Audit finds holes in P8I naval aircraft deal signed by UPA government

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New Delhi, Aug 7 (IANS) Indias central auditor has castigated the government over defence cost and time overruns and irregularities in bids for procurements, including a $2.1 billion deal of January 2009 to buy P8I maritime reconnaissance aircraft from Boeing, risking the preparedness and effectiveness of the Armed Forces.

The report tabled in parliament said that the US company Boeing was favoured over its Spanish competitor EADS CASA to procure the fleet of P8I – an aircraft that has been deployed on all key missions and exercises of the Indian Navy.

The report said the Defence Ministry while evaluating the bids for conclusion of the contract for a long range maritime reconnaissance anti-submarine warfare aircraft “enhanced the financial bid of EADS CASA to cater for 20 years product support cost while ignoring this element in respect of Boeing, USA.

“The contract was concluded with Boeing in January 2009 ($2.1 billion). At a later date, Boeing offered the product support under a separate negotiable contract and consequently the deduced ranking of Boeing as L-1 (lowest bidder) turned out to be incorrect.”

The auditor said it has found that Boeing has not met its offset obligations of $ 641 million till March 2018, despite the contract specifying that all obligations have to be fulfilled by August 2016.

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The report said the critical role equipment of Boeing were not fully meeting the needs of the Indian Navy.

“Owing to capability limitations of radars installed onboard, the aircraft is not able to achieve the envisaged coverage area requirements. The (naval staff qualitative requirements) NSQRs had envisaged the procurement of torpedoes and ‘X’ bombs as the ammunition for anti-submarine warfare.”

However, the contract for procurement of ‘X’ bombs had not yet been concluded and reasons for non-procurement of ‘X’ bombs were yet to be intimated by the Indian Navy.

Thus, in the absence of the bombs, the anti-submarine warfare “capability of the aircraft could only be partially fulfilled”, it said.

Besides the eight ordered in 2009, India ordered an additional four P8I in 2016 in a $1 billion deal.

The report also lashed out at the government over the proposed indigenous development of an Airborne Early Warning and Control (AEW&C) system which was approved in 2004 at a cost of Rs 1,800 crore to be completed by 2011.

“Besides, non-achievement of certain operational requirements specified by (the Indian Air Forces), there was time overrun of 70 per cent. Selection of Embraer as platform created design constraints and caused delay. The achievement of indigenisation was only about 48 per cent of project cost. The project conceived in 2002 is yet to be fully realised leaving gaps in air surveillance capability of the IAF.”

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It has also highlighted irregularity in procurement of MiG aircraft tyres through “faulty tendering process adopted since 2009”

This has resulted in the contract being repeatedly awarded to the same foreign vendor, despite the vendor supplying defective tyres.

“The IAF is saddled with defective, unusable 3080 MiG tyres from the firm, valuing Rs 5.92 crore. Faulty RFP was issued as it did not correctly specify the quality requirement and the price evaluation criteria. Vendors were selected for issue of RFP on pick and choose basis.”

Indigenisation was forgone to facilitate import of tyres.

Pointing out irregularities in tendering for repair and overhaul of Mi-17 1V helicopters, the report said the IAF “unwarrantedly” delayed the procurement of repair and overhaul facility for the helicopters.

“Repair and overhaul of the helicopters suffered from severe delays, excess expenditure and monopolization of repair and overhaul of helicopters by the Russian firm. By the time the contract was signed, most of the helicopters were grounded for want of repairs. By not setting up of the facility which would have costed about Rs 196 crore, the IAF committed to spend more than Rs 600 crore by sending the helicopters abroad for repairs.”

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The audit has also found inadequacies in the support facilities at IAF airfields adversely affecting their readiness.

These included facilities like restoration of runway after bombing, modernisation of communication systems, safe landing and take-off of aircraft, surveillance of aircraft while in air, refuelling of aircraft and handling of armaments to be loaded on the aircraft.

The government implemented a project for modernisation of airfield infrastructure at a cost of Rs 1220 cr by 2014 for a specified number of airfields. But till date, only a few number of airfields were commissioned.

“There were shortfalls in the equipment to be held by the airfields, which was mainly due to delay in the procurement,” said the report about the operational readiness of the IAF airfields which is vital for air operations, especially during conflict.



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