Audit watchdog flays big-ticket defence deals

March 14th, 2008 - 9:28 pm ICT by admin  


New Delhi, March 14 (IANS) India’s audit watchdog has flayed a series of big-ticket defence deals, including the purchase of business jets and a troop carrier, saying the flouting of norms during their negotiations had led to huge cost overruns. In his report for 2006-07 tabled in parliament Friday, the Comptroller and Auditor General (CAG) has singled out for adverse mention the purchase of a third Boeing Business Jet (BBJ) by the Indian Air Force (IAF) and the troop carrier INS Jalashva by the Indian Navy.

The CAG said the purchase of the third BBJ at a cost of Rs.3.12 billion for ferrying VIPs was “avoidable” as, despite spending over Rs.9.97 billion, the three aircraft “will not be used for international travel, necessitating the use of Air India aircraft with all its adverse consequences”.

In the case of the Jalashva, the CAG depreciated the purchase of “an ageing 36-year-old foreign ship from a foreign government after refurbishment at a cost of $50.63 million without physical assessment of the ship.”

“The poor condition of the ship entailed significant changes in the scope of the refurbishment work, with the cost of this going up from $15 million to $36.94 million. The navy did not bring all costs for consideration of the competent authority while seeking approval,” the report noted.

Overall, the CAG has found irregularities of a staggering Rs.8 billion in defence expenditure, and said the money was improperly allocated or should not have been spent at all.

Of this, the Indian Air Force (IAF) has been faulted for irregular expenditure of Rs.4.76 billion, the Coast Guard for Rs.2.21 billion, the Indian Navy for Rs.340 million, the Indian Army for Rs.550 million and the defence ministry for Rs.350 million.

Elaborating on the BBJs, the CAG said that the acquisition process “deviated from laid down procedures and well recognised norms of propriety. Supplies valuing $50 million were contracted without the benefit of competition.”

“Besides, the acquisition of the aircraft and self protection suite was inordinately delayed, leading to a total cost escalation of $19.70 million”, the report said.

This apart, the IAF’s operational requirement for the aircraft was “incomplete and tentative”, the technical evaluation was “not comprehensive”, several concessions were made to the manufacturer, and the acquisition process “was not efficiently managed”.

The CAG has also commented adversely on the IAF’s upgrade programme approved in 1999 for its MiG series of combat jets at a cost of Rs.4.30 billion, saying “it will have limited viability as inherent problems being faced by the aircraft and its engines have not been resolved.

“The feasibility of the project was doubtful an-inito and considerable time overruns would further dilute benefits of the project as the upgraded aircraft would have a very short residual life,” the report noted.

The IAF has also been faulted for the “avoidable procurement” of 44 aircraft gearboxes at a cost of 1.64 billion.

The Coast Guard has drawn the CAG’s ire for releasing payment of Rs.2.21 billion to a private Indian shipyard for constructing three pollution control vessels “not commensurate with the milestones specified”.

“The acquisition process followed by Coast Guard HQ lacked transparency and deviated from prescribed purchase procedures,” the report noted.

The report finds fault with the defence ministry for procuring 209 bullet proof vehicles for Rs.350 million, “of which 200 vehicles were reported defective by the users.

“Besides compromising safety, Army HQ, citing urgency of requirement, favoured the procurement of vehicles manufactured by a particular firm,” the report says.

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