The rules do make it impossible to go to L2 but let me ask you a tantalizing question......what if in the wake of the supposed price increases of Rafale the MoD determines that Rafale is not actually L1 & EF is L1? Most tenders don't have this complication -L1 remains lowest, this one is different & does allow us to speculate?(only)
Sir here is how it works. The initial indent proposal/tender/PFP has to mention the cost calculation method. In this case for example MoD defined life cycle costs (consisting of initial capital cost, running or flying cost) as basis of determining the Lowest-1 (L-1) bidder. There is a plain method of doing it by simply adding the capital cost and then adding the expenses expected for flying divided by expected flying hours (6000 hrs in this case i suppose) plus maintenance cost expected (Spares included) and the depreciation.
Now the issue gets complicated when you compare two seemingly identical machines that may have different set of maintenance requirement. Assume hypothetically that Rafale's engine would require engine maintenance after 1000 flying hours (so total 5 in all for 6000 hrs) and EFT's would require so after say 2000 hrs (total 2). Let us also assume that each overhaul for Rafale would cost $10 but for EFT it is $50, so at the end of 6000 hrs you would find, just for one component you've paid $50 more during entire life. This way you can add for all possible components and work out a value., however it is quite complex considering there could be cases where two or more components are affected by one another.
Now as far as rules for procurement are concerned, in two part bidding system (Financial and technical), the technical requirements and their adequacy was adjudged by IAF long time back and after doing above calculations, L-1 cost was also found in favor of Dassault.
It is pertinent to quote here that officials have said this difference of cost as razor thin.
But guidelines for procurement clearly indicate that one cannot go to any other bidder other than L-1 even for negotiations. So theoretically even if EFT brings down its cost to that of Dassault's offer or even lower, you cannot place an order on them. The process requires Re-Tendering.
But in all i guess it isn't correct to speculate that cost is the factor behind delay of deal, the reasons as DM states are Dassault's hesitance from taking guarantee of HAL's part of deal and since this was a part of original tender, the condition cannot be waived off. The logic is if t so happens, theoretically it would've been possible to procure the items at lower cost from L-2 bidder as rules fo tender has changed. this is called Post Facto changes and aren't allowed without very solid justifications. I don't think DM or PM would take a chance here.
I'll also narrate a relevant situation, i once heard at a training seminar. This was on Public procurement system and faculty was ex GM of East Central Railways. One person from a PSU asked what should be done in case there are two L-1 bidders (a scenario similar to what we might be having here with Dassault and Rafale's offer being very very close). to which it was replied that under such a scenario, the buyer can call both party's for negotiation by disclosing the initial and final price bid of other. This way laws of natural justice isn't violated.
