CAG: Delivery schedule in 2016 Rafale contract better by one month

 New Delhi:The Comptroller and Auditor General (CAG) has found that there was an improvement of one month in the delivery schedule of the 2016 contract for 36 Rafale fighter jets in flyaway condition than the one negotiated by the UPA government.

The CAG report on Capital Acquisition in Indian Air Force tabled in Parliament on Wednesday said one of the objectives of the Indian Negotiation Team (INT), which was derived from the Indo-French Joint Statement, was to expedite the delivery of the aircraft and weapons compared to the delivery period offered by Dassault Aviation in 2007.

According to the original delivery schedule offered by Dassault in 2007, first 18 flyaway aircraft were to be delivered between 37 and 50 months of the signing of the contract. The next 18, which were to be license produced in HAL, were to be delivered from 49th to 72nd months of the signing of the contract.

During negotiations, INT conveyed to the French side that it expected the delivery of the first batch of 18 Rafale aircraft in 24 months after the signing of the Inter Government Agreement (IGA); and next batch of 18 aircraft in 36 months after the signing of the IGA.

However, the delivery schedule finally offered by the French side was 18 aircraft by 36 to 53 months after the signing of the IGA and the remaining 18 to be delivered by 67 months of the signing of IGA. This was better than the delivery schedule of 2007 by five months.

"However, Audit noted that as against the delivery period of 72 months in the earlier offer, the contracted delivery schedule for 36 Rafale aircraft was actually 71 months. The Indian Specific Enhancements (ISE) on the first aircraft would be completed by T0 plus 63 months and integration on the next 35 aircraft would be completed in eight months. Thus, there was an improvement of one month in the delivery schedule of the 2016 contract," the CAG report said.

Further, it said, audit noted that INT had apprehensions about the achievement of even this delivery schedule, because at the timing of the signing of the contract Dassault had an order backlog of 83 aircraft.

"Considering its production rate of 11 aircraft a year, clearing this backlog itself would take more than seven years. Ministry in its response stated that the Project was currently on schedule and the progress was being closely monitored by the resident Project Management Team and also through the Inter-Governmental Bilateral High Level Group," it said.

On commercial advantage of Non-firm and Fixed Price bids, the CAG said any savings which accrues would be due to the difference between the escalation cap and actual escalation rates, between 2016 and 2021.

These would have also been available in the 2007 commercial offer depending upon escalation rates but after the mid delivery period as calculated by a sub-committee of the Contract Negotiation Committee in 2011-12.