Indian Defence Review

“The only real mistake is the one from which we learn nothing.”  John Powell

Every review of defence procurements by the Comptroller and Auditor General of India (CAG) highlights the same deficiencies and omissions. As per CAG, mistakes are repetitive in nature and no corrective measures have been initiated – similar mistakes are being committed year after year without any discernible improvement. To err is human but to repeat mistakes is unwise. Recurrence of mistakes due to sheer indifference and inefficiency can neither be justified nor condoned. In the case of defence procurements, mistakes can prove grave for national security.

“¦there is little to suggest that Ministry of Defence (MoD) is keen to promote organisational learning to prevent recurrence of past mistakes. As a consequence, it has become a ritual for Indian defence procurement regime to continue to blunder and for CAG to castigate MoD in its reports.

Organisational learning is the sum total of the experience gained by key functionaries. A well structured and efficient system channelises individual experiences into a configuration that facilitates discerning of pattern of recurring mistakes and identification of contributory factors. However, the process has to be sustained on regular basis to convert inputs into lessons learnt in a format that can be easily disseminated to all related agencies. It is only then that corrective measures can be taken at all levels.

Unfortunately, Indian procurement setup is beleaguered with problems of its own making. Despite the fact that Defence Procurement Procedure (DPP) has undergone four revisions since 2002, there is little to suggest that Ministry of Defence (MoD) is keen to promote organisational learning to prevent recurrence of past mistakes. As a consequence, it has become a ritual for Indian defence procurement regime to continue to blunder and for CAG to castigate MoD in its reports.

India’s failure to learn from previous cases is costing the nation dear. Unplanned procurements continue to prevent optimum utilisation of resources and perpetuate ad-hocism. Delays continue to dog all cases with resultant cost escalations. Faulty parameters and inefficient trial regimes result in premature termination of many cases. Flawed contracts lend themselves to multiple interpretations, making India suffer through small print. Subsequent disputes result in protracted wrangles and delays. Vendors raise prices of spares arbitrarily, fail to provide promised after-sales support and show reluctance to transfer contracted technology. India finds itself helpless to force compliance of contractual obligations.

Reasons for Failure to Learn from Experience

Some of the major factors that contribute to Indian inability to institutionalise organisational learning in the critical area of defence procurements are discussed below.

Lack of Data Bank

In an omission of grave dimensions, MoD has totally overlooked the need to create a data bank to create organisational memory. DPP’s mandate is limited to the maintenance of a data bank of prospective vendors by the Acquisition Wing for issuing Requests for Proposals (RFP).

Acquisition Wing has no centralised retrievable records available of different acquisition cases handled by it. Each case is dealt with on different files and stored accordingly. No effort is ever made to identify issues of common interest to draw lessons from acts of commission and omission. Lack of a centralised data bank promotes compartmentalised and disjointed functioning. CAG has pointed out instances when different services paid different prices for the same item from the same vendor. Worse, after signing a contract, Acquisition Wing gets no inputs as regards performance of the vendor. Contract management and monitoring are outside its purview.

Inadequacies of Acquisition Functionaries

Staff inadequacies have been the bane of Indian procurement regime. Procurement of military equipment worth billions of dollars is being carried out by people who are ill-equipped for the job. Even CAG was forced to observe that the existing system of acquisitions being handled by unspecialised personnel posted for three-year tenures was simply not adequate. It pointed out, “Defence acquisition is a cross-disciplinary activity requiring expertise in technology, military, finance, quality assurance, market research, contract management, project management, administration and policy making”.

Bureaucrats are averse to learning from others experience in the mistaken belief that their basic intellect, initial training and subsequent exposure equip them to shoulder any responsibