In line of Congress attack over the Rafale deal, this will provide some ammunition to the BJP to return fire. The Comptroller and Auditor General(CAG)in its report tabled in Parliament on Tuesday questioned a $2.1 billion contract inked under the UPA regime for eight P-8I long range maritime reconnaissance and anti-submarine warfare aircraft for the navy with Boeing of USA. The report indicated that Boeing was favoured over rival bidder EADS CASA of Spain.
In its report, the CAG also noted that the Defence Ministry was yet to realise offset fund worth over $641 million from Boeing which was to be paid within seven years that is August 2016. It also observed that the aircraft was not meeting the the operational requirements of the navy due to limitations of the forward and aft radars to achieve the envisaged coverage area requirements in certain modes of operation. The navy has inducted all the eight aircraft and four more are to be inducted in a phased manner over the next two to three years.
Regarding the anomalies in the contract, the CAG noted the Defence Ministry enhanced the financial bid of Spanish aerospace firm to provide for a 20 year “product support” cost on assumption that Boeing’s offer had similar provision.
Howwever, Boeing, at a later stage, offered the aircraft maintenance support under a separate negotiable contract, the auditor said, while terming as incorrect the conclusion that the American company was the lowest bidder (l1).
It said enhancing the financial bid of the Spanish company by including its product support cost resulted in pushing it to l-2 status (second lowest bidder).
As per the report, the contract was concluded with Boeing in January 2009 at $2.1 billion (about Rs 14,500 crore at the current exchange rate).
“At a later date, Boeing, USA, offered the product support under a separate negotiable contract and consequently the deduced ranking of Boeing, USA as l-1 turned out to be incorrect,” it said.
As regards Boeing not fulfilling off set obligations, the CAG said “Boeing, USA had claimed offset credits on mere placement of purchase orders defeating the very purpose of offset obligations.”
Under India’s offset policy, foreign defence entities have to plough back minimum 30 per cent of the totoal cost of the deal into indian defence industries to give boost to indigenous capabilities.
Moreover, creation of infrastructure facilities wasmarred by delays forcing the navy to store missiles and aircraft in unsuitable climatic conditions. Also non procurement of bombs was adversely impacting the functioning of the aircraft.