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CAG castigates MoD, Navy for its 2009 Boeing deal for P-8I aircraft

The deal in 2009 was negotiated and signed by the UPA government. Interestingly, the current BJP government placed an order for four more P-8Is for the Navy in July 2016 under the same terms.

By: Express News Service | New Delhi | Updated: August 9, 2018 2:36:45 am
2009 Boeing deal, P-8I aircraft, P-8I aircraft deal, Indian navy, CAG on Boeing deal, military aircraft, Admiral Arun Prakash, India news, Indian express news The CAG said, “lack of proper internal checks on the part of the CNC resulted in Boeing being adjudged L-1 incorrectly.” (File photo)

In a report placed in Parliament on Tuesday, the Comptroller & Auditor General (CAG) castigated the defence ministry and Navy for violating procedure in buying eight P-8I Poseidon Long Range Maritime Reconnaissance Anti-Submarine Warfare (LRMR-ASW) aircraft from US aircraft manufacturing firm, Boeing in 2009.

The deal in 2009 was negotiated and signed by the UPA government. Interestingly, the current BJP government placed an order for four more P-8Is for the Navy in July 2016 under the same terms.

Former Navy Chief, Admiral Arun Prakash (Retd) however criticised the CAG report, and told The Indian Express that “past experience has shown that overreach, combined with pedantic hair-splitting by the CAG without understanding the practical nuances of issues involved, has inflicted incalculable damage on our national security.”

“The CAG, no doubt, has a vital function to perform as a constitutional authority, for audit of all receipts and expenditure of the GoI, he conceded but suggested that “it is time that Parliament directed the CAG to classify such comments and references as ‘Top Secret’, to be seen only by MPs so authorised.”

The ministry, CAG report states, “enhanced the financial bid of M/s EADS CASA, Spain to cater for 20 years product support cost while ignoring this element in respect of M/s Boeing, USA. The contract was concluded with M/s Boeing, USA in January 2009 at MUSD 2,137.54 (US $2.177 billion). At a later date, M/s Boeing, USA offered the product support under a separate negotiable contract and consequently the deduced ranking of M/s Boeing, USA as L-1 turned out to be incorrect.”

CAG also dismissed the Navy’s reply last year that as Boeing had not specified any amount in its commercial offer, the CNC considered the 20-year product support as ‘nil’ and concluded it was included in the overall acquisition price. The CAG said, “lack of proper internal checks on the part of the CNC resulted in Boeing being adjudged L-1 incorrectly.”

CAG report also goes on to add that “the Offset obligations of MUSD 641.26 ($641.26 million), to be fulfilled within seven years (August 2016), had not been fulfilled till date. M/s Boeing, USA had claimed Offset credits on mere placement of purchase orders defeating the very purpose of Offset obligations”.

The CAG is also critical of the equipment in P-8I aircraft, stating that “The critical role equipment offered by Boeing was not fully meeting the needs of the Indian Navy. Owing to capability limitations of radars installed onboard, the aircraft is not able to achieve the envisaged coverage area requirements.”

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