CAG raps DRDO lab for not insuring components

The CAG on Thursday rapped the Aeronautical Development Establishment, a DRDO laboratory, for not providing insurance cover while signing a contract to purchase components for Light Combat Aircraft and causing a loss of $2.13 million (Rs 10.63) crore to the government.

Tabling its report on Defence Services in Parliament, CAG noted the “failure of ADE to comply with the extant order for getting insurance cover resulted in a transit loss of stores worth Rs 10.63 crore, for which no insurance claim could be raised.”

The report recommended “the matters needs to be investigated by the Ministry to fix the responsibility for not insuring the stores and thus causing a loss to the government due to negligence on the part of the officials.” CAG had audited a contract signed by ADE to purchase Integrated Flight Control Systems for Light Combat Aircraft (LCA) from BAE System Overseas in September 2004 at a cost of $30.60 million or Rs 140.70 crore.

BAE System was required to deliver the orders by December 2008. The report said, “the consignment containing 15 ship sets, costing $2.13 million or Rs 10.63 crore has not been received by them ADE till October 2010 even though the firm has dispatched them through British Airways in December 2008.”

The efforts to locate the missing consignment by ADE remained unfruitful and meanwhile complete payment was released to the firm by December 2009, the report said.

CAG has said that as per the extant orders, stores costing Rs 2.50 crore or more are required to be insured against loss or damage in transit and the insurance cover is invariably required to be obtained before dispatch of the consignment by the firm or the supplier.