Massive coverup of CAG reports on defense deals

KT NEWS SERVICE. Dated: 9/24/2020 9:40:51 AM

NEW DELHI, Sep 23: The Comptroller and Auditor General (CAG) is a constitutional authority that audits the expenditures of the Centre and the State Governments and the bodies and corporations substantially financed by them.
The government is duty bound to table all reports of the CAG, who enjoys the same status as a Supreme Court judge, in Parliament to enable two Parliament bodies to dissect them and present reports to Parliament, namely the Public Accounts Committee (PAC) and the Committee of Public Undertakings.
However, the government sat over all reports of the CAG, at times critical, and this came to light only on Wednesday on the last day of the monsoon session of Parliament when Minister of State for Finance Anurag Singh Thakur laid on the table not one or two but as many as 29 CAG reports that were put on the backburner for long. The government could not have hidden the reports any longer as there a Constitutional compulsion under Article 151 to table every CAG report in Parliament.
Though difficult to quickly analyse so many reports coming together, just one CAG report on defence throws up how undue favour was shown by the Indian Navy to a foreign vendor in the procurement of a fleet of tankers worth Rs 936 crore. The report says:
"Indian Navy awarded a contract for acquisition of a fleet tanker to a foreign shipyard even though the steel to be used by the shipyard in construction did not meet Indian Navy technical specifications. Commercial negotiations with the foreign vendor for procurement of a fleet tanker, despite being protracted and delayed, did not address the issue of reasonability of pricing adequately. Excess provisioning of spares of Rs 30.44 crore and under-realisation of offset benefit to Indian industry were also noticed in the procurement of the tanker worth Rs 936 crore."
Some other strictures in the CAG Report No 12 of 2020 are:
-- Import of radars by Bharat Electronics, a PSU, against indigenous manufacture order: Bharat Electronics Limited (BEL) was awarded a contract for supplying 22 Surveillance Radar Element radars at a cost of Rs 870 crore. The contract was signed by the Ministry under special dispensation of the Defence Procurement Procedure on the premise that BEL would be able to manufacture the radars indigenously as they had absorbed the technology transferred from the Original Equipment Manufacturer (OEM). BEL violated this intent by procuring 60 per cent radars in Completely Knocked Down form from the OEM at a lower cost. As a result, BEL earned unwarranted additional returns of Rs 10 crore. Supplying completely knocked down radars instead of indigenously manufactured ones also resulted in premature delivery before finalization of associated works services with no benefit to the Indian Air Force.
-- Undue benefit to HAL in pricing policy: Hindustan Aeronautics Limited follows a Fixed Price Quotation (FPQ) Policy for the pricing of the supplies and services made to Indian Air Force. Delay of four years in finalising the base year to be used for the FPQ Policy resulted in Indian Air Force incurring extra expenditure of Rs 400 crore. Further, notwithstanding Government instructions to the effect that no budgetary support for wages increase would be provided separately and that resources for funding the increased cost on account of wage revision have to be generated by the company internally,
Indian Air Force reimbursed arrears on account of wages and gratuity to the extent of Rs 315 crore.
-- Helicopter engines: Despite knowing the facts that two Kamov 25 helicopters with the Navy were old and in a poor material state with virtually no product support, Ministry of Defence concluded contracts with a foreign firm for their overhaul at a cost of Rs 10.38 crore. Not only was the quality of the overhaul poor but expenditure amounting to Rs 8.14 crore became unfruitful as flying operations on these two helicopters were discontinued due to severe defects in their engines. Related procurement of spare KA 25 engines also became wasteful as the engines could not be utilised.
-- Electronic warfare system: Despite an on-going indigenous programme for development of Electronic Warfare systems, Indian Navy spent Rs 472 crore on import of seven Electronic Warfare systems, on the grounds of operational emergency. The timeline of nine weeks given by the Raksha Mantri was overshot considerably and it took 176 weeks to finalise this contract. The expenditure, thus, could not meet the urgent operational requirement.
-- Air bases sanctioned in 80s not yet ready: The Ministry sanctioned the establishment of an airbase at Phalodi in 1985 and an Air Force station in South India in 1984. Even after two decades both are yet to be commissioned. As on date, the utility of the air base and station has not been determined, given the constantly vacillating position of the Indian Air Force on their future use. In the case of Phalodi, the Indian Air Force intends to use the base for helicopter operations though the base was envisaged as a strategic forward base airfield. In the second case, the intended air cover over sensitive installations remains elusive in the absence of an active and operational air base.
-- Submarines: Owing to poor planning, lack of need assessment and absence of a conclusive time bound agreement with US Navy, there was an inordinate delay in commissioning the Indian Navy submarine rescue facility. The expenditure of Rs 3.35 crore incurred could not serve its
objective as by now 75 per cent submarines of Indian Navy have already completed three fourths of their estimated operational life.
-- Microlight Aircraft: Indian Air Force did not adhere to the procedures prescribed for tendering, price negotiation and release of funds while procuring the Composite Technology Short Wing Microlight Aircraft. Instead, actions and decisions were regularised subsequent to placement of the order.

 

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