Not a tight ship, submarine project leaked like a sieve

Since sensitive information was left with sub-contractors and consultants from the very beginning, the report does not surprise Indian officials

August 25, 2016 01:22 am | Updated December 04, 2021 10:59 pm IST - NEW DELHI:

Mazagaon Docks Limited is building six Scorpene submarines with technology transfer from DCNS of France.

Mazagaon Docks Limited is building six Scorpene submarines with technology transfer from DCNS of France.

The leak of key documents of the Scorpene submarine project is not too surprising, say officials who were earlier involved in the project valued at over Rs. 20,000 crore. From the very beginning, they had been baffled by the way several sub-contractors and consultants were handling sensitive information of the highly sensitive project.

These officials argue that since all the documents that have emerged in The Australian newspaper are not available with any individual or on a single server in India, they could have come only from a French source. This is exactly what Cameron Stewart, journalist with The Australian , who scooped the leak, told The Hindu in an interview.

From the very early phase, the Scorpene project has been in the eye of controversies. From delay to allegations of kickbacks, the project has now been hit by an unusual data leak. “It can’t get any worse,” a senior Navy source said.

“One of the flaws was that the project was hugely dependent on sub-contractors. It is something that we have been worried about from the very beginning,” says an official involved in the project since the deal was signed in 2005.

“Many sensitive issues, even design documents, were being handled by sub-contractors. [The French company] DCNS had engaged sub-contractors for converting and formatting French design into technically transferable English documents,” he said.

In fact, sources said a few sub-contractors had left the project following differences with DCNS while the Indian contract was under way. One official also recalled that a key official of Thales, one of the French companies involved in the contract, left midway and returned to the project recently. “It could well be any of them,” an official said.

Lingering questions

Insiders speak of yet another aspect of the contract that has resulted in much confusion, significant cost escalation, and probably, the data leak.

The primary contract for the construction of the Scorpene submarines was between the Mumbai-based Mazagon Dock Ltd. (MDL) and the French firm Armaris. “I have been to the DCNS headquarters very early during the project, and saw Armaris operating from a single room there. It was never an independent entity. There was no proper due diligence [to ensure if Armaris was indeed an independent firm, and find ou its relations with DCNS],” an official said.

As the original collaboration was between the MDL and Armaris, DCNS was a sub-contractor. However, later DCNS took over the so-called Armaris entity.

Armaris estimated that over €400 million worth of equipment were to be sourced from various suppliers for building the submarines in Mumbai. Procurement of the so-called Mazagon Dock procured material was also to provide the Mumbai-based shipyard expertise in managing logistics chain for building the next line of submarines indigenously.

However, over the years, all this has unravelled and India is now paying more than double the amount, with very little control over the supplies.

The material was categorised into A, B, and C. Category A items were to be procured from single sources recommended by Armaris, including DCNS, for radar, stabiliser and so on. Category B items were to be procured from a limited number of sources based on limited tendering and procurement. Category C items could be procured from anywhere.

Ultimately, for Category A items, DCNS and other firms quoted almost double the estimates given by Armaris to MDL. A Navy source said Armaris later claimed they made no commitment on prices.

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