CAG FAULTS DEAL FOR MARITIME AIRCRAFT
To meet its requirements of maintaining vigil over the Indian Ocean, the Indian Navy procured Long Range Maritime Reconnaissance Anti-Submarine Warfare (LRMRASW) aircraft from Boeing during the period May 2013-October 2015. The LRMRASW is an airborne platform that can search, locate, identify, track and destroy enemy ships and submarines.During its test audit, the Comptroller and Auditor General of India (CAG) observed major infirmities in the procurement process followed and in its report presented to Parliament was scathing in its criticism of the functioning of CNC, management of offsets and contract monitoring.
The proposal to purchase 8 LRMRASW aircraft began in 2005, and thereafter, the bids of five respondents were evaluated by the Technical Evaluation Committee (TEC), constituted to study the received technical proposals to ascertain their compliance with the Qualitative Requirements (QR), as mandated in RFP. After due deliberations, TEC declared Boeing (P-8I Poseidon) of the US and EADS CASA (Airbus A319) of Spain as fully compliant and after extensive trials, both aircraft were found suitable. The Commercial Negotiation Committee (CNC) then met in November 2007 to examine the bids of the two firms, and awarded the contract to Boeing. The aircraft were delivered between May 2013 to EADS CASA’s rigged bid ballooned to ₹8,712.44 crore. Deceitfully thereafter, CNC compared the EADS CASA bid of ₹8,712.44 crore (including 20 years product support) with the Boeing bid of ₹8,700.37 crore (without any product support) and declared Boeing to be the lower bidder (L1). A contract was signed with Boeing in January 2009.As the signed contract was bereft of product support, Indian Navy’s entire fleet of Poseidon aircraft was without any product support till June 2017 when an interim support agreement was signed with Boeing for USD 131 million (nearly ₹840 crore @ ₹64 per dollar) for product support for mere three years.
The MoD in its defence said that while comparing the bids, it had mistakenly thought that the Boeing bid also included product support for 20 years. This was a blatant lie and was outrightly rejected by the CAG as Boeing had made it clear in 2008 itself, in a letter written to the MoD, one full year before the contract was signed, reiterating that a separate contract would be required for the stipulated product support for 20 years. Hence, there was no ambiguity at all. It was a wilful act of tweaking the bids to favour Boeing. It is not known if EADS CASA lodged any complaint with the independent monitors.
If the estimated cost of 20-years product support is added to the commercial quote of Boeing, the bid works out to ₹14,300.37. When compared with the equivalent bid of EADS CASA of ₹8,712.44 crores (extrapolated with 20 years product support), it shows that wilful tweaking of the deal in favour of Boeing, resulted in India incurring an extra expenditure of ₹5,587.93 crores.
In terms of Offsets too, the deal was manipulated. The maritime aircraft deal was carried out under the provisions of DPP-2006 and the offset policy contained therein. In January 2009, MoD concluded an offset contract with Boeing for USD 641.26 million (₹3127.43 crore), being 30 percent of the main contract value. It was to be effective from August 2009 and to be completed within 7 years by August 2016. Here too, the MoD functionaries either connived wilfully or failed to take cognisance of many issues, two of which are as under:
• India’s offset policy unambiguously states that any change in offset programmes, offset partners and offset percentages would be through written mutual agreement between MoD and the vendor. Through the footnotes, Boeing appropriated to itself the right to change offset projects, partners and percentages without reference to MoD.
• As per the policy, offset credits can be claimed only on the execution of the offset deals and not merely on the placement of orders. Boeing inserted footnotes stating that offset credits would be assumed to have been awarded on the placement of purchase orders on the Indian partners or when direct investments are made in an Indian entity. Such tweaking of the policy provisions defeated the very purpose of offsets. For, Boeing had submitted offset claims totalling USD 716 million by September 2017 against purchase orders. However, no proof of actual completion of work had been provided.
• Under the policy, penalty levied on a vendor for failure to fulfil offset obligations in a given year can be recovered from the bank guarantee of the main contract or from the amount payable to the vendor against his supplies under the main contract. These provisions were duly mentioned in RFP issued for the maritime aircraft.A penalty of USD 71.26 million was levied on Boeing for the shortfall in offset fulfilment up to August 2016. CAG was shocked to notice that the penalties clause of the offset contract failed to specify the method of recovery of penalties. Contrary to the provisions of DPP and RFP, there was no linkage between the offset and the main contract. When MoD wanted to recover penalty from the payments due to the vendor under the main contract, the Navy expressed its inability as the contract contained no provision to deduct penalty from the bank guarantee or the amount due to the vendor. Consequently, till the finalisation of the CAG report, no recovery could be affected. It is an inexcusable lapse having significant financial implications.
Indifferent Contract Monitoring and Sub-optimal Exploitation
Due to indifferent post-contract management, MoD failed to procure anti-submarine ammunition in time for weapon integration of the aircraft. Such a requirement was mentioned at the outset in RFP itself. In addition, MoD told the Cabinet Committee on Security (CCS) in November 2008 that the weapon integration of the aircraft would, inter alia, include procurement of bombs as well. However, as the contract for the procurement of bombs had still not been signed at the time of the CAG report, anti-submarine capability of the aircraft remained under realised.
Similarly, non-procurement of adequate quantity of longer range sonobuoys and non-adherence to QR in respect of Maritime Patrol Radar for detecting targets during surface surveillance adversely affected the exploitation of the full capability of the aircraft. CAG also observed that the authorities concerned failed to create the necessary infra-structure for the aircraft in time. Rapid Erect Sun Shelter hangers failed to withstand winds much lower than the claims made by the manufacturers and soon became unserviceable.
The entire working of the CNC needs to be looked into. In any case, the excuse given by CNC that it thought Boeing’s quote to be inclusive of product support is incredulous and needs to be discarded with the contempt it deserves. Tweaking of quotes to swing the deal in favour of a particular vendor smacks of malfeasance and appears to be a wilful act, which has cost grave financial loss to the country. In light of CAG’s severely critical comments on the highly questionable commercial evaluation process, it is time the government revisits the procedure followed and holds the concerned defaulters accountable.
(This is a brief summary from the detailed blog of Maj Gen. Mrinal Suman)
MILITARY SATELLITE LAUNCHED
India successfully launched Microsat-R, a military satellite for imaging purposes, onboard its Polar rocket PSLV-C44, from the spaceport at Sriharikota on night 24-25 January 2019. The PSLV-C44, assembled in 30 days, was the first mission of a new variant of the PSLV, called the PSLV-DL, as it was equipped with two strap-on configurations. Usually, PSLVs were launched without any strap-ons (boosters) or were equipped with six strap-ons fixed around the rocket, but the ISRO, for the first time, used only two boosters for the mission. This was also ISRPs first mission for the year. The 44 metre tall PSLV-C44 was launched at 11.37 pm and precisely 13 minutes and 30 seconds later, it injected the 740 kg Microsat-R into orbit in a 274-km polar sun-synchronous orbit. This was yet another feather in the cap of ISRO and a moment of pride for the country. It also marked the first for ISRO to place a satellite in a lower orbit, at around 274 kms from Earth.
Also launched was Kalamsat, a students’ payload. Built at a cost of around Rs 12 lakh, the Kalamsat is an experimental satellite for studying the communication system of nano-satellites, which can be useful in many fields, predominantly disaster management. Contributed by college students and the members of a Chennai-based organisation – Space Kidz India – Kalamsat is the first to use PS4 (the fourth stage of the vehicle) as a platform to orbit around the Earth. It is also the lightest satellite to be launched by ISRO.
The launch was witnessed by former ISRO chairmen Krishnaswamy Kasturirangan and A.S. Kiran Kumar. With this launch, the PSLV, basically a four-stage vehicle with alternating solid and liquid stages, has launched 54 Indian and 269 satellites of international customers.
HAROP KILLER DRONES FOR IAF
In a bid to enhance its unmanned warfare capability, the Indian Air Force is planning to acquire around 15 more HAROP attack drones which can crash into high-value enemy military targets to destroy them completely. The IAF already has an inventory of these drones which are equipped with electro-optical sensors to loiter over high-value military targets such as surveillance bases and radar stations before exploding them.
As of now, the proposal for acquisition is under consideration. Once approved, the Indian Air Force would be exercising the option clause in the previous deal signed a few years ago with Israel which is the main supplier of all types of drones to the IAF. Also under discussion with the Israelis is Project Cheetah, under which almost all the drones of the three services would be turned into high-quality attack drones and their surveillance capabilities would also be enhanced. At present, the three Services have a fleet of more than 100 UAVs, acquired over the years in different batches. Work is also in progress on developing indigenous combat drones which would be deployed on India’s Western and Eastern borders.
FUSION CENTRE FOR IOR
India has taken a significant step forward in increasing Maritime Domain Awareness (MDA) by setting up an Information Fusion Centre-Indian Ocean Region (IFC-IOR), in Gurugram. The Centre was inaugurated by the Raksha Mantri, Ms Nirmala Sitharaman on 22 December 2018 at the Information Management and Analysis Centre (IMAC), Gurugram. Apart from representation by officials from the MoD, MEA, MHA, Ministry of Shipping and the NSCS, Ambassadors and Resident Defence Attaches of partner countries also participated in the event.
The IOR is vital to world trade and economic prosperity of many nations including India, but faces challenges from maritime terrorism, piracy, human and contraband trafficking, illegal and unregulated fishing, arms running and poaching. Responses to such challenges require enhanced situational awareness of the maritime activities in the region. The scale, scope and the multi-national nature of maritime activities, however make it difficult for countries to address these challenges individually—hence the need for collaborative effort between maritime nations in the IOR.
IFC-IOR aims to strengthen maritime security in the region and beyond, by building a common coherent maritime situation picture and acting as a maritime information hub for the region.Towards this end, the IFC-IOR aims to engage with partner nations and multi-national maritime constructs to develop comprehensive MDA and share information on vessels of interest with a view to securing the global commons for a peaceful, stable and prosperous region. Currently, the IFC benefits from “white shipping” agreements with 36 nations and three similar multi-lateral constructs.White shipping means sharing and exchange of advance information regarding identity and movement of non-military commercial vessels.
In his address to the gathering, Admiral Sunil Lanba, the Chief of the Naval Staff said that the IFC – IOR is a collaborative construct that will work with partners, countries as well as international agencies to enhance maritime security and safety.
He further added that the IFC-IOR would work towards capability building in the region, coordination of incident response and disaster relief, and in time, also share submarine safety information.
The Raksha Mantri stated that the objective of having an IFC-IOR is more for partners, equals to work towards keeping the global commons safe and democratically available for all of us. She further added that, in addition to utilising our collective wisdom and resources towards addressing the myriad challenges in our region, the IFC-IOR will help us interface and integrate, wherein, we would benefit from each other’s best practices and expertise. More significantly, the IFC-IOR will help foster bonds of trust, camaraderie and partnership; ingredients that are vital for relationships between nations to transcend from being merely transactional to ones that are transformational”.
The information exchange at the IFC-IOR would be initially undertaken by virtual means, using telephone calls, faxes, emails and video conferencing over internet. Subsequently, to enable better interaction, quicker analysis of information and provide timely inputs, the IFC-IOR would host Liaison Officers from partner countries. Additionally, towards enhancing capability building, the IFC-IOR would undertake conduct of exercises and training capsules in maritime information collation and sharing.
VETERANS AND WAR-WIDOWS
New Delhi, 16 January 2019: In a welcome announcement which has come as a great relief to the Veterans and Veer Naris, Raksha Mantri Smt. Nirmala Sitharaman, on 16 January 2019, approved the proposal to provide legal advice/support to Veterans and war-widows in a meeting attended by the top hierarchy of MoD and the Chairman Armed Forces Tribunal.
Speaking on the announcement, Rajya Sabha MP Shri Rajeev Chandrasekhar thanked the Raksha Mantri and Prime Minister Modi on behalf of the veterans and their families for their steadfast support to the veterans and the families of our Bravehearts. He also thanked the Raksha Mantri for her positive approach towards this highly emotive matter of legal issues faced by Veterans and the Veer Naris. “This is a move which will greatly help the affected Veteran’s and Veer Naris,” he said.
Shri Rajeev Chandrashekar had met the Raksha Mantri along with Major Navdeep Singh and Maj D. P. Singhon 03 January 2019 and submitted a letter on the emotive issue of pending appeals against disabled soldiers. This announcement by the Raksha Mantri was in response to the above meeting.