The CAG report says that faulty tendering process adopted since 2009 ensured that contract for MiG tyres was repeatedly awarded to the same foreign vendor despite the vendor supplying defective tyres

CAG report indicates preferential treatment to Boeing. Reports says air force suffering due to substandard tyres for MiG aircraft. Points delay in development of Advanced Early Warning System

Coming down heavily on a number of defence deals signed during the UPA-II, the Comptroller and Auditor General (CAG) on Tuesday suggested that attempts were made to favour Boeing, a US-based company, over its Spanish rival which had quoted a lower price.

The deal here was about purchasing spy planes for the Indian Navy.

In its report tabled in Parliament, the CAG said the Union Defence Ministry was wrong in concluding that Boeing was the lowest bidder (L1). The ministry had increased the financial bid of the Spanish firm to provide for a 20 year "product support" cost, assuming that Boeing had a similar provision in its offer.

However, what Boeing in fact did was that it offered the support cost at a later stage under a separate contract.

But by then the government had concluded that Boeing was the lowest bidder (L1).

Terming this conclusion as wrong, the CAG report 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 finalised with Boeing in January 2009 at USD 2.1 billion (about Rs 14,500 crore at the current exchange rate).

"At a later date, Boeing offered the product support under a separate negotiable contract and consequently the deduced ranking of Boeing as L-1 turned out to be incorrect," the CAG report said.

Besides this, the CAG also observed that the American aircraft was not "fully meeting" the needs of the Indian Navy, mainly due to limitations of radars installed onboard the aircraft.

PROCUREMENT OF SUBSTANDARD TYRES FOR MiG PLANES

The report also points out irregularities in procurement of tyres for MiG fighter aircrafts. The air force has been facing quality issues with tyres of MiG aircrafts since 2012.

In March 2017, the air force set-up a committee to study why tyres of these aircraft frequently burst during landing.

The CAG in its report said that faulty tendering process adopted since 2009 ensured that the contract was repeatedly awarded to the same foreign vendor despite the vendor supplying defective tyres.

The air force is saddled with 3,080 MiG tyres worth Rs 5.92 crore that are defective and unusable.

DELAY IN DELIVERY

Meanwhile, beside the deal to purchase spy planes for the navy and the substandard MiG tyres, CAG also raised issues relates to financial transaction of the Indian Air Force. The CAG report said a project of indigenous development of the Advanced Early Warning System was approved in 2004 at the cost of Rs 1,800 crore.

Besides non-achievement of certain operational requirements specified by the air force, there was a time overrun of 70 per cent, the report said.