COMMENT

‘Coffins’ in NDA Coalition Cupboard

A contract was concluded in August 1999 with Buitron and Baize, USA for 500 aluminium caskets and 3000 body bags at a total cost of US $ 1.5 million equivalent to Rs. 6.55 crore. Even though this was not a complex item, the bid was obtained only from one firm without considering the possibility of indigenous and other sources. While the vendor name and the specifications of the casket were obtained earlier in 1994 from the Commander of the Indian forces deployed at Somalia, the price per casket could be negotiated only to US $ 2,500 equivalent to Rs. 1.09 lakh as against the US $ 172 reported by the Commander.

Despite this being a new purchase, no acceptance test and evaluation was carried out. There was also no indication either in the record of the minutes of the Price Negotiating Committee (PNC) or scrutiny in the Ministry that the reasonableness of the cost with reference to the material used had been conducted. The procurement was expedited in view of the urgent need to airlift bodies from the Kargil sector.

Audit scrutiny revealed that :

(a) In December 1999, the firm requested for an amendment to the contract for increasing the weight of the casket from 18 Kg to 55 Kg. While the Government was still deliberating on the request (March 2000) it supplied 150 caskets towards which a 90 per cent payment of US $ 337,500 equivalent to Rs. 1.47 crore was released. The entire lot of caskets was subsequently rejected during inspection on grounds of being overweight and welded rather than die pressed. These had been kept in stock as of June 2001.

(b) The supplier had indicated that 75 percent of cost was towards the material used (aeronautical grade aluminium). The price paid would convert to a rate of Rs. 45.31 lakh per tonnes of aluminium which is at least 10 times more than the rate being paid presently by Hindustan Aeronautical Limited for importing the highest grade aluminium. Furthermore, as per the price bulletin brought out by the London Metal Exchange, the price of High Grade Aluminium on 9 August 1999 was US $ 1440 per tonne equivalent to Rs. 63,360. It is obvious that the rate quoted by the firm was highly inflated.

The transaction achieved little, other than to benefit the supplier. In response, the Ministry intimated (August 2001) that after the caskets supplied were found to be too heavy the contract was cancelled, performance bond furnished by the vendor was encashed and decision taken not to pay the balance 10% of the cost of these stores.