Vigilance heat forced BEL to drastically cut tender size for software in IAF's Rs 7,900-cr IACCS project, but contract went to tainted US firm

New Delhi: After Firstpost expose on glaring irregularities in the civil construction of Indian Air Force's (IAF) highly sensitive Integrated Air Command and Control System (IACCS) project, a former manager of a defence public sector undertaking and a whistleblower has surfaced alleging corruption in the procurement of software for automated command and control system for air defence operations.

Bharat Electronics Limited (BEL), a defence public sector undertaking is implementing the Rs 7, 900 crore project, which was initiated during the UPA regime.

The former manager of BEL, Bhupesh Sharma in a letter to the Ministry of Defence and the Central Vigilance Commission (CVC) on 29 June 2019 has said that top management of the defence public sector undertaking, quietly buried the findings of a 2016 internal inquiry, which indicted six BEL officers for alleged corruption. Sharma alleged that despite a reminder from the Chief Vigilance Officer (CVO) of the company to the Chairman and Managing Director (CMD) of BEL in April 2018, no punitive action was taken against the accused officers.

Sharma, then part of the procurement committee, had blown the whistle over alleged manipulation in the procurement of Data Distribution Service (DDS) software to favour an American company. Sharma alleging victimisation said accused officers indicted by vigilance were rewarded by BEL while he was harassed for exposing deep-rooted corruption.

 Vigilance heat forced BEL to drastically cut tender size for software in IAFs Rs 7,900-cr IACCS project, but contract went to tainted US firm

Representational image of an air defence system. Reuters

“Even after CVC intervention and reminders by CVO to CMD (Chairman and Managing Director) no action was taken against the erring officers. I was harassed and troubled to the extent that I was forced to resign. Instead of black listing the vendor M/S RTI USA, the order was finally placed on the vendor. The vigilance officer who did the enquiry in this case has also been given punishment posting to a remote unit of BEL. The message given by the top management was clear that anyone who speaks against corruption would be brutally suppressed and those who play along with the persons at the top having vested interests would be rewarded,” Sharma, who claims to have been decorated with innovation award, excellence awards and Raksha Mantri award for IACCS project , wrote to the CVC.

The documents also reveal that efforts were made by BEL officers to conceal the alleged irregularities by removing the files and purchase order. Even the investigators were denied full access to e-mails of concerned purchase department.

A detailed questionnaire sent to the Chief Vigilance Commissioner Sharad Kumar, Ministry of Defence and BEL CMD MV Gowtama remained unanswered.

Unravelling of software scam

Firstpost has reviewed the documents submitted to the Ministry of Defence and the CVC, which clearly shows that the procurement committee had engineered unwarranted specification in the procurement of DDS software to allegedly disqualify one of the two vendors in the race for the contract.

The two companies, M/S RTI, USA and M/S Prismtech, UK represented by M/S Mistral Solutions and M/S RTTS respectively were invited by the BEL for the procurement of DDS software. The vigilance report said procurement team had pre-decided to give the contract to M/S RTI USA and the entire process of real time demonstration to assess feasibility also known as Proof of Concept (PoC) was merely an eyewash.

Although UK Company had quoted value of the project in the range of about Rs 5 to 10 crore, the quote submitted by American company M/S RTI was about Rs 130 crore. However, since, the BEL had decided to grant the project to M/S RTI, USA through its Indian representative M/S Mistral Solutions, BEL officers inserted a particular specification which caught the eye of vigilance team investigating the case.

“Technical expert in his report has stated that there is a lack of clarity in the PoC evaluation process/criteria which leads to ambiguity and conspiracy. Also technical expert has confirmed that there are irregularities and inconsistencies in framing of specifications and conducting PoC. Scope of PoC for the DDS document does not specify any particular method of demonstrating the PoC and it generally highlights the features to be shown in the PoC. Hence the vendor can select any particular method and demonstrate the features. PoC evaluation criteria and the PoC test document is not uniform for all the vendors," the vigilance report to the CVC said.

System Requirements Specification document signed with the customer by BEL indicates that there are no special specification requirements for the use and configuration of DDS and also the security of the data transferred using DDS. PoC scope does not highlight that the above security implementations should match and confirm to DDS OMG standards. Even though no vendor has a complete implementation of DDS X types still M/S RTI was shown complied during technical bidding regarding para 6.2 of technical specification,” the report further said.

The vigilance report made it clear that specifications mentioned above as ‘para 6.2 technical specs’ were allegedly modified by the procurement committee of BEL to suit American firm. Sharma claims he had opposed such manipulation and turned whistleblower by exposing the wrongdoings in his emails to vigilance and top officials of the BEL.

“I became the whistleblower when ordering of software for the IACCS project was forcibly being ordered on the resultant single tender basis (by manipulating and making the other vendor technically non-complied). I tried my best to stop the ordering by talking to all my seniors in the unit and finally when I was not heard, I wrote to CVO and all the directors of the company including CMD about the corrupt practices being followed in the unit,” Sharma wrote to the CVC.

It is also evident from the vigilance report that the UK firm was deliberately denied security clearance for demonstration though its India representative M/S RTTS was allowed and subsequently disqualified.

“The team (BEL) misinformed M/S Prismtech regarding non-availability of security clearance on 11 May 2016, though a security clearance was taken by Senior Manager DGM (Development & Engineering division of Network Centric System 1) for the period of 9 May-11 May 2016. The contradicting statements of senior executives and D&E engineers in relation to security clearance for M/S Prismtech representative’s leads to suspect that D&E does not want to give the opportunity to M/S Prismtech to demonstrate the features,” the vigilance report said.

Questions have also been raised by the vigilance team over the formation of a technical committee and PoC committee for the procurement. The report observed although the procurement involves a lot of technical parameters related to software and high value of approximately Rs 130 crore, the procurement committee was made with two mechanical engineers, one finance and two electronic engineers. The report slammed BEL further asserting that there were no software professionals in the technical specification team and approval of a procurement team with non-technical members reveals a lax approach of the management as they played a dubious role.

“It appears that D&E engineers (Development & Engineering division) have played a pivotal role in finalizing specifications whereas others merely acted as spectators,” the vigilance report said.

The report has also raised doubt on the assessment process of technical specifications saying that evaluation of features is not the same for both M/S Prismtech and M/S RTI.

It said the PoC which were done by engineers from M/S Mistral Solutions, representative of RTI, USA, did not have relevant past experience to carry out PoC of DDS software and they could not answer anything technically or relevantly. The vigilance team during an interrogation of engineers from Development & Engineering division found that some engineers who were nominated as PoC members were not aware that they were part of an evaluation team.

Some were absent during the assessment, some engineers had relegated the job to their junior executives and no detailed review was done during the conduct of PoC and no senior executives have monitored the progress of PoC though it was such an important activity for the project. The test report of the American firm was also prepared in advance.

“From the test data report of M/S Mistral (representative of M/S RTI USA, it emerges that test data report was pre-prepared by suppliers and merely signed by BEL engineers. During examination of D&E engineers, it is observed that D&E-NCS has started working on evaluation versions of M/S RTI, USA since October 2015 through license agreements. During evaluation many issues came time to time and were resolved. This was probably the reason that PoC with M/S RTI, USA was merely a formality. The PoC conducted by M/S Mistral Solutions has been cleared despite number of irregularities/ inconsistencies,” the vigilance report said exposing the manipulation to favour a particular vendor.

The documents reveal that before the investigators could examine the documents related to alleged corruption, the files were removed by the concerned officers to erase the audit trail.

The vigilance report said, “Documents with respect to change of specifications which is intimated to M/S RTTS (India representative of M/S Prismtech, UK) was not found in the file, not informed to the investigator at any point and the same was concealed by purchase department. There was no documentary proof regarding the intimation of changed specifications to four cases to all the suppliers participated in the bidding. Currently, the purchase requisitions are also deleted in SAP (System Applications and Products) without assigning reasons and Unit Management has not given any reasons till now for the same.”

The vigilance report which was forwarded to the CVC on 24 November 2016, clearly opined that there are procedural violations in the subject case and there appear to be malafide intentions right from the beginning of coming out of consolidated requirements, generating the specifications for this software instead of PP drawings, arriving of PoC conditions, the manner in which PoC was conducted and M/S RTI, USA bid was accepted and M/S Prismtech bid was eliminated.

The vigilance recommended blacklisting of M/S RTI, USA, initiation of disciplinary action against officers involved and including the name of two senior officers in doubtful integrity list.

In defence procurements, the private companies are known to be hiring retired officials to exercise the influence. In this case too, vigilance raised apprehension about alleged manipulation as a former CMD of BEL was on board of Mistral Solutions. The vigilance had recommended a probe by the Central Bureau of Investigation (CBI), however, the matter was never referred to the premier investigative agency.

“It is learnt that M/S RTI’s malafide intention/ involvement with BEL D&E team cannot be underestimated as ex-CMD (BEL) Mr. Ashwini Kumar Datta is working in M/S Mistral Solutions which requires further investigation by the CBI,” the vigilance report said.

In its recommendation, the vigilance also said the finalisation of specifications and scope of PoC should be done by a competent technical committee and any vested interest/doubtful integrity executives should not be part of the panel.

Cover-up by BEL?

The alleged cover-up in the entire irregularities started after the project came under the scanner. The Rs 130 crore tender was scrapped and suddenly BEL realised that they have in house capability to provide that suspected security specifications that was inserted to allegedly favour a particular company.

However, Sharma said, the BEL management did not take any disciplinary action against accused officers, did not include two senior officers in doubtful integrity list and did not blacklist the American firm. In fact, Sharma alleged, a bogus re-tendering process was initiated on the single-vendor basis and this time the DDS software contract without suspected specification was awarded to same firm Mistral Solutions, India representative of RTI, USA at less than Rs 10 crore. The BEL GM, NCS Joydeep Majumdar in a letter to the CVO confirmed the contract to Mistral Solutions while claiming they have saved more than Rs 110 crore.

“Earlier security features were included in the RFQ for DDS software. M/S Mistral Solutions qualified technically. Mistral quoted Rs. 120 Crores, however, the technical committee after study found out that the security solution was available with CRL Bangalore (Central Research Laboratory) and no need to buy from Mistral. A proof of concept was carried out and it was found working with the proposed DDS. Thus, the committee decided to go for the same DDS from Mistral which was purchased earlier for CMS in NCS, SBU which was without security features and hence was valued very low. Also, since the NCS engineers are conversant with this DDS it will obviate learning the new DDS, if chosen otherwise. A fresh Single Tender Enquiry was floated and the expected order price is less than Rs.10 Crore,” GM Majumdar wrote to the CVO on 9 February 2017.

This new found solution to douse the scandal was clearly an afterthought, reveals the documents sent to defence ministry and the CVC. The vigilance report clearly stated that Request For Proposal (RFP) even before the procurement process began, was finalised in coordination with the CRL. Nowhere, documents mentioned CRL team’s observation that they have in-house capability of security solution and therefore there was no need to purchase it from a private vendor at such a high price.

Even after RFP, the two members of CRL were part of the evaluation process and nowhere during the assessment process, the members acknowledged having in-house capability for the security solution that could save taxpayers money. In fact, further investigation revealed that UK’s company India representative M/S RTTS had held meeting at CRL Bangalore but the issue of having this in house security specification capability was not raised.

“A meeting with the vendor M/S RTTS at CRL Bangalore was conducted and the vendor has informed during discussion that PoC had ambiguous requirements not in line with PoC document, hostile environment during conduct of PoC by some of the PoC team members, required infrastructure which has to be provided by BEL was not provided,” the investigation report said.

Sharma claimed, the BEL officials brought up the issue of CRL having security solution only after procurement came under the vigilance scanner to conceal the alleged irregularities.

Subsequently, the CVC, not pleased with soft action of merely issuing warning letters to accused officers, wrote to BEL CMD MV Gowtama on 5 July 2017 for taking appropriate action.

“The Commission has observed that the tender was scrapped but the violations are serious in nature. The officers concerned have been let off with very lenient action. The Commission has desired that the CMD, Bharat Electronics Limited may review it sou-moto, if provision exists,” Ajay Kanoujia, Director, CVC wrote to Gowtama.

Later on 17 July 2017, Manager Vigilance in a note decided to send a reminder to the CMD observing that action against accused officers were indulgent.

“In the subject case, CVC’s observation were in line with Corporate Vigilance’s observations that a lenient view has been taken by the disciplinary authority without analyzing corporate vigilance letter/report, to close the case with minor penalty actions for the reasons not mentioned in the corporate vigilance report. In this regard, in line with CVC recommendations, it is proposed to send a letter to CMD to initiate appropriate major disciplinary proceeding action on attempts done by delinquent officers,” the note said.

Further, file noting suggests that another reminder for action in the case was sent to the CMD on 9 April 2018. It is also learnt that similar irregularities were unearthed in the procurement of database (DB) and Operating System which were later rectified after an internal probe flagged the wrongdoings.

Similarly, in civil construction, the issue of a single vendor for design consultant and procurement from the related parties have come under the vigilance scanner. Instead of taking action against the accused officers named in the vigilance report, the defence public sector undertaking has suspended members of the investigation team, who exposed the corruption.

“The same modus operandi has been followed with the vigilance team which brought out the corruption in selection of the design consultant and civil infrastructure ordering. The report of the vigilance enquiry has been downplayed and every member who was part of the vigilance enquiry has been charge sheeted, suspended or given punishment postings,” Sharma wrote to the CVC.

Updated Date: Jul 11, 2019 12:31:00 IST