CAG finds irregularities in purchase of aero engines for unmanned aero vehicles

The Comptroller and Auditor General (CAG) of India has found irregularities in the purchase of aero engines for unmanned aero vehicles (UAV) by the Indian Air Force. According to the CAG report on the Union Government, (Defence Services) Air Force, tabled in both houses of Parliament on Wednesday, Israel Aerospace Industries gained an undue benefit of ₹3.16 crore as it supplied the five contracted UAV engines at more than three times the market price.

The CAG said that the Indian Air Force (IAF) concluded a contract in March 2010 with Israel Aerospace Industries (IAI) for supply of five 914 F (certified) UAV Rotax engines at a cost of ₹87.45 lakh per engine.

“Audit however, noted that Aeronautical Development Establishment (ADE), a Defence Research and Development Organisation (DRDO) Lab in April 2012 had procured the same variant of Rotax engine at ₹24.30 lakh per engine. Also, the average price of this engine in the international market ranged between ₹21 lakh and ₹25 lakh,” the CAG noted.

“As a result, the vendor gained an undue benefit of ₹3.16 crore as it supplied the five contracted UAV engines at more than three times the market price or the price offered to the DRDO unit,” the auditor found.

Audit also noted that the vendor resorted to mis-labelling and supplied uncertified engines to IAF instead of the contracted certified engines. There were many reported accidents involving these uncertified engines, including loss of one UAV in a flying accident.

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Taking a stern view of this situation, the CAG recommended an investigation into the matter and fixing of responsibility for wrongful supply and acceptance of mis-labelled engines by IAF.

The CAG also found lacunae in the upgradation of Medium Lift Mi-17 Helicopters proposed in 2002. This was expected to overcome the operational limitation of these helicopters but could not be achieved even after 18 years. As a result, these helicopters were flying with limited capability, thus compromising operational preparedness during these years.

According to the CAG, the Defence Ministry due to poor planning and indecision at various stages of procurement took 15 years to enter (January 2017) into the upgradation contract of 90 Mi-17 helicopters with an Israeli company.

“The contracted delivery of these upgraded helicopters was to start from July 2018 and be completed by 2024. Audit however, noted that after upgradation, 56 of these helicopters would be left with less than two years of life and would be phased out by 2024,” the CAG noted.

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In another report on Defence Services, the CAG that the Indian Navy’s auxiliary vessel strength was not increasing commensurately with the increase in combat fleet and was, in fact, declining. The CAG’s Audit Report on Defence Services, Navy & Coast Guard, was also presented in Parliament on Wednesday.

Auxiliary vessels are designed to operate in support of combatant ships and other naval operations. Auxiliaries are not primary combatants, although they may have some limited combat capacity, usually of a self-defence nature. Auxiliary vessels are extremely important for the optimal functioning of the combat vessels of Indian Navy.

CAG said, “Indian Navy’s auxiliary vessel strength was not increasing commensurately with the increase in combat fleet. In fact, it was declining. The planned targets for acquisition of auxiliary vessels could not be achieved due to inordinate delays in the acquisition process; specifically, non-adherence to the prescribed timelines in conclusion of contracts. This was principally on account of lack of expertise of Defence Public Sector Undertakings (DPSUs) and non-assessment of capability of shipyards,” the CAG report said.

Commenting on the delays in procurement of a Landing Platform Dock (LPD), the CAG said, “LPD is a warfare ship that is used to transport troops, defence equipment, helicopters and vessels into a war zone by sea. The existing capability of LPDs was found to be inadequate to meet the requirements of amphibious/ expeditionary operations. Indian Navy, therefore, decided to acquire this vital warfare ship in October 2010 at a cost of ₹16,000 crore. However, even after a lapse of nine years, the contract has not been concluded. This was due to failure to fix a specified time frame for obtaining a Corporate Debt Restructuring exit certificate by one of the participating firms.”

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