Anatomy of a blacklist: Singapore Technologies

The Comptroller and Auditor General (CAG) of India was asked by the Ministry of Defense, in June 2009, to conduct an audit into the facts and circumstances that gave rise to the criminal case against the former Director General of Ordnance Factories and Chairman of the Ordnance Factory Board (OFB), Sudipta Ghosh.

While submitting that the institution of the CAG was neither ’empowered nor equipped’ to conduct inquiries of a forensic nature, the CAG nevertheless accepted the charge and submitted a report to Parliament last week, that testifies to the acts of omission and commission, based on incompetence, lack of foresight or mala fide intent, that led to the recommendation of a blacklist of companies.

The recommendation for blacklisting Singapore Technologies (ST) arose from the issue of the supply of Close Quarter Battle (CQB) Carbines to paramilitary forces under the Ministry of Home Affairs (MHA), India’s law enforcement and interior ministry.

ST was indirectly mentioned in the FIR (First Information Report) registered by the CBI (Central Bureau of Investigation) against Sudipta Ghosh and so the ‘transaction with STK was put on hold in June, 2009 by MOD.

OFB, disingenuously presented itself in partnership with STK for the transfer of technology and production of carbines for paramilitary forces and, when no such arrangement existed and committed to supply the weapons to the MHA. MHA’s urgent requirements for procurement also allowed the OFB to create a fait accompli, which left few choices for the MHA to look for alternatives but to ask for the supply of STK’s weapons in partnership with OFB.

“While MHA could avoid floating the normal tendering procedures by procuring it from OFB, the fact is that OFB in absence of any co-production arrangements would have supplied carbines produced by STK. The process amounted to a sophisticated connivance by OFB and STK to sell STK carbines to MHA without going through the approved laid down procedures,” says the report, adding, “Even the rudimentary terms and conditions of TOT and co-production arrangements had not been contemplated at that stage. OFB falsely presented before MHA the SAR 21 MMS as OFB’s offer, with production and TOT arrangements with STK. OFB’s decision to approach the Ministry of Defence at a very late stage for approval of collaborative instrument between STK and OFB amounted to a fait accompli situation in which little alternative was available. If the proposal was rejected, the supply to MHA would have been jeopardized and the modernization of paramilitary forces would have been adversely affected.

The CAG found it strange that the Ministry of Defence was unaware of these developments and  found out only when it received ‘two anonymous complaints in February, 2009 through MHA’. It also pointed out that MHA officials, too, failed to verify the ‘capacity of the Ordnance Factories to produce such carbines’.

The Ministry of Defence accepts that OFB offered STK’s carbines to MHA ‘without going through the due process’, ‘even after the failure of the STK carbine in the drop-test during trials’, ‘despite the valid objections raised by the Members of OFB’ and ‘no assessment of their capabilities or track record was seen to have been made’, with an inadequate sample size of two carbines.

According to the CAG, the story began when Sudipta Ghosh received a communication from ST on 12 June, 2008, which referred to a meeting in September, 2007 which discussed ‘collaboration between OFB and STK (Singapore Technologies Kinetics) on offset arrangements for selected programs of the Ministry’. STK said that it had received Requests For Proposal (RFPs) for ‘Close Quarter Battle Carbines and ammunition and also other items like Light weight Howitzer and Towed Gun system’.

STK asked the OFB for their terms for an offset partnership. At the same time, STK told Ghosh and other OFB officials that the MHA was ‘likely to make outright purchase of CQB carbine and they would like to participate in the same’.

The CAG report says, “Chairman / OFB stated that the subject matter can be taken up with MHA stating that ‘an offset agreement has been signed between OFB and STK and the latter has developed the carbine using Indian components so that the indigenization process becomes faster for supply to MHA’.”

No such agreement had been signed.

The CAG says that even though the meeting decided that this issue could be taken up with the MHA only after the carbine, with Indian components, was developed and test-fired in India in the presence of the OFB, ‘subsequent actions of the OFB belied that decision and confirmed the intention to mislead the MHA’.

MHA and OFB officials met on 24 July, 2008, where the former expressed an urgent requirement for 5.56 mm carbines because of the imminent deadline of the modernization plan of police forces (31 March, 2010).

Even while MHA officials pointed out the OFB’s own AMOGH carbine had already failed trials, OFB officials informed them of fresh trials being planned and recommended that five carbines from ‘one Singapore firm’ also be tested, for which OFB had ‘Transfer of Technology (TOT) arrangements’.

