The CAG report has suggested that the UPA government in 2009 had awarded a contract for buying eight surveillance planes by allegedly favouring American company Boeing
In what could be yet another scam in the procurement of aircraft for the Indian Navy, a CAG report has suggested that the UPA government in 2009 had awarded a contract for buying eight surveillance planes by allegedly favouring American company Boeing by declaring it the lowest bidder 'incorrectly' in the tender worth over Rs 10,000 crore.
Under the Defence Procurement Procedure, if two companies meet the requirements for a particular weapon system wanted by a service in a tender, the contract has to be awarded to the company offering it at a lower price. The deal in question was for buying eight P-8I surveillance aircraft from the US-based Boeing for replacing the Russian Tupelov spy planes.
"The commercial bid of Boeing, USA was at USD Rs 8,700.37 crore whereas the other firm EADS CASA, Spain had quoted Rs 7,776 crore which also included product support for two years. Boeing had clarified to the Defence Ministry that they would be in a position to provide a minimum of 20 years’ product support under a separate contract in terms of maintenance, materials and spares to be negotiated," a CAG report tabled in Parliament said.
The report said the Spanish firm, on the other hand, had also included the cost of two-year product support in their bid.
The CAG said instead of reducing the cost of two-year product support from the European bid for determining the lowest bidder, the Defence Ministry enhanced the Spanish bid to Rs 8,712.44 crore by adding the product support for another 18 years.
As a result of this, Boeing was declared the lowest bidder in January 2009 and contract worth over Rs 10,773 crore was awarded to it and the planes were later on delivered between 2013 to 2015.
The CAG has also found that there will be no product support from the aircraft manufacturers after the expiry of warranty in 2017 and an interim support agreement worth over Rs 850 crores for a period of three years. "...Boeing of USA had clarified in January 2008 itself that it would be in a position to provide a minimum 20-year product support under a separate contract. This was visible in conclusion of an agreement with Boeing in June 2017... and thus lack of due diligence and lack of internal checks on part of the contract negotiation committee resulted in Boeing being judged as lowest bidder incorrectly," the CAG said.
Before this report came out, the officials had played similar tricks in the AgustaWestland deal to declare the Italian choppers as the single vendor for buying 12 VVIP choppers for the Air Force.
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