Statement from MoD
Acquisition of AW-101
Choppers for IAF: The Facts
In August 1999, the
IAF which is responsible for carrying out VVIP communication task, proposed the
replacement of Mi-8 VIP helicopters due to severe operational constraints, such
as, inability of Mi-8 to operate at night and in adverse weather, inability to
operate safely at places in elevation beyond 2000 meters etc. IAF felt the need
for the replacement of Mi-8 helicopters as they were completing their total
technical life.
2.
A global RFP was issued in March 2002 to which 4
vendors responded. The Technical Evaluation Committee shortlisted 3 helicopters
and accordingly flight evaluations were conducted. Since, EH-101 of M/s. AgustaWestland was not certified
for an altitude of 6000 meters, it did not participate in the flight
evaluation. The Russian helicopter Mi-172 could not comply with 7 mandatory Operational
Requirements (ORs). After flight
evaluation, EC-225 of M/s. Eurocopter, France was found suitable for
acquisition.
3.
On November 19, 2003 a meeting was taken by Principal
Secretary to PM on this subject. In the
meeting, Principal Secretary observed that his main concern was that the
framing of the mandatory requirements has led us effectively into a single
vendor situation. It was also noted that
PM and President have rarely made visits to places involving flying at an altitude
beyond 4500 meters. In the meeting it
was decided to make the mandatory requirement for operational altitude 4500
meters. The higher flying ceiling of 6000
meters, and a cabinet height of 1.8 meters could be made desirable operational
requirements. It was observed that
with these revisions, several helicopters which otherwise met all requirements
but had been rejected due to the altitude restriction, would now come into the
reckoning.
4.
The meeting was followed by a letter dated 22nd
December, 2003 from the Principal Secretary to PM to the Air Chief, stating
that it was unfortunate that neither PMO nor SPG was consulted while framing
these mandatory requirements. He
suggested that CAS and Defence Secretary may jointly review the matter to draw
up realistic mandatory requirements satisfying operational, security and
convenience requirements of VVIPs and also set in motion a fast track process
for selection and acquisition of the replacement helicopters.
5.
In pursuance of the above directive, the ORs were
deliberated at length between IAF, NSA, SPG/PMO and MoD between March, 2005 to
September, 2006 and the above indicated changes were incorporated.
6.
The required numbers of helicopters for the entourage
of VVIP was further deliberated between Air HQ, MoD and SPG/PMO. The quantity
of helicopters proposed for procurement was revised from 8 to 12 helicopters by
adding 4 helicopters in non-VIP configuration for security reasons.
7.
The AON for the procurement of 12 helicopters was
accorded by the Defence Acquisition Council under ‘Buy’ category with 30
percent offsets on 3rd January, 2006. RFP was issued to 6 vendors on 27th
September, 2006.
8.
Three vendors, namely M/s Sikorsky, USA (S-92
helicopter), M/s AgustaWestland, UK (EH-101
helicopter) and M/s. Rosoboronexport, Russia (Mi-172 helicopter) responded to
the RFP.
9.
M/s. Rosoboronexport did not
submit earnest money deposit and the Integrity Pact, along with their Technical
and Commercial proposals. It had been made clear to M/s Rosoboronexport in
February 2007 that this was a global tender and hence every contractual clause
would be the same for all vendors. As no
Integrity Pact and Earnest Money Deposit were received from M/s
Rosoboronexport, their Techno-Commercial offer was not accepted.
10.
The Technical Evaluation Committee evaluated
the technical proposals of M/s Sikorsky and M/s AgustaWestland and recommended
field evaluation trials of their helicopters.
11.
The Field Evaluation Trial of M/s
AgustaWestland was carried out in UK and trials of M/s Sikorsky were carried
out in USA from 16 January 2008 to February 2008. The Field Evaluation Trial team submitted its
report in April 2008 and recommended AW-101 helicopter of M/s AgustaWestland
for induction into Service. SPG was also
part of the Field Evaluation Trial team.
12.
The Staff Evaluation Report of Air HQ
concluded that the S-92 helicopter was non-compliant with respect to four SQRs
for the VVIP helicopter (Missile Approach Warning System, Service Ceiling of
4.5 km, Drift Down Altitude and Hover Out of Ground Effect). The Staff Evaluation Report assessed the
VVIP helicopter AW-101 to be fully compliant with all SQRs.
13.
Technical Oversight Committee constituted on
6 August 2008 found that the field evaluation trials, compliance to SQRs and
selection of vendors were done according to the prescribed procedures.
14.
Contract Negotiation Committee (CNC) was
constituted and it carried out its discussions with the vendor between 19
September 2008 and 21 January, 2009.
While the CNC was progressing its discussions, Air HQ, recommended
inclusion of Traffic Collusion Avoidance System (TCAS-II) and Enhanced Ground
Proximity Warning System (EGPWS) for all 12 helicopters and SPG/PMO recommended
inclusion of Medevac System for 8 VVIP helicopters. These additional equipment were considered to
be essential for safe and effective operation of the helicopter in VVIP
transportation role. SPG also agreed to
these requirements. The CNC, thereafter,
recommended conclusion of the contract at a negotiated price of EURO 556.262
million.
15.
On completion of CNC the proposal was
submitted for approval of the Cabinet Committee on Security (CCS). The CCS considered the proposal in its
meeting held on 18 January 2010 and approved the proposal.
16.
In pursuance of the decision of the CCS the
Ministry of Defence concluded a contract for the supply of 12 AW-101 VVIP
helicopter with M/s AgustaWestland, UK on 08 February, 2010.
17.
The procurement case was, thus, progressed in
accordance with the established procurement procedure in a transparent manner
with all stages of procurement being followed meticulously. Security aspects as required by SPG/PMO and
IAF were fully taken into consideration. The role of PMO which began in 2003 was to ensure
that security, communication and other requirements of VVIP security were taken
care of and the helicopter for VVIP use is selected on the basis of broad based
QRs.
18.
Contract signed with M/s.
AgustaWestland includes specific contractual provisions against bribery and the
use of undue influence. Article 22 of
the contract deals with penalty for use of undue influence. This clause entitles the ‘Buyer’ to cancel
the contract with the ‘Seller’ and recover from him the amount of any loss
arising from such cancellation. Article
23 of the contract dealing with agents and agency commission requires the ‘Seller’
to confirm and declare that he has not engaged any individual or firm, whether
Indian or foreign, whosoever, to intercede, facilitate or in any way to
recommend to the Government of India or any of its functionaries, whether
officially or unofficially, to award of the contract to the ‘Seller’ nor has any
amount been paid, promised or intended to be paid to any such individual or firm
in respect of any such intercession, facilitation or recommendation. This clause further entitles the ‘Buyer’ to
consider cancellation of the contract without any entitlement or compensation
to the ‘Seller’ who shall be liable to refund all payments made by the ‘Buyer’
in terms of the contract along with interest.
19.
In addition to the above
contractual provisions, M/s. Agusta Westland has signed an Integrity Pact with
the Government. The validity of this
Integrity Pact is from the date of its signing and extends up to five years or
the complete execution of the contract whichever is later. Under the Integrity Pact, the bidder commits
himself to take all measures necessary to prevent corrupt practices, unfair
means and illegal activities during any stage of the bid or during any
pre-contract or post-contract stage. Any
breach of the provisions of the Integrity Pact entitles the ‘Buyer’ to take
actions against the ‘Seller’ which includes forfeiture of the earnest money,
performance bond, cancellation of the contract without giving any compensation,
to recover all the sums already paid with interest, to cancel any other
contracts with the bidder and to debar the bidder from entering into any bid
from the Government for a minimum period of five years
which may be extended, etc.
20.
As regards, the allegations of unethical dealings in
helicopter procurement case including involvement of middleman and payment of
bribes etc., the first report in the media appeared in February 2012.
21.
Immediately (the next day after the news item
appeared in the papers) DG(Acq) in MoD sought a factual report in the matter
from our Embassy in Rome.
22.
MoD also noted the
report in the ‘Hindu’ of 28.2.2012 that, quoting Finmeccanica, states that its
subsidiary AgustaWestland is not involved in “any irregularity in the deal”.
23.
Subsequently, MoD received more than one communication
from M/s AgustaWestland confirming that the statements in the press are
“completely unfounded and have been
issued with malicious intent” and that “no commissions whatsoever were paid” in
the case.
24.
In April 2012, MoD wrote again to our Embassy
in Rome seeking an update.
25.
A detailed report on the status of the case
was received from our Embassy in Rome in May 2012. The report made it clear that there are
inherent difficulties in obtaining formal details of the case given the
independence of the judiciary from the executive in Italy.
26.
MoD in July 2012 wrote to our embassy in Rome
stating that it could approach the
concerned judicial authorities directly.
A formal request was indeed made by the embassy to the Naples
prosecutors office on July 16, 2012.
27.
Since factual information was difficult to
arrive at, Defence Secretary wrote to Secretary (West), MEA, in October 2012
reiterating the importance of the need to get information from the Italian
authorities so that MoD could take further necessary action in this regard.
28.
MEA’s response again was that the matter had
been taken up with the Italian side and the position conveyed for the need for
‘reliable information’, for “news reports alone could not be the basis for the
Ministry of Defence to make any preliminary determination”.
29.
In October 2012 Defence Secretary also wrote
to Secretary (West) to take up the matter with the Government of U.K. in view of the alleged involvement of a
British citizen and the fact that the contract was signed with M/s AgustaWestland,
U.K.
30.
In November 2012, Secretary (West), MEA,
replied to Defence Secretary stating that ‘the U.K. authorities were waiting
for the results of the Italian investigation in order to ascertain whether
there are further actions to take’.
31.
Earlier, in connection with the letter
received from one
Mr. Edmund Allen of Ganton Limited, USA, MoD had written on 19.4.12 to CBI and Enforcement Directorate for necessary action, as Abhishek Verma and others were also being named in various media reports in connection with several defence deals. Later, Enforcement Directorate informed MoD in July 2012 that they were enquiring into the allegations.
Mr. Edmund Allen of Ganton Limited, USA, MoD had written on 19.4.12 to CBI and Enforcement Directorate for necessary action, as Abhishek Verma and others were also being named in various media reports in connection with several defence deals. Later, Enforcement Directorate informed MoD in July 2012 that they were enquiring into the allegations.
32.
In November 2012, a letter was received in
MoD from the Director, Income Tax (Investigations) regarding allegations
against Indians possibly involved in the deal as middlemen and seeking
information about them. The current
status of the case was conveyed to the income tax authorities in January
2013; in return, MoD asked Income Tax to share with it any ‘credible
information’.
33.
Throughout the process of this case, MoD has
been prompt to take action on newspaper reports, and to seek factual
information from the concerned authorities.
Since foreign governments are involved, MoD has consistently pursued the
matter though MEA.
34.
As soon as information was available of one
concrete step having been taken by the concerned foreign investigative
authorities, namely, the arrest of Mr. Giuseppe Orsi, CEO, Finmeccanica on Feb
12, 2013. MoD handed over the case to CBI for investigation and put on hold
all further payments to Agusta Westland.
Besides this, the Indian Embassy has been requested to provide the
factual position and any other relevant information. The CEO of M/s AgustaWestland has also been
asked to categorically state the clear position in view of the current
developments indicating specifically if any financial transaction has taken
place with any Indian individual / entity which would be violative of the
Integrity Pact or any other terms and conditions of the contract.
35.
As already mentioned above, both the contract
and integrity pact signed with M/s AgustaWestland, U.K., contain specific
provisions by which strict action including cancellation of contract,
recovery of payment, blacklisting and penal action can be taken against the
vendors. Government is determined to
take all possible legal and administrative action against the guilty parties
and accordingly has ordered a thorough probe by CBI.
Sitanshu Kar/
Kk Singh
ReplyDelete11:05
Explanations, C of I, CBI, Judicial probe will follow and after 10-15 yrs, it will be revealed that due lack of evidence the case is dismissed
Remember Bofors?
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