P-8I aircraft (File photo)

NEW DELHI: The CAG has punched several holes in the $2.1 billion deal for eight American Poseidon-8I maritime patrol aircraft signed by the UPA regime in January, 2009, holding that the Boeing-manufactured planes were wrongly declared cheaper than their European competitor, amid the ongoing slugfest between BJP and Congress over the Rafale fighter deal inked by the NDA government.

The CAG may not have yet finalised its audit of the Rs 59,000 crore contract for 36 French Rafale fighters inked in September 2016, but its latest report tabled in Parliament on Tuesday tore apart the P-8I deal on several counts. They range from Boeing ’s higher price and shoddy discharge of offsets to the aircraft’s limited radar coverage and “partially fulfilled” anti-submarine warfare (ASW) capabilities in the absence of no contract being inked for Mark-82 bombs.

While this may give some ammunition to BJP to attack Congress, the fact also remains the NDA government had inked another $1.1 billion deal for four more long-range P-8Is in July 2016 after the first eight were inducted by the Navy in 2013-2015.

The Navy, in fact, is so gung-ho about the P-8Is that it has pitched for another dozen such aircraft, which are packed with sensors and armed with Harpoon Block-II missiles, MK-54 lightweight torpedoes, rockets and depth charges, to detect, track and destroy enemy submarines in the entire Indian Ocean Region

But the CAG report blames the UPA government’s defence ministry (MoD) for “incorrectly” judging P-8I as the L-1 (lowest bidder) over the A-319 aircraft fielded by the EADS (European Aeronautic Defence and Space Company) CASA Spain.

“While evaluating the bids for conclusion of contract, the MoD enhanced the financial bid of EADS to cater for 20 years of product support (by extrapolating its figures), while ignoring this element in respect of Boeing,” it said.

The Boeing bid was for Rs 8,700 crore in November 2007, while EADS had quoted Rs 7,776 crore, with the latter also including the cost of product support for two years. The MoD’s contract negotiations committee (CNC) enhanced the EADS bid to Rs 8,712 crore by including product support for another 18 years.

But the CNC did not do the same for Boeing, which had held it would provide the requisite 20 years of product support under a separate contract. “The delivered P-8I aircraft did not have product support, post expiry of warranty, until June 2017 when the Navy concluded an interim support agreement at a cost of $131 million with Boeing for a period of three years,” said CAG.

Boeing has also not fully met its offset obligations of $641 million (Rs 3,127 crore) till date when they were to be completed by August 2016 under the contract, with the MoD also not imposing any penalties on the aviation major.

India, incidentally, is poised to raise the huge delays in discharge of offsets by US firms like Boeing and Lockheed Martin during the inaugural “two-plus-two” dialogue between defence minister Sitharaman and foreign minister Sushma Swaraj with their American counterparts, Jim Mattis and Mike Pompeo, here on September 6.

