The Comptroller and Auditor General (CAG) has recommended an investigation into the Indian Air Force (IAF)’s purchase of five Unmanned Aerial Vehicle (UAV) engines in 2010, noting that the same engines were purchased by a Defence Research and Development Organisation (DRDO) laboratory at almost one-third the price two years later, resulting in an undue gain for the vendor of ₹3.16 crore. The CAG recommended “fixing of responsibility for wrongful supply and acceptance of mis-labelled engines by the IAF.”
“Israel Aircraft Industries (IAI) Ltd. gained an undue benefit of ₹3.16 crore as it supplied five UAV engines at more than three times the market price. The vendor supplied uncertified engines while the contract was concluded for certified engines,” the CAG said in a report tabled in Parliament on Wednesday. “There were many reported accidents involving these uncertified engines including loss of one UAV in a flying accident,” the report said.
In March 2010, Air headquarters concluded a contract with IAI of Israel for the supply of accessories and spares of Heron UAV, at a cost of $136.43 mn (₹9.07 crore), which included supply of five Rotax 914 F3 engines to be fitted on the Herons. The Rotax engines used in Herons are manufactured by an Austrian company consisting of 914F, which is certified engine while, 914UL is an uncertified engine.
The average price of Rotax engines in the international market then was around ₹21 lakh to ₹25 lakh. The audit noted that Aeronautical Development Establishment (ADE), a DRDO lab, had procured the same variant of Rotax 914F in April 2012.
The ADE had procured 914F engines at ₹24.30 lakh each from Verman Aviation, an authorised Indian supplier of Rotax. However, IAI supplied the 914UL engine to IAF in 2010 for ₹87.45 lakh each — “more than three times the price paid by DRDO or the market price.”
The contract stipulated that the engine to be supplied was of specifications 914F3 which is certified by the European Aviation Standard Agency. However, documents submitted to the CAG pertaining to the delivery of one of the five engines show that the vendor had supplied uncertified engine 914UL.
A team of IAF and IAI representatives carried out the Joint Receipt Inspection (JRI) of the consignment and accepted the engines in January 2012, but they could not detect the fact that the delivery was not in accordance with the contract as they did not have a copy of the contract while carrying out the inspection.
Further, according to the contract the engines were to be delivered at an Equipment Depot (ED) of IAF “which was the ultimate consignee” but records showed that one of the engines was delivered at an Air Force station and not the designated ED, the CAG noted.