Purchase of INS Jalashwa also under scanner

“Since the ship has already outlived major part of its service life (36 years up to 2007) before being commissioned into Indian Navy, the decision for the acquisition of the ship does not appear to be prudent,” a CAG report says, raising doubts on the “real advantages” of the warship due to a restrictive clause on its use imposed by the US.

The report highlights that there are “restrictions on the offensive deployment of the ship” and disadvantages due to permissions given to the US “to conduct an inspection and inventory of all articles transferred under the end-user monitoring clause”.

“Given that the ship is of old vintage, Indian Navy would remain dependant upon foreign-based support.”

Severely criticising the $50 million contract signed in 2005, the report says seaworthiness of the vessel was concluded only on the basis of a visual inspection and there was “over-reliance on information provided by the foreign navy on the condition and maintenance history of the ship”.

The auditor has said the cost of the ship is likely to go up as it has been delivered only in a “safe to steam” condition and will require major upgrades and modifications.

The report also raises questions over the “hasty manner” in which the purchase was finalised, hinting that the Navy was under pressure to conclude the agreement at the earliest. “Absence of due diligence in examination of the contract is a testimony to the dilution of standard procurement procedures,” the report says.

The auditor has brought another big ticket purchase from the US under scrutiny by pointing out flaws in the $160 million deal for procuring three VIP Boeing Business Jets (BBJs) that was signed in 2005.

Raising doubts on the usefulness of the VIP jets due to their limited flying range, CAG has said Boeing was given “several concessions” during the procurement process that “seriously compromised” the “interests of the government as a buyer”.

The report says although the BBJs were meant to replace two ageing VIP jets of the Indian Air Force, the Government’s decision to purchase a third BBJ at a cost of Rs 312 crores was “avoidable”.Besides, it questions the necessity of the aircraft as the three jets will primarily be used for domestic travel, “necessitating the use of Air India aircraft with all its adverse consequences” for international travel. The report also says the acquisition process “deviated from laid down procedures and well-recognised norms of propriety” and supplies worth $50 million, including self-protection systems, were contracted without a competitive bidding process.