New Delhi: In a relief to the government ahead of Lok Sabha polls, the much-awaited Comptroller and Auditor General (CAG) has found that the deal signed by the NDA regime in 2016 for 36 fighter jets was 2.86 per cent lower than the price negotiated by the UPA for 126 aircraft but felt that the present capital acquisition system is unlikely to effectively support the IAF.
Without going into the controversial offset clause of the Medium Multi Role Combat Aircraft (MMRCA) deal, the report examined the pricing but did not disclose the actual price of the 36 Rafale fighter jets contracted by the NDA government.
The prices have been redacted in the audit report based on the insistence of the Defence Ministry citing the Indo-French agreement of 2008 and the provisions of Inter-Government Agreement (IGA).
The Rafale deal is believed to be of the order of Rs 59,000 crore.
Against the backdrop of the Congress and other opposition parties attacking the government accusing it of corruption in the Rafale deal, the relief from the CAG comes on top of the Supreme Court clean cheat given last year.
“Overall, it may be seen that as against the Aligned Price as estimated by Audit of ‘CV’ million Euro, the contract was concluded for ‘U’ million Euro i.e. 2.86 per cent lower than the Audit Aligned Price,” the CAG said in its report on “Capital Acquisition on Indian Air Force” tabled in Parliament on Wednesday.
The report contained audit findings relating to the acquisition of MMCRA through an IGA with the government of France. “This includes examination of the pricing.”
Going into the methodology of the price comparison, the national auditor said the price offered by M/S Dassault Aviation in April 2008 against the Request For Proposal (RFP) of 2007 was a market discovered price and based on competitive bidding.
The price offer of 2007 had two distinct packages: Pricing for 18 flyaway aircraft package and pricing for Transfer of Technology (ToT) package for 108 aircraft which were to be licensed produced in India.
The offer of 2015 on the other hand, the CAG said, was only for 36 flyaway fighter aircraft. The acquisition and price bids of 2007 and 2015 were very different as the latter
included the price of ToT for licence production of 108 aircraft in India which was 77.8 per cent of the total price bid of 2007.
In a comparative analysis of 2007 and 2015 price bids, the CAG said: “The Aligned Price worked out by INT was ‘U1’ million Euro while the Aligned Price as assessed by the audit was ‘CV’ million Euro which was about 1.23 per cent lower than the INT aligned cost.”
This was the price at which the 2015 contract should have been signed if the prices of 2007 and 2015 were considered at par. But as against this, the contract was signed in 2016 for ‘U’ million Euro which was 2.86 per cent lower than the Audit’s aligned price.
The difference between the Aligned Price estimated by INT and of Audit could be attributed to inconsistent price variation factors adopted by INT, alignment of the quantities/scope of the two offers and the difficulties of the alignment itself, the CAG report said.
The contract consisted of six different packages — Flyaway aircraft package, Maintenance Package, Indian Specific Enhancements, Weapons Package, Associated Services
and Simulator Package. There were a total of 14 items under these six packages.
Item-wise analysis of prices showed that the contracted prices of seven items were higher than the aligned price, three were same and four were lower. Also the price of elements could not be compared because the structure/format of Dassault bid of 2007 and offer of 2015 were different, it said.
On Weapon Package, the CAG said after alignment of scope of the aligned price worked out to ‘WP1’
Million Euro and the contract price was ‘WP2’ Million Euro, a saving of 1.05 per cent.
On the Basic Aircraft package, the Defence Ministry contended that the aligned price worked out by INT and Audit in the case of basic aircraft was the same but argued that the negotiated price of 36 flyaway aircraft was 9 per cent lesser than the price offered for the aircraft in 2007.
However, the CAG said: “There is no difference between the bid of 2007 as escalated by INT with actual escalation factors, and the negotiated cost of the 2015 offer, for the same aircraft.” — IANS
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