George haunted by his own prize defence

8 May 2002
Rajesh Ramachandran

NEW DELHI: In a pamphlet published in January and commended by Defence Minister George Fernandes to MPs, two letters were prominently displayed to support the claim that $2,500 was an appropriate price for India to have paid for coffins meant for men killed in Kargil.

One was from US ambassador to India Robert Blackwill, the other from Indian ambassador to the US Lalit Mansingh. Blackwill’s letter to Fernandes dated December 20, 2001 — nine days after questions over the price paid for the coffins rocked Parliament — states: ‘‘I have been informed that aluminium caskets in the US Navy procurement system cost $2,768.40 each...

Inquiries on the Internet and with a casket supplier in the US indicate that $2,500 is an appropriate and reasonable price for a rubber sealed aluminium casket of the type used in funeral homes in the US.’’ Blackwill was replying to a query from Fernandes.

Mansingh’s letter gives the identical price as Blackwill down to the last decimal, citing ‘‘informal indications by military sources’’. It was written on the same day as Blackwill’s letter. Blackwill’s endorsement of the MoD price appears intriguing given that a Pentagon agency, the Defense Supplies Centre, Philadelphia (DSCP), buys identical caskets for around $1,200 a piece.

Though the DSCP bills specific branches of the US military a higher sum to cover costs, Tom Sidor of the medical material’s directorate of DSCP told TOI that $1,200 would be the approximate price the Indian Army would pay were it to approach a US casket supplier directly.

Sidor explains why the DSCP charges a huge mark up over the procurement price. ‘‘The... DSCP buys these items for depot stock. Once at the depots, any of the branches of the military may requisition them. However, to pay all of our bills, we currently have what we call a cost recovery rate that we add onto the purchase price of all items in our depots, and because of a variety of business reasons, we currently add 130.7 per cent of our purchase price onto the prices of these depot stocked items...’’

Thus, when Fernandes asked Blackwill about the price paid by the US armed forces for such caskets, he was technically correct in replying that this was around $2,500. But Blackwill may not have known — or perhaps chose not to reveal — that the actual procurement price of the caskets within the Pentagon’s procurement system was half that sum.

The Times of India asked the US embassy whether Blackwill knew that the US navy price included the 130.7 per cent internal book-keeping mark-up and that the true cost of the caskets was around $1,200. The embassy was also asked to identify the casket supplier who told Blackwill $2,500 was ‘‘a reasonable and appropriate price’’.

However, all Gordon Duguid, press attache, was prepared to say was, ‘‘We stand by the facts in (Ambassador Blackwill’s) letter of December 20, 2001’’. While Blackwill’s letter could touch upon issues of diplomatic propriety — both because of the incomplete information it contains and the use Fernandes put it to — the substantive issue is why the defence and external affairs ministries could not track down the original casket manufacturers instead of paying an inflated price to a middle-man like Victor Baiza.

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