centered on their questionable interpretation of complex procurement regulations; pursuing the IGA route avoids such possibilities.

Nor are IGAs required to follow standard multi-step procurement procedures or adhere to the rigid contractual terms envisaged in the DAP. Instead, they are negotiated on mutually agreed terms between the governments of the two countries, which allows for greater flexibility in finalizing agreements and their eventual execution.

This compressed IGA – and FMS – procedure typically begins with the approval of the overall framework of the proposed agreement by the Defense Acquisition Board of the Ministry of Defense headed by the Minister of Defence. It is followed by negotiations between the foreign government agency and an interdisciplinary committee appointed by the Ministry of Defense which determines the terms and conditions of the purchase, including cost, delivery times, maintenance assistance program and any possible transfer of technology for local manufacturing.

The empowered committee is also authorized by the Department of Defense to liaise directly with the original equipment manufacturer in overall intergovernmental negotiations. Once the draft terms and conditions of the purchase are mutually agreed, the IGA is signed with the approval of the Cabinet Committee on Security headed by the Prime Minister of India.

In almost all cases, an IGA compresses the total period of finalizing a contract, from the time the proposal is initiated to the time it is finally signed. The purchase of 36 Rafales, for example, was first announced by Prime Minister Narendra Modi in Paris in April 2015, and the Rs 59,000 crore contract for them was signed via an IGA 17 months later in September 2016, followed by the start of deliveries in July. 2020.

In-flight refueling of one of the five Rafale planes, which took off from France on Monday, en route to India. Rafale planes cover a distance of nearly 7,000 km from France to India with a single stopover in the United Arab Emirates. Photo: PTI

Procurement in the United States under the FMS program is even more enticing to Department of Defense officials, although the DSCA follows its own procedure, including terms and conditions of sale. The MoD accepts this as a fait accompli, and its officials are content to follow the FMS procedure as the DSCA takes responsibility for the whole process, especially in terms of negotiating the cost – by far the most risky aspect. defense procurement – with potential US suppliers.

As part of the FMS process, the DSCA negotiates with the original equipment manufacturer as it would if the US military were acquiring the equipment and charges the Department of Defense a standard “facilitation” fee for its efforts. With 189 countries and international organizations currently participating, the FMS process is widely regarded as transparent, reliable and secure. This is further confirmed by the fact that no FMS agreement between India and the United States has so far been under a cloud.

India’s FMS purchases included 22 ‘AH-64E(I)’ Apache Guardian and 15 CH-47F Chinook heavy-lift helicopters for the IAF, 14 P-8I Neptune long-range maritime multi-mission aircraft and 24 Lockheed Martin / Sikorsky MH-60R Naval Multirole Helicopters for the Indian Navy.

Six additional Apaches were on order for the Indian Army, while the IAF had also ordered 12 Lockheed Martin C130J-30 transport planes and 11 Boeing C-17 Globemaster IIIs. By 2016, the Indian Army had signed for 145 BAE Systems M777 155mm/39 caliber lightweight howitzers – of which around 100 had been delivered – in addition to acquiring 72,400 SIG716 assault rifles from Sig Sauer in 2019.

To conclude, the IGA or FMS contracts provide “psychological comfort” to the civil and military bureaucracy of the MoD, as the responsibility for the public contracts entered into under these contracts is assumed collectively by the empowered committee on the Indian side and the government concerned, or its agency like the DSCA, on the other hand.

This minimizes the risk for managers of being subsequently questioned for their decisions and facing allegations of irregularities in the procurement process which, in recent times, has been the bane of effective decision-making. and which had a negative impact on the long life of the Indian Army. delayed modernization.

Amit Cowshish retired from the Indian Defense Accounts Service in 2012.

A version of this article first appeared in The India Cable, a subscriber-only newsletter published by The Wire and Galileo Ideas. You can subscribe to The India Cable by clicking here.