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Experts Speak

 
     
  Need for reforms in procurement system  
 
By Air Marshal (Retd) V.K. Bhatia, New Delhi
 

In a double-edged endeavour to streamline the defence procurement as also to give a fillip to self-sufficiency India’s Ministry of Defence (MoD) issued detailed guidelines through the issuance of Defence Procurement Manual (DPM) and Defence Procurement Procedure (DPP) under the overall ambit of Defence Procurement System. The stated aim of the MoD was to expedite procurement; ensure optimal utilization of allocated budgetary resources; demonstrate the highest degree of probity and public accountability, transparency in acquisition processes, free competition and impartiality; and achieve self-reliance in defence equipment.

The first version of DPP, which exclusively deals with capital procurements, was released in 2002. It was a tentative but a bold step indeed. However, it soon became clear the document suffered many deficiencies. But, it is ironical that instead of taking bold and pragmatic steps to iron out the deficiencies in one go; a somewhat confused and unsure politico/bureaucracy establishment adopted a highly cautious tortoise-paced approach to correct the anomalies. Not surprisingly, the DPP has been revised eight times since its inception, but even the latest version issued in 2011 lacks clarity and comprehension.

It is a well acknowledged fact that DPP has failed to achieve any of its stated lofty aims. Since its promulgation in 2002, not a single major contract has been successfully concluded so far under its provisions in an open competitive environment. MoD had to resort single vendor deals conducted through government-to-government route for emergent procurements. Consequently, modernisation of the armed forces is lagging behind by a huge margin. Some glaring anomalies still existing in the DPP are summerised below:

  • Despite best efforts MoD has not been able to address the issue of time delays in arms procurement. A large contract normally takes 36 months for fructification and at every step of the eleven or so phases – from RFP to post contract administration – timelines have been provided in the DPP. But there is little reaction to address non-adherence to laid-down timeframes. The absence of punitive clauses for non-adherence to timelines by vendors is also a major problem that needs to be rectified by the MoD. The stretched timeframes also encourage external influences to creep in, vitiating and corrupting the processes of procurement at different stages.

  • The problems of arms procurement largely emanate from non-transparency and non-accountability. The DPP, unfortunately, has not been able to address the issue. Over-lapping procurement related institutional mechanisms within the MoD have only perpetuated non-accountability. Superficial attempts like bringing all three Services HQs within the administrative control of the MoD have certainly not addressed the issue.

  • DPP has also failed to make any changes in the decision-making process. Despite the introduction of HQ IDS in the procurement process, no decision-making powers have been delegated to it.

  • Last but not least, India’s offset policy, while generating huge commitments from the foreign vendors (Could touch $10 billion with – the to-be-inked soon – MMRCA contract alone), does not have any well-evolved objective. For example, while India seeks self-reliance in defence production, it finds itself hesitating to accept infusion of technology against offsets.

  • Needless to say there are major anomalies in India’s defence procurement system which calls for far-reaching reforms if India is to emerge as a nation which can look after its own defence needs. Rationalising the procurement process, ensuring transparency and accountability, meeting time deadlines, eradicating corruption, accepting ToT (Transfer of Technology) as a norm against offset obligations, introducing much greater FDI in joint ventures to encourage foreign vendors to bring high-end technology into India and providing a truly competitive but a level playing field to the public/private sectors are some of the major issues which need to be tackled on war-footing if India wants to surge ahead in its quest to achieve not only self-sufficiency but a prominent position in the world as manufacturer of state-of-the-art defence equipment.
 
 
 
 
 
 
 
 
 
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