OFB Members, Ammunition & Explosives and Weapons, Vehicles & Equipments, both stated in an internal note on 29 July 2008, that STK’s carbines should not be offered for trials by the MHA ‘since they had not been evaluated by the Ordnance Factories’.

In spite of this opinion, Ghosh called a meeting on 11 August, 2008, where it was decided to ‘offer to MHA the STK carbine having minimum 50 per cent work share with OFB along with OFB’s own AMOGH carbine’ and that STK would provide six carbines, including five for the test by the MHA.

At this meeting, STK agreed to send two carbines by 25 August, 2008 and an end-user agreement and non-disclosure agreement was concluded on the day of the meeting itself, to ‘facilitate import’.

Tests of the carbine were carried out by both the OFB Small Arms Factory (SAF) in Kanpur as well as paramilitary forces. While the weapon did badly at Kanpur, its performance seemed to have improved in the hands of paramilitary forces.

Trials of the STK SAR 21 MMS (Singapore Assault Rifle Modular Mounting System) were carried out on a 50 meter and 200 meter range at SAF, Kanpur on 15 September, 2008, where the ‘Ability to fire with One Hand grip was found Not suitable‘. The weapons was observed to overheat and the safety lever came loose at the end of firing and could not be fixed. Drop tested from 5 meters, one of the carbines experienced a ‘major misalignment problem’, rendering it nonfunctional.

The other carbine too experienced minor problems during the tests, which, at this point, did not examine the effect of dust on the weapon and its performance.

STK then asked OFB to provide a safety certificate, apprehending ‘technical complications if their carbine is subjected to reliability test specifications as spelt out in the MHA’s trial directive’ and anticipating this requirement if the carbines were being offered as OFB’s carbines, produced by Transfer of Technology. OFB obliged by supplying the ‘required safety certificate and other certificates for recoil forces, noise levels etc. that were issued by DDG/R&D based on the certificate issued by STK’.

Without formal collaboration with STK, issuing safety certificates by OFB to facilitate trial by MHA was incorrect as the carbine was fully imported and it had failed on several parameters when tested in SAF, Kanpur.

The MHA tested the weapons from 17 November, 2008 to 21 November, 2008 at the National Security Guards (NSG) base at Manesar. The trials here found the carbine satisfactory on several parameters that had been deficient at the Kanpur trials. The weapons were drop-tested from five feet and not five meters, as at the SAF. Where Kanpur complained of smoke, the Manesar trials did not find any trace of smoke, but did find that the weapon could easily be handled and fired with one hand.

OFB had also brought its own carbine, AMOGH, to the proving grounds. The Deputy Director General, Research and Development, OFB’s representative at Manesar, ‘brought out that large numbers of stoppages were observed’ during its firing, largely found to be on account of defective feeding of ammunition by the magazine. The Deputy Director General ‘opined that the gun has otherwise performed satisfactorily as far as accuracy, consistency and other parameters are concerned’. This weapon was also six times cheaper than the SAR 21 MMS.

“He further observed that ‘Poor performance of SAF Carbine during trials of NSG could have been avoided, had SAF taken more care in preparing the Weapons Systems before sending to NSG‘,” says the report (emphasis original).

What happened next was, the OFB committed to supply the SAR 21 MMS carbine to the MHA, recieving commitments from the Border Security Force (BSF) and Central Reserve Police Force (CRPF).

“In a meeting in the MHA on 18 February, 2009 regarding procurement of Carbines, OFB committed that they can supply the first batch of 2627 carbines on 1.9.2009, 18369 by 31.3.2010 at the same monthly rate and the total quantity by 28 February, 2011. BSF opted to procure the weapon from the OFB. CRPF also agreed with that,” says the report.

The Ordnance Factory Board met on 26 February, 2009 where it considered whether to undertake production of ‘STK make carbine’ and passed a resolution saying such production would depend on the collaboration with ST being approved by the MoD and the MHA committing to buy enough numbers, so as to make production worthwhile.

Resolution: Production of 5.56 mm Carbine of Singapore Technology with 45mm chamber length would be undertaken subject to (a) MOD’s approval of collaborative instrument with Singapore Technologies and (b) MHA’s commitment to procure economically viable quantities from Ordnance Factories. The background of selection of Singapore Technologies for obtaining technology for production of 5.56 mm carbine inter-alia bringing out that no RFP was issued to identify the collaborator would be spelt out to MOD at the time of sending the collaborative instrument for their approval.

The matter went no further because Sudipta Ghosh was charged with accepting illegal gratification. The CBI recommended the blacklisting of Singapore Technologies, besides six other companies in June, 2009 and again last month. Singapore Technologies had denied it was blacklisted last January.