The country’s primary audit body has found that ordnance factories have been buying stores worth Rs 472 crore at unreasonable rates during the past six years due to a long-running suppliers’ cartel, which deliberately kept up the prices. Criticising the Defence Ministry for its inability to break the cartel, the Controller and Auditor General (CAG) has listed out 117 procurement cases where identical prices were quoted by different suppliers to ordnance factories involved in the production of equipment, ranging from infantry combat kits to INSAS rifles and tank ammunition. “Inability to break a suppliers cartel led to procurement of stores worth Rs 472 crore by 11 ordnance factories from different suppliers at identical rates, without ensuring the reasonableness of price,” said a CAG report on Ordnance Factories, presented in the Parliament on Friday. The Chanda ordnance factory—tasked with the production of gun, mortar and tank gun ammunition—topped the list of cartel-affected units with procurements worth Rs 130 crore, carried out with suppliers quoting identical rates. The Ambajhari factory—which manufactures shells, cartridge cases and fuses of various ammunition—came a close second with purchases worth Rs 117 crore from the suppliers’ cartel. The Kanpur Ordnance Factory, manufacturing gun barrels and bombs, placed orders worth Rs 78 crore.The CAG has pulled up the factories for not actively opposing the cartel despite specific suggestions by the CVC in February 2004. “Factories had not taken any effective steps to break the cartel, which deprived them of getting the best economic offer,” the report said. The audit body has also directed the factories to look at other Government organisations such as the Railways Board for measures to break the cartel and immediately identify more sources for supply of stores. The Defence Ministry has been advised to bring changes in the procurement policy of ordnance factories on the lines of the Defence Procurement Policy (2006) that lays down harsh punitive measures against suppliers found quoting similar rates.
