Copter deal breached rules

Many violations in the Defence Procurement Policy, Request for Proposals issued in Sept 2006 found

The Comptroller and Auditor General of India (CAG) has said the government had failed to follow Defence Procurement Policy (DPP) rules in awarding a euro 560 million (Rs 4,000 crore) luxury helicopter deal to AgustaWestland, a division of Italy's Finmeccanica.

The deal is being examined for quite some months by the Central Bureau of Investigation (CBI). Among other things, there is an allegation of bribes being given to the family of then air force chief, S P Tyagi, via agents appointed by Finmeccanica. The matter is also before an Italian court (Finnmeccanica is headquartered there, though AgustaWestland is based in Britain).

"Several instances have been observed where the ministry had deviated from the provisions of the DPP 2006 and RFP (Request For Proposals) issued in September 2006," the CAG said, in a report presented to Parliament on Tuesday.

The luxury helicopters, meant for use by the President, Prime Minister and other VIPs, were to have been procured in 2003. However, no vendor except one was able to meet the certified flying height of 6,000 metres and then National Security Advisor Brajesh Mishra had asked the government to avoid a single vendor situation. In 2006, the parameters were revised downwards to avoid such a situation. However, says CAG, when the government gave the go-ahead to procure the aircraft in 2010, there was only one vendor who could meet the requirements.

The CAG also notes that field trials were not conducted on the helicopter to be procured; representative aircraft were used. In fact, the helicopter sold to India was still in the development phase.

The recommendation by the Chief of Air Staff, justifying the field trials on a representative aircraft, was misplaced, it has said.

The CAG notes several other procedural glitches -- the benchmarked cost adopted by the Cost Negotiation Committee was unreasonably high compared to the offered cost, the benchmarked cost the government accepted (Rs 4,871 crore) was unacceptably higher than the offered cost (Rs 3,966 crore).

The CAG also noted that the DPP made it mandatory for manufacturers to procure a part of the value of the contract from Indian manufacturers; this was not adhered to. In sum, the deviations in this case, the CAG says, were too frequent and too many.