Flaws in contract terms stall $275-mn ARV deal

NEW DELHI: The $275 million armoured recovery vehicle (ARV) deal has run into fresh trouble relating to the specification mismatch that has been red-flagged by the defence ministry.

Highly placed sources said BEML has been informed about ground clearance gap discrepancy in the ARV specification, which is sure to throw the delivery schedule haywire.

In October 2011, Polish firm Bumar had bagged the mega contract to supply 204 ARVs. As per the contract, the first batch of eight ARVs was to be delivered by August-end.

But now it looks far-fetched because of specification anomalies and the tricky indigenization to be done by BEML. As per the contract signed between BEML and the defence ministry in 2011, the ground clearance of ARVs should be 480 mm, while in the contract between BEML and Bumar it is only 395 mm. After signing the contract, the defence ministry paid Rs 250 crore to BEML.

After stumbling on the discrepancy, the ministry wrote to BEML on the mismatch. It is learnt that BEML had planned to amend the contract clauses with MoD to ensure timely delivery of the ARVs. TOI is in possession of the letter dated June 9, 2012, in which BEML sought amendment in the contract with MoD about the ground clearance gap.

Sources said that changing the technical specifications at the last minute was shocking and hinted that BEML did not incorporate the ground clearance specification (480 mm) before signing the contract and price negotiation with Bumar in 2011.

The high ground clearance in ARVs was demanded by the Army since it is used in all-terrain operations across the country.

Sources said Bumar had been wooing BEML to engage its subsidiary for supply of periscopes in the ARVs. TOI is in possession of a letter written by the commercial director of Bumar recommending its subsidiary. However, BEML chickened out at the last minute and did not go ahead for the periscope deal under the indigenization clause.