Indian government auditor slams AW101 acquisition

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India's comptroller and auditor general (CAG) has slammed the acquisition of 12 VVIP AgustaWestland AW101 helicopters for the Indian air force in its probe into the deal.

According to the report, "the entire process of acquisition of VVIP helicopters right from framing of [the] Services Qualitative Requirements (SQRs) to the conclusion of contract deviated from laid down procedures.

"The entire process of acquisition thus poses serious questions on accountability and lack of transparency in the finalisation of the contract, which need to be addressed."

The report is likely to remove all hope of an early resolution to the matter.

India's Central Bureau of Investigation (CBI) has already registered a case against 13 people and six firms with regard to the contract. A CBI investigation is under way and the contract has been put on hold. India has already paid about 30% of the €560 million ($737 million) contract.

AgustaWestland was quick to issue a letter refuting the auditor's allegations.

It says that change of the air force's requirements, stipulating a cabin height of 1.8m, was met by other helicopters and did not lead to the "ejection of any competing aircraft" from the contest. Focus was also placed on a change of the aircraft's service ceiling, dropping it to 4,500m (14,800ft) from 6,000m in an earlier request for proposals (RFP). AgustaWestland points to letters it sent to the Indian air force in 2005 stating that the AW101 could be modified to operate at the higher altitude.

According to the CAG report, these changes "resulted in an operational disadvantage to the [air force]".

The decision to make the minimum cabin height at 1.8m "essential" rather than "desirable" - from the 1.45m originally stipulated - reduced competition, resulting in a single vendor situation, it says. The report also questions the order for four additional helicopters, in view of the low utilisation rate - approximately 29% from 1999-2010 - of the existing fleet of VIP Mil Mi-8 helicopters.

Uncertainty over the contract has led to AgustaWestland slowing down work on the order at its Yeovil, UK facility. Three AW101s are ready for delivery with the remainder of the order in an advanced state of completion. However, AgustaWestland remains hopeful these aircraft will eventually be handed over. Nonetheless, one of the completed AW101s, repainted in AgustaWestland livery, was transported to the recent MAKS air show in Russia.

The Indian air force is already believed to be having trouble in keeping its fleet of three AW101s - delivered between November 2012 and February 2013 - airworthy.

India had placed an order for 12 AW101 helicopters, eight in VIP configuration and four in non-VIP configuration. Alleged violations with respect to offset obligations as per the defence procurement procedure (DPP) were also mentioned in the report.

The controversy means that the air force's Air HQ Communication Squadron, responsible for providing air transportation - rotary and fixed wing - to the country's president, vice-president and prime minister, will have to continue flying with its fleet of ageing eight Mi-8s, six of which were obtained in 1988.