72% of Army Emergency Procurement Contracts Delayed: CAG

New Delhi: After Chief of Defence Staff Gen. Anil Chauhan flagged delays, the Comptroller and Auditor General (CAG) has reported that 72 per cent of contracts issued by the Indian Army under emergency procurement were delayed.

The delays, the CAG said, defeated the objective of special waivers granted by the defence ministry under emergency procurement provisions. The audit also found that Army Headquarters lacked clarity on how delays under the Fast Track Procedure (FTP) were to be reported to the Defence Acquisition Council (DAC), chaired by defence minister Rajnath Singh, despite this being a mandatory requirement. This, the CAG said, eliminated any scope for monitoring and corrective action by the DAC.

Of the contracts concluded by Army Headquarters between November 2020 and August 2021 under the FTP, the CAG examined 69 per cent, which accounted for 83 per cent of the total value. The findings were detailed in the report Union Government (Defence Services – Army) for the year ended March 2023, tabled in Parliament on Thursday.

“While the primary focus of the special waivers was to ensure speedy procurement, in 72 per cent of the contracts examined, items were not delivered within the stipulated timelines,” the CAG noted. It added that only 28 per cent of the contracts were completed within one year.

In 55 per cent of cases, deliveries were completed with delays ranging from one month to 18 months. In the remaining 17 per cent, delivery had not been completed even up to December 2023, although, as per the extended timelines, all supplies should have been completed by August 2022.

The emergency procurement approvals were granted by the DAC in July 2020 to meet urgent operational requirements of the Army, with additional waivers to FTP provisions for a specified period.

The report comes amid renewed debate on Aatmanirbharta in defence production. Last month, controversy erupted after Gen. Chauhan said some companies had misrepresented indigenous content and that firms awarded contracts under emergency powers had failed to deliver on time. The defence ministry had earlier empowered the Army, Navy and Air Force to undertake emergency procurement of arms and ammunition amid heightened tensions with China.

The CAG rejected the defence ministry’s explanation that delays were due to first-time procurement from the domestic defence industry. It said this reasoning was inconsistent with the Defence Acquisition Procedure (DAP) 2020, which stipulates that FTP procurement should be limited to equipment available within the prescribed time frame. Non-adherence to delivery schedules, the CAG concluded, undermined the very purpose of the waivers granted by the DAC.