Mini-Scam in BAE Hawk Spares Contract

The Indian government's financial audit watchdog, the CAG, has found that pricing anomalies in the spares contract for 66 Hawk advanced jet trainers.

According to the latest CAG audit report, first, BAE Systems was to provide a list of spares five months after contract signing in March 2004. This did not happen until May 2006, and the spares contract was signed in November 2007. A mini scam here though. The audit watchdog has observed that "Scrutiny of prices charged by M/s 'A' [BAE Systems] for these spares revealed that firm had charged excess amount of UKP 837,108 (Rs 6.44 crore) for the fixed spares, as the pricing was done for each line item based on unit price and contracted rates were not implemented. Ministry stated in 2008 that M/s ‘A’ [BAE Systems] was allowed to amortise the administrative cost of spares estimation using Proprietary Reliability and Maintainability data in the cost of spares. The reply is not tenable as the provision of such amortisation is neither included in the contracts finalised with M/s ‘A’ [BAE Systems] in 2004 nor was such a fact brought to the notice of the CFA."

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