The CAG report says the Indian Air Force never tested the AgustaWestland helicopter AW-101. The CAG report says the Indian Air Force never tested the AgustaWestland helicopter AW-101.

The UPA government is smarting from a stinging report by the CAG on the AgustaWestland VVIP helicopter deal that says the Ministry of Defence ( MoD ) had set a base price for the helicopters higher than what the company itself wanted, that it deviated from standard procedures on many occasions and revised the specifications of the helicopter so that at the end there was just one seller - AgustaWestland.The difference between the MoD-set base price and the price quoted by the Italian company was almost Rs 1,000 crore. The deal was finally at Rs 3,727 crore.

The report, by Vinod Rai when he was Comptroller and Auditor-General (CAG), was tabled in Parliament on Tuesday, during the tenure of his successor as CAG chief, Shashi Kant Sharma, who was director-general for acquisitions in the MoD as well as joint secretary, air, and later defence secretary.





While the report is silent on why there was a difference between the prices, the Opposition has sensed that it has ammunition in the form of a scam of nearly Rs 1,000 crore to turn the heat up on the UPA in Parliament.The CAG has stated in its report, tabled in Parliament on Tuesday, that the benchmark cost of Rs 4,871.5 crore for the 12 helicopters was unreasonably high as compared to the Rs 3,966 crore quoted by AgustaWestland. "Our scrutiny of records revealed that benchmarking of price was not done on a realistic basis," the report says.The apex audit body questioned the decision of the then Air Chief, Fali Major, to hold the trials of helicopters by the two contenders for the deal abroad and said the decision "lacked justification". The report also mentions Defence Minister A.K. Antony questioning the rationale of conducting field evaluation trials at vendor-specific locations abroad and asks why permission was granted for trials to be held abroad.The CAG report says the Indian Air Force never tested the AgustaWestland helicopter AW-101 that it would agree to buy. Instead, field trials of AgustaWestland's bid were conducted on representative helicopters Merlin MK-3A and Civ-01 and on a mock-up of the passenger cabin, and never on the actual helicopter, the CAG said. The auditor says current CAG Shashikant Sharma, who was a senior official in the MoD at the time, was party to the changes in specification that ultimately favoured AgustaWestland. "Several instances have been observed where the Defence Ministry deviated from the 2006 Defence Procurement Procedure and the tender for the deal issued in Sept. 2006," the report stated.The CAG blamed the MoD and Air Force for causing an inordinate delay in the acquisition process and also limiting the process to only one contender, which eventually favoured AgustaWestland. "The qualitative requirements for the VVIP helicopters were revised by the ministry and IAF, leading to restricted competition in the tender process and resulting ultimately in a single-vendor situation," the CAG observed. The CAG criticised the procurement of four additional helicopters in the deal for Rs 1,240 crore as avoidable and said the assessed requirement was not commensurate with the low utilisation levels of existing helicopters providing transportation to VVIPs.While the CBI has been probing alleged corruption in the AgustaWestland deal, the CAG has also raised doubts about the role of the MoD and Air Force in the Rs 3,727-crore deal. The CBI is also investigating the role of former Air Chief S.P. Tyagi.AgustaWestland is an arm of Italian defence firm Finmeccanica . Indian investigators began the probe after Italian probe agencies began probing top Finmeccanica and AgustaWestland executives for their role in the deal. According to the CAG report, the IAF had told the ministry in 2004 that a service ceiling of 6,000 metres was an inescapable operational necessity as many areas in the north and north-eastern regions of the country would be accessible only by a helicopter with a service ceiling of 6,000 metres.The CAG report on the Agusta-Westland deal says Defence Minister A.K. Antony had questioned the IAF's decision to hold overseas trials for the VVIP choppers. The CAG says Antony agreed to trials at foreign bases only after an assurance by the IAF that the evaluation team was fully competent to carry out the task assigned to it. "What is the guarantee that fidelity and credibility of these trials will remain above board when they do not take place in the country?" the report quotes Antony as having asked in a note.