The Indian Air Force didn't even test the VVIP choppers bought from the UK-based AgustaWestland for Rs. 3,727-crore, the national auditor told Parliament on Tuesday.
In a scathing 38-page report on the VVIP chopper deal, the Comptroller and Auditor General (CAG) said the IAF conducted field trials only on "representative helicopters" and not AW-101 VVIP choppers that were bought - a glaring violation of procurement rules.
"Audit does not have reasonable assurance…whether the parameters that remained untested at the time of trials were subsequently found fully compliant post its delivery and acceptance in India," the report said.
It also questioned the decision of then IAF chief Air Chief Marshal Fali Major to hold the trials abroad in early 2008.
The Agusta offering was evaluated in the UK and its only competitor S-92, manufactured by American firm Sikorsky, was tested in the US. Major said the air headquarters only makes recommendations and final decisions are taken by the defence ministry.
The CAG nailed "frequent deviations" from rules in awarding the contract to AgustaWestland for 12 helicopters.
AgustaWestland is a subsidiary of Italian defence group Finmeccanica.
In an indictment of the defence ministry and IAF, the CAG raised questions on "accountability and lack of transparency" at various stages -- from firming up requirements, conducting trials to commercial negotiations.
AgustaWestland allegedly paid more than Rs. 375 crore in kickbacks, which is being probed by the CBI. Former IAF chief Air Chief Marshal SP Tyagi and his cousins are among the accused.
Three of the 12 choppers were delivered by February 2013 before the government put the contract on hold following the kickback charges.
Commercial negotiations were also botched, the CAG found. The government failed to assess "the reasonableness of price". The "benchmarked cost" of Rs. 4,877 crore was far higher than that offered by the vendor (Rs 3,966 crore).
The auditor faulted the government for raising the requirement for VVIP choppers from eight to 12 at an extra cost of Rs. 1,240 crore, saying the assessment was not in line with the low utilisation of the existing VVIP chopper fleet.
The report, prepared during the tenure of former CAG Vinod Rai, said the revision of requirements in 2006 restricted competition and led to a single-vendor situation that benefitted AgustaWestland.