CAG raises question over $2.1 bn aircraft deal with Boeing under UPA regime

August 07, 2018 18:33

National auditor CAG today raised questions over a USD 2.1 billion Indian Navy contract awarded to Boeing during the previous UPA regime, suggesting the American defence major was favoured over rival bidder EADS CASA of Spain for procuring a fleet of P-8I maritime reconnaissance aircraft.

In its report tabled in Parliament, the CAG said the defence ministry enhanced the financial bid of Spanish aerospace firm to provide for a 20 year "product support" cost on assumption that Boeing's offer had similar provision.

Boeing, at a later stage, offered the aircraft maintenance support under a separate negotiable contract, the auditor said, while terming as incorrect the conclusion that the American company was the lowest bidder.

It said enhancing the financial bid of the Spanish company by including its product support cost resulted in pushing it to L-2 status (second lowest bidder).

As per the report, the contract was concluded with Boeing in January 2009 at $2.1 billion (about Rs 14,500 crore at the current exchange rate).

"At a later date, Boeing, USA, offered the product support under a separate negotiable contract and consequently the deduced ranking of Boeing, USA as L-1 turned out to be incorrect," it said.

The CAG observed that the American aircraft was not "fully meeting" the needs of the Indian Navy, mainly due to limitations of radars installed onboard the aircraft.

-- PTI

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