Saturday, Oct 25, 2014

MoD not to issue new contracts to Finmeccanica

FIN-480 Finmeccanica headquarters in Rome. (Source: Reuters)
Written by Pranav Kulkarni | New Delhi | Posted: August 26, 2014 7:05 pm | Updated: August 27, 2014 1:26 am

The Defence Ministry has decided to not issue any new contracts to Finmeccanica, the parent company of AgustaWestland, in the aftermath of the alleged irregularities in the VVIP chopper deal. The ban on new contracts “till further orders” comes even as the MoD has decided to continue with the existing contracts that have been bagged by the company so far. The government’s decision was notified in a letter sent out to all the functionaries of the MoD.

“Where the tender process is yet to commence, a company under the Finmeccanica Group of Companies should not be given the tender papers for purposes of bidding… Where tender process is ongoing but no vendor has been declared as L-1 as yet, the Finmeccanica Group of Companies may not be considered in the tender provided the tendering can be satisfactorily completed with other competitors,” reads one of the points in the latest MoD notification. However, it goes on to permit the existing contracts by saying, “Where contracts are under execution, there is no reason not to proceed with the contracts… Where contract has already been executed, but spares, upgrades etc are still required on a regular basis, the contracts would be gone through.”

While the decision clearly affects the future contracts that the Italian defence major could have bagged with India, the ongoing contracts of the conglomerate will thus continue unaffected.

For instance the Navy’s major contract — the Multi-Role Helicopters (MRH) in which US Major Sikorsky’s S-70B helicopter and AgustaWestland subsidiary NH Industry’s NH-90 helicopter have been shortlisted, which sources say will continue unaffected.

The carefully-worded decision that leaves scope for ambiguity comes at the end of detailed consultation with the Law Ministry as well as the Attorney General in June after the new BJP-led government came to power.

The MoD had called off the deal with AgustaWestland in January after allegations of kickbacks in the 12 VVIP chopper deals involving the firm’s AW-101 platform had surfaced.

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