Eurojet pays dearly for engine re-bid delay

European aerospace firm Eurojet missed being declared the lowest bidder — L1 — by a whisker for the engine deal of the indigenous light combat aircraft (LCA) Tejas Mark-II being developed by Aeronautical Development Agency (ADA).

The European consortium is engaged in a fierce battle with the American GE Aviation for providing technology and consultancy for the manufacture of 99 engines for the LCA Tejas Mark-II.

An official with knowledge about the bid, on the condition of anonymity, said Eurojet had submitted its revised bid on September 28 and it reached the Defence Research and Development Organisation (DRDO) on September 29.

“Eurojet marred its chance by submitting its bid a day before the announcement (of L1 biddder) was made — September 30. And so their revised bid was not considered,” he said.

He said Eurojet’s revised quotation for manufacturing of its EJ200 indigenously is lower than GE’s F-414 by $80-100 million.

According to sources, after reworking the bid and providing the details soughtby the price negotiation committee, the European consortium’s tender price is around $900 million while that of GE is $980 million. In the initial round, Eurojet’s bid was reportedly lower at $666 million compared with GE’s $822 million. It is learnt Eurojet’s price had shot up because it had not clearly specified certain items in its bid.

One of them was the $65 million cost of tools, which it is giving on ‘free on loan’ - meaning the tools would be returned on completion of the project.  

 GE, on the other hand, is providing the tools totally free.

“This and other costs, which were specified more clearly in response to queries from the price negotiation panel has closed the gap between Eurojet and GE but European engine maker’s bid is still lower than GE,” said a source.

Though, another source, who did not want to be named, said initially Eurojet’s bid had shot up to over $1000 million after they clarified certain expenses in the tender.

 “They rushed to correct that (their bid climbing higher than GE’s) but by the time they came back with a revised bid, it was too late,” he said.

Price negotiation committee chairman and chief controller - R&D - of DRDO Dr CK Prahlada could not be reached for comments.

The LCA Tejas Mark-II is an upgraded version of the current Mark-I, which uses GE’s F404 engine.