As reported by ET, after the CAG report hinted at favouritism, the defence ministry is dusting through the files of the contract signed in 2009

by Manu Pubby

NEW DELHI: Well before the Comptroller & Auditor General discovered irregularities in a $2.2-billion deal in 2009 to procure P-8I maritime reconnaissance aircraft, the UPA government in trying to close a landmark deal with the US chose to overlook representations by the main competitor on alleged deviations. The deal had sparked controversy earlier this month after CAG slammed the UPA government for signing a “separate product support agreement” with makers Boeing while its competitors EADS, now rebranded as Airbus Military, had included this cost in their bid. At that point, EADS had made several representations highlighting this. They had flagged almost all major issues highlighted by CAG in its report, including denial of some key technologies that were demonstrated during the flight trials.

Four Issues Were Raised by Competitor EADS

Two aircraft had been shortlisted for the contract to procure long range maritime reconnaissance and anti-submarine warfare aircraft — Boeing’s P-8I and EADS’s A-319. The American offer was accepted after the defence ministry determined that it was the cheaper option. However, the CAG report has disputed this, alleging that defence ministry “enhanced” a financial bid by EADS to include a 20-year support package that was not included in the Boeing offer.

This part was negotiated separately with Boeing after it had secured the deal. ET has reviewed the letters written by EADS to the defence ministry. They broadly raised four issues including the protest on financial assessment that was used to declare Boeing as the winner. The thrust of the complaints was that several technologies in the Boeing P8I declared as technically competent were discovered during the final assessment not be authorised for transfer. These technologies included the original electronic safety measures that are needed to detect incoming missiles. The complaint said source codes and mission system software that are the brains of the aircraft were not offered for transfer.

Also, it stated that the US was not providing a 360-degree radar as per the terms of the tender. Instead, it offered a 240-degree radar which was declared sufficient. Direct allegations were made in the letters that Boeing had attempted to get the Navy to downgrade its requirements. EADS, Spain had also complained that its requests for clarifications on several aspects of the selection were not even responded to between 2006 and 2008 by the ministry. It may be noted that after losing the Indian competition, the EADS A-319 variant was practically shelved and could not re-enter the market.

As reported by ET, after the CAG report hinted at favouritism, the defence ministry is dusting through the files of the contract signed in 2009 as part of an internal inquiry into the matter. The matter took political colour after senior government ministers including Piyush Goyal and Rajyavardhan Rathore charged in a series of similar twitter posts that the deal put national security at risk and that the UPA bought ‘defective spy planes’.

CAG has alleged that if the proper price determination model was followed, the European offering of the A-319 plane would have turned out cheaper. It has also stated that the US platform does not fully meet the requirements of the Indian Navy due to capability limitations of radars installed onboard and that critical ammunition for anti-submarine warfare has not been procured.

The Indian P-8I fleet, meanwhile, has been deployed on key missions and exercises, including in the Pacific Ocean. The aircraft was also used in critical land missions, including the collection of real time intelligence during the Doklam crisis on the China border last year.