Defence Ministry gives Boeing time till 2020 to show offset work

In a major relief to the US-based Boeing, the Ministry of Defence has given time till 2020 to prove that it carried out offset work of worth $641 million. Earlier this year, the Comptroller and Auditor General (CAG) has pulled up Boeing for not completing the offset obligations.

The deal to procure P8 I maritime reconnaissance aircraft was signed in 2009; the $2.1billion deal took a political color after the CAG audit had raised serious apprehension.

The Economic Times reported that Defence Ministry has given them an extension of the 'period of performance' till December 2020 to the US aviation giant to provide all necessary documents which support those offset obligations were duly adhered to.

As an alternative, the defense ministry has also kept a legal measure at hand to recover 'full penalty payable' in case Boeing is not able to stick to the offset work. The ministry had taken a bank guarantee of $106 million against the same. The issues triggered in 2016 when Boeing claimed to not only met its offset obligation but also exceeded its offset work. The company claimed that it undertook $845 million worth of offset work as against the agreed $641 million.

The argument made by Boeing came under the ministry's legal department scrutiny and in response to that, it asked the company to present the supporting documents to prove the claim. Now, after the US company requested that collecting the list would be an afterthought process it would have to get back to all the concerned partners to collect the relevant documents which would take substantial time. Responding to the request, the Defence Acquisition Council (DAC) agreed to give time till 2020.

It is to be noted that the CAG had questioned the deal and had said that multiple attempts were made to favour Boeing over its Spanish competitor by hiding the actual offer price. Moreover, the CAG has also said that Boeing had not obliged to the offset of $641 million conditions by August 2016.