- Will adding DPSU’s in SP model’s ambit be a boon or a bane for Indian Navy’s submarine programme?
New Delhi. 16 December 2021. The strategic partnership model was envisioned to bring the private industry into the fold of defence manufacturing, under the auspices of well-defined terms of agreement. Though the Dhirendra Singh committee New Delhi had provided the broad parameters for selection criteria, the Aatre task force had highlighted in its report that the main difference between the commercial bidding process under the ‘buy and make’ category of Defence Procurement Policy 2013 and 2016 and the strategic partnership model is that the selection criteria are based on “inherent capacity and ability of the entity rather and not on the lowest bidder principle.”
However, Project 75 (I), aims to build six conventional submarines in the country , under the SP model in a competitive Buy and Make type of a competitive bid and that too for one particular project, with no guarantee of future projects.
Presently, it is learnt that the MoD is seeking Industry inputs to amend the SP Model in DAP 2020 as “the spirit behind introduction of SP model is however lacking in some of these proposals” . Defence experts are interpreting this as a desire to include DPSUs in the SP model while others feel a more holistic revamp is required to cut down procurement time as well as make the model workable.
The existing chinks in the armour of the SP model were already pointed out in a report by a New Delhi based firm, Insighteon Consulting, which carried out a corporate wargaming exercise on November 11 and 12, 2021, on the future dynamics influencing India’s submarine acquisition initiatives concentrating mainly on the P(75) I Program. In an earlier war-game conducted by the firm on “Corporatisation of OFB” , the war-game participants had quite accurately predicted that there will be a reduction in the range of product offerings as well as that an average minimum price increase of 7.5 per cent will be witnessed post corporatisation due to cost of maintaining working capital and R&D costs. Both the predictions rang true a month after corporatisation. The findings were presented to various departments of the Indian Army.
The Insighteon war game report on the “Future Dynamics Influencing Submarine Acquisition by India”, brings out that the present form of SP model is likely to suffer from all the flaws of the current Buy and Make procurement procedure and therefore will be as tedious and complex to execute, if not more. The report brings out how the complexity, high costs and high risks peculiar to submarine construction does not lend itself to a fixed cost competitive bid of six submarines. The tender is also unlikely meet its stated aim of price discovery which was the main reason of making the SP model competitive. Besides lack of assured orders or a “one program participation” disincentivizes the SP as well as the OEM to invest in the either the eco system or R&D, which is again one of the aims of the SP model. The report concludes that for the SP model to achieve its aims, both shipyards ( SPs) need to be given a chance to specialise in submarine build programs by getting adequate load.
The war- game also played out possible domestic reactions to Russian proposals of refurbished submarines and French offers pertaining to additional scorpions as well as assistance in SSN construction where the French assistance, if any, was deemed to be restricted to reactor technology or consultation.
The Indian Navy initially had intentions to also procure 57 carrier-borne fighter jets, 111 Naval Utility Helicopters (NUH) and 123 multi-role helicopters under the strategic partnership model but a reduction in numbers is expected to adjust to domestic production capabilities.