Contract deviated from rules: CAG

Says IAF tested different chopper,insisted on trials abroad despite Antony’s objection.

Written by Manu Pubby | New Delhi | Published: August 14, 2013 1:26 am

The entire process to procure helicopters for VVIP travel — from framing technical requirements in March 2005 to the signing of the deal in February 2010 — deviated from the rules and several undue exceptions were granted to winning contender Italian firm AgustaWestland’s AW 101,according to a special audit report on the controversial deal.

Taking a strong line on the deal that is currently under investigation for bribery charges after a series of reports in The Indian Express,the CAG report has revealed that the IAF did not even test the AW 101 during field trials in Italy,opting for only “representative helicopters” as the machine was not ready for trials.

It also says that the then Air Chief Marshal F H Major insisted that trials be carried out in the UK and US,despite objections from Defence Minister A K Antony that the “fidelity and credibility” of the tests could be compromised if conducted abroad.

The CAG report raises questions about the fairness of the trial process,saying that although a single trial directive was issued,the IAF in 2008 chose to employ different methodologies for the evaluation of the the two contenders —the AW 101 and S 92 — in contravention to the Defence Minister’s directions.

Dissecting the contract from 1999,when the requirement for new VVIP choppers was first put up,the CAG says in its report that deviations started after the UPA I government gave its go-ahead to the project and initiated the contract in March 2005.

The key change in technical requirements,currently being probed by the CBI,was the reduction of the service ceiling from 6,000 metres to 4,500 metres that enabled the Italian firm to participate.

While the defence ministry in a detailed statement issued earlier this year put the blame for the critical changes on the NDA government by citing a 2003 meeting by then NSA Brajesh Mishra where the matter was discussed,the CAG report says the changes were actually initiated in 2005.

Even after the meeting by Mishra in 2003,the IAF had in 2004 stuck to its position that the service ceiling should not be reduced. In a presentation to the Defence Secretary in January 2004,Air HQ said a 6,000 metre service ceiling was an “inescapable operational necessity” as many areas in the north and northeast are accessible only with such a capability.

However,just a year later in March 2005,months after Air Chief Marshal S P Tyagi took charge,the IAF changed its stance and the requirement was relaxed,the CAG report says. A new requirement for 1.8 metre of cabin height was also introduced.

Tyagi has been named in an FIR by the CBI that is currently probing the case.

Bribe money: CAG report boosts CBI case

The CAG report on the VVIP chopper deal has strengthened the CBI case on the allegations of bribery to fix the contract in favour of Italian firm AgustaWestland by pointing out a vital link with a software company that is under the scanner for being the route through which money exchanged hands.

The report has revealed several discrepancies in the offset programme associated with the deal that mandates that at least 30 per cent of the contract value of Rs 3,546 crore has to be invested in the Indian defence sector. While it says several programmes which were to be considered as offsets were not compliant with rules,the report specially points out a contract with software firm IDS Infotech.

The firm had been named in 2008 as one of the Indian offset partners of AgustaWestland that said it has given the Mohali-based company a contract for translation of drawing of the AW 129 helicopter into software. This had been accepted by the Defence Ministry’s Technical Offset Evaluation Committee. But the CAG report says the “details regarding type of services and export orders to be executed by IDS Infotech was not clearly indicated in the offset contract”.

As reported by The Indian Express,a key document in possession of Italian investigators that has been shared with CBI is a copy of a contract between IDS Infotech and AgustaWestland dated January 2007 that promised a “compensation” of five per cent of the value of the deal if the Italian firm won the tender.

The agreement says AgustaWestland will utilise its “engineering activity and consultancy” in case it wins the chopper contract and the “compensation” agreed is that IDS Infotech would be engaged to get “business for minimum of five per cent of the total value of the order”. It is signed by then AgustaWestland MD Bruno Spagnolini,currently facing trial in Italy.

Italian investigators believe the engineering and software contracts were the route through which a part of the alleged bribe money was routed.

The CAG says that while IDS was listed as an offset partner since 2008 it was replaced in August 2012 with AgustaWestland saying the work identified under the project had been completed prior to February 2010 when the chopper deal was formally signed with India.

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