Indian defense audit claims Israeli companies were given improper contracts

Report says Elbit awarded contract without going through tender; Indian gov’t company paid second Israeli firm to do research for it

Stuart Winer is a breaking news editor at The Times of Israel.

Illustrative: An Elbit UAV. (Tsahi Ben-Ami/Flash90)
Illustrative: An Elbit UAV. (Tsahi Ben-Ami/Flash90)

A state-run arms development authority in India offered several no-bid contracts to Israeli firms and bought existing technologies from Israeli companies instead of conducting homegrown research, a special audit by the Indian Defense Ministry has found.

The DNA India website reported on Thursday that the audit discovered that the government-run Defense Research and Development Organisation, known as DRDO, was using research projects to facilitate the entry of foreign companies into the Indian defense market, in some cases offering contracts without a competitive bidding process.

In one case Israeli defense contractor Elbit was awarded an $895,000 project as part of research into mini unmanned aerial vehicles that was not offered to any other company.

“DRDO has recommended only an Israeli firm i.e. Elbit Systems and has not examined the UAVs of any other firm available from large number of American, European and Russian sources,” DNA India quoted from the audit report, which it obtained. “Without any competitive bidding, undertaking such work amounts to facilitating the entry of M/S Elbit, Israel on a single vendor basis to the armed forces. This is not a project to develop something new by DRDO but to facilitate entry of a foreign vendor by conducting trials of its product at the expense of DRDO. This is grossly irregular and improper.”

Another Israeli company, Semiconductor Devices, referred to as SCD, was given a contract to further develop an existing technology under the guise of a research project, the report said. According to the audit, DRDO should have carried out the research itself.

The audit claimed DRDO had agreed to fund a $3.5 million research project to further develop special detectors already offered by SCD but without specifying any details on intellectual property or final arrangements for the results of the research. According to the audit, this amounted to funding research in foreign companies rather than doing the research at DRDO.

DNA India did not report whether there will be any consequences for the Israeli companies as a result of the audit.

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