The Indian Navy's (IN's) plans to acquire 13 127 mm guns for its frontline warships have run into problems after the withdrawal of one of two vendors invited to participate in the tender.
BAE Systems, which was sent a request for proposals (RfP) for the 127 mm guns in November 2013, has opted not to offer its 5-inch (127 mm) 62-calibre Mk 45 Mod Naval Gun System for the INR15 billion (USD243.5 million) tender after claiming that it is commercially and technologically unviable.
BAE Systems' withdrawal leaves Italy's Oto Melara as the sole bidder with its 127 mm/64-calibre lightweight naval gun.
"The company concluded that key aspects outlined in the RfP present the bidder with a disproportionate level of risk," BAE Systems wrote in a letter to the Indian Ministry of Defence (MoD) in late 2013, ahead of the March 2014 deadline to submit proposals.
Industry sources interpret "disproportionate risk" to include BAE Systems assuming production and quality control guarantees and delivery schedules for India's state-owned Bharat Heavy Electricals Limited (BHEL), which will build 10 of the 13 guns via a transfer of technology.
BAE Systems would have no functional control over BHEL, but it would be penalised for the latter's nonperformance.
BAE Systems produces the Mk 45 gun in Minneapolis in the United States. It is in service with 10 navies including those of Australia, Japan, South Korea, Spain, Taiwan, Turkey, and the United States.
BAE Systems' departure leaves Oto Melara in the running with its 127 mm/64-calibre lightweight naval gun, which it is offering with the precision-guided Vulcano round that recently entered service with the Italian Navy.
Official sources said the "systemic" drawback of Oto Melara's inclusion is that it is owned by Finmeccanica, which faces a possible MoD ban following the 1 January termination of the deal for 12 AW101 AgustaWestland helicopters.
In addition, India's Defence Procurement Procedure (DPP) demands the participation of at least two bidders in all materiel contracts. The DPP, however, does provide for exceptions to procure equipment from single vendors, such as materiel acquired via the US Foreign Military Sales (FMS) programme. Military sources indicated that BAE Systems could be awarded the 127 mm contract via the FMS route, but there was no IN confirmation on its outcome.
The IN is being forced to import 127 mm guns as the government-run Defence Research and Development Organisation has been unable to develop them. The systems will arm seven Shivalik-class frigates and six Delhi-class destroyers that are at various stages of construction at local shipyards.
