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Lockheed Martin and Boeing Lost India’s $11B Medium Multi-role Combat Aircraft (MMRCA) Contract

Posted by shbanchang on May 27, 2010

Why should we care that Boeing, Lockheed and Raytheon have all recently lost major contracts to foreign competitors (not just to other domestic competitors)?

America lost out a few weeks ago when Saudi Arabia agreed to purchase nuclear capable missiles from China instead of the US.

Now we learn that the US has lost an opportunity to re-fit the Indian Air Force with new MMRCA’s.
Several things could be happening here. In the case of the Indian fighters, it appears that the US government balked at some technology transfer.

The same could have been the case with the missiles deal. It could also be that buyers have chosen to become less reliant upon US technology. It could also be that the price/value ratios aren’t there OR that our allies can no longer rely upon the US to be an ally in good times or bad.

The US government has appeared to adopt a foreign policy that recognizes not long-standing allies but rather situations of convenient mutual interest.

Consistency in foreign policy is imperative (though backing oppressive dictators only because of their loyalty to the US has not served us well).

It takes very little time to change course in foreign policy but it takes a great deal more time to get back on course if you made the wrong turn.

The Indian government has told the United States that the two companies (Boeing and Lockheed Martin) bidding for the B medium multi role combat aircraft (MMRCA) contract are now out. Washington is trying not to over-react.

Boeing had hoped to supply its F/A-18 Super Hornet and fellow US contractor Lockheed Martin had hoped to supply the F-16, in a 126-plane order.

There are many sub-contractors who rely upon such contracts to supply maintenance, parts and other supply and service chain items. They, too, have lost a great deal on this transaction.

Sweden’s Saab and Russian’s MiG also released a statement saying that their fighters have had been dropped from consideration. With American, Swedish and Russian fighters out of the scene, the battle narrows down to Typhoon from the EADS Eurofighter consortium (owned by Germany, Spain, UK and Italy) and Rafale from Dassault of France.
If the Eurofighter is selected, the deal could prove lucrative for several British defense companies other than BAE. Ultra Electronics, Meggitt and Cobham all manufacture parts for the Typhoon fighter. The deal could go up to 200 planes or more as aging Russian MiGs are phased out from Indian Air force service.

Experts believe that India’s choice for European aircraft makers is based on the intention to obtain the technologies required for the realization of its own TEJAS light fighter jet program.

The other technologies, which India could obtain with the other jets, do not fit the program.

Joel Johnson, an international aerospace trade expert told Reuters in Washington that India may have opted for a European fighter because of a history of US sanctions tied to its nuclear program and because of technology transfer constraints. “US contractors may get defeated by politics, but not by quality… India is likely to turn to the US again for unique know-how and products,” he said.

Other analysts such as Byron Callan of Capital Alpha Partners theorized the US government had been unwilling to transfer as much sensitive electronic warfare and radar technology as India had hoped.

If this was a principled decision by the US to cut back on technology transfers (possibly due to the emergence of the new Chinese J20), then this is a good thing.

If, however, this is a trend that buyers are actively seeking and finding new sources for their defense needs, this is just another sign of American marginalization.

It is happening to the dollar, why not our defense products?

GLOBAL INTELLIGENCE CENTER | NorAm Intelligence