Such a statement from the apex body monitoring public procurements has pushed NAC´s purchase deal for two aircraft from Airbus into controversy again.[break]
“Our investigation showed that NAC´s bid evaluation procedure is ambiguous,” said Shankar Prasad Pandey, office secretary at PPMO, adding that the documents do not spell out whether commodities or consultancy services were being procured.
Stating his findings on NAC´s procurement decision at the parliamentary Public Accounts Committee (PAC), Pandey apprised lawmakers that going by the Public Procurement Act and Regulations, NAC, while approving the bid, also needs to determine the final bidding price after adjusting costs like fuel consumption, repair and maintenance cost, cost incurred in owning the aircraft and the final residual price after its total life, apart from the initial aircraft price.
“However, NAC has not made such adjustments,” said Pandey. “Evaluating the bid based on seat capacity does not give a full picture of the aircraft life-cycle value. Hence, the decision taken by NAC is not based on a realistic picture.”
Pandey elaborated that the life-cycle value of aircraft can be ascertained only when there is more than one bid to compare the facts. Also, because NAC had not prepared cost estimates, it has not developed a base to compare whether the quoted price was overvalued.
He further said that no agency, including NAC, can undertake procurement without complying with public procurement law. “We have sought further details from NAC to complete our study. But it has not carried out our instructions so far,” Pandey stated.
Keshav Raj Aryal, deputy director of NAC´s Financial Department who paid Airbus the booking price (advance) worth Rs 57.30 million, argued on the other hand that it was not within his jurisdiction to judge whether the process followed so far is correct.
“I simply followed the orders of my superiors, including directors, the executive chairman and the NAC board,” he said, responding to lawmakers over the advance payment made by NAC without following necessary procedures.
Mayur Rana, deputy director of NAC, said NAC made the advance payment after top management informed that failure to make a payment would jeopardize the procurement deal. “We made the payment through Himalayan Bank Ltd into the Airbus account,” he added.
Referring to a statement by an NAC board member that the advance was released without the decision of the board, PAC member Hridayesh Tripathy said that he smelled a rat in NAC management´s hurried decision to make the advance payment.
“Payment of advance prior to arrangement of the financing needed for procurement has raised doubts about NAC management´s intentions. Hence, the management should take responsibility for the loss if the deal fails,” said Ramji Prasad Sharma, another lawmaker in the PAC.
NAC, Airbus defer signing deal
NAC and Airbus have failed to sign the final contract on aircraft procurement on Monday as scheduled and deferred the signing to December 23, 2009.
The signing was deferred as the government did not pledge a bank guarantee to the national flag carrier, something that is necessary for NAC to get financing from the Employees Provident Fund (EPF).
NA is mulling over the procurement with Rs 10 billion in loans from EPF but the latter has sought a government guarantee for the loan agreement.
This is the second time that NAC and Airbus have deferred the contract signing. Originally, the two parties had agreed to seal the deal by the last week of November. If they had adhered to that date, Airbus would have delivered an A320 narrow-body aircraft by December next year.
With the deferral of the signing, Airbus has said it would deliver aircraft only by March 2011 and that too only the A330 wide-body, said a source.
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