Saturday, July 25, 2009

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."


Anonymous said...

Will Anthony the clean man come out clean by prosecuting the culprits or he is also corrupt like most of his colleagues in the government. Will Mr.Clean becomes Mr.Dirt or will he retain his clean image?

Mickey said...

Anon @ 11:16 AM

While, I have no knowledge on the instant case, but what has Mr Anthony got to do with this. Isn't it a bit harsh to pull up a Defence Minister for a faux Paux by someone much lower in the hierarchy.

My personal experience on dealing with such matters is that the 'audit' reports don't always bring out the true facts of the case. They bring out 'audit' anomalies without looking into the circumstances which caused such anomalies to take place.

With civilian bureaucracy (at lower functional level) not at all concerned with the "actual ground reality and operational status of the equipment' and rather being more interested in being 'paper correct' on files, sometimes, the dealing officers are forced to take procedural shortcuts to ensure that they are able keep the equipment operational.

I am not saying that 'financial bungling' does not take place in defence deals.

It probably does.....

but I have no knowledge of it.

With media constantly interested in 'blowing up' even smallest of procedural errors, and the MoD staff (again at lower functional level) not willing to be constructive part of the whole "process of managing defence of a nation", it is a bleak and desperate future we are looking at.

I am not cutting you short,

just expressing my opinion out of some personal experience on the subject.

Everyone concerned with procurement is NOT CORRUPT. There are many who do the job with a conscience.

Anonymous said...

Good reply, Mickey... not that I necessarily agree, but surely these discrepancies need to be explained and understood.

The CAG is always complaining about something or the other. If the CAG cannot give useful feedback, then why do we even have a CAG? And what exactly is the government doing to plug these procedural loopholes?

I understand the Armed Forces will compromise if their operational preparedness is being threatened by non-acquisition of equipment due to civilian "paper processing"... but what's the solution to this problem?

NJS said...

HAL & DRDO should develop trainer aircraft in fastract . need to co develop trainer with indian / abroad manufacturer for quick result.