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CAG finds flaws in Defence Ministry's benchmark price estimates

IANS  |  New Delhi 

The General (CAG) has found flaws in Defence Ministry's benchmark price estimates for the equipment it proposes to buy as in four deals, including the contract for 36 jets, the estimated cost turned out to unrealistically lower than the actual bid.

"Repeated off-the-mark benchmarking reveals lack of costing expertise in the defence acquisition system," said in its latest report on 11 recent acquisitions by the (IAF).

The noted that variation in benchmark price estimated by the (MoD) and the actual price offered for 126 jets being negotiated by the was 47 per cent.

In the contract for 36 Rafales finalised by the Modi government, the difference between the benchmark and real price was 56.67 per cent. The report has concealed the actual amount.

In the case of purchase of 15 heavy-lift helicopters, MoD had estimated a benchmark price of Rs 4,119.72 crore but the bid price turned out to be Rs 6,473.91 crore.

For procurement of five full mission simulators which was a repeat order, the MoD had estimated the cost to be $44.48 million. But the actual bid price was $79.61 million.

The noted that mostly price of last purchases were relied on to make an estimate. "These last purchases were very old and the products were also not identical," said the report.

The noted that much of the costing, price estimation and price comparison exercise are generally done by the air headquarters with or without the help of the in the Ministry of Defence, said the report.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, February 13 2019. 18:24 IST