CAG raised objections to flaws in military intelligence contract

Vinaya Deshpande.

The Indian Army paid hundreds of crores for software used to identify enemy troop locations and military assets, even though the Comptroller and Auditor General (CAG) said it was entitled to them for free, documents available with The Hindu reveal.

In its 2001 report, CAG raised objections to Rs. 38-crore contract given to Indian firm Rolta in 1996 for image analysis equipment, which is used by the Directorate of Military Intelligence to scan raw images gathered by satellites and unmanned aerial reconnaissance vehicles. It pointed out that the Army paid Rolta for software upgrades as part of a maintenance contract even though it was contractually obliged to provide them.

Earlier this month, The Hindu revealed that the terms of contracts signed post-2008 to Rolta had been controversially manipulated to allow it to cease supplying upgrades for key software — and that the Army was poised to place another Rs. 165-crore contract in spite of the company’s failure to meet its past commitments.

Union Defence Minister A.K. Antony ordered an investigation into the contracts, but there is no word on when its findings will become available.

Contradictory claims

K. Subramaniam, Director of Audit for Defence Services at CAG, wrote to the Ministry of Defence in April, 2005, stating that it had made contradictory claims about its acquisitions from Rolta. Mr Subramaniam’s letter said that the Ministry should not have paid for software upgrades while procuring equipment from Rolta, as it was already contract-bound to provide the latest versions available.

Mr. Subramaniam observed that while the Ministry of Defence “on the one hand stated that updates and upgradation should not be mixed up,” it had made precisely the opposite argument to the Parliament’s Public Accounts Committee. He wrote that the Ministry’s “explanations contradict each other, as all software updates/upgradation were to be supplied at no extra cost.”

In his letter, Mr. Subramaniam also asked if “any advance technical evaluation was done to determine the new functionalities that will become available after upgradation and the reasonableness of the cost of such upgradation.”

For reasons that are unclear, the Ministry of Defence never responded to these questions. Between 1996 and 2008, the Army awarded 12 contracts worth approximately Rs. 500 crore and maintenance contracts worth more than Rs. 200 crore to Rolta.

The CAG raised objections in 2001 about the purchase of software updates for digital photogrammetry systems back in 1996, in the course of a thorough review of defence acquisitions related to the Kargil war. The Ministry of Defence responded to the objections in 2004. More queries were raised by the Director o Audit, Defence Services about a deal signed with Rolta for image-interpretation equipment and its maintenance, but the Ministry has not responded to them or six years now.

-via The Hindu

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