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The Comptroller and Auditor General of India (CAG) said on Tuesday that the government had failed to follow defence procurement policy rules in awarding a 560 million euros (Rs 4,000 crore) luxury helicopter deal to AgustaWestland, a division of Italy's Finmeccanica.
"Several instances have been observed where the ministry had deviated from the provisions of the DPP (Defence procurement policy) 2006 and RFP (request for proposals) issued in September 2006," the Comptroller and Auditor General said in the report presented to Parliament.
The luxury helicopters , meant for use by the Prime Minister and the President of India and other VIPs, were to have been procured in 2003 but the procurement was vetoed by the Prime Minister’s Office (PMO) as the then National Security Advisor Brajesh Mishra had asked the government to avoid a single vendor situation – no vendor except one was able to meet the certified flying height of 6000 m. in 2006 the parameters for the helicopters were revised downwards to avoid a single vendor situation. But the CAG notes that 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 the field trials were not conducted on the Agusta Westland helicopter which was going to be procured: instead representative aircraft were used for the field trials. In fact the helicopter that was sold to India was still in the development phase. So the recommendation by the Chief of Air Staff, justifying the field trials on a representative aircraft was misplaced, the CAG notes.
The CAG notes several other procedural glitches in the procurement: the benchmarked cost adopted by the Const Negotiation Committee (CNC) was unreasonably high compared to the offered cost: the benchmarked cost that the government accepted (Rs 4871 crore) was unacceptably higher than the offered cost (Rs 3966 crore).
The CAG also noted that the Defence Procurement Procedure (DPP) which makes it mandatory for manufacturers to procure a part of the value of the contract from Indian manufacturers was violated. Although the CAG says deviations could have been approved by govenrment, the deviations “in this case”, the CAG notes, are too frequent and too many.
The AgustaWestland helicopter is currently being examined by the Central Bureau of Investigation (CBI) for alleged kickbacks given to the family of then Air Chief SP (‘Bundles’) Tyagi, via agents apppointed by Italian company Finnmeccania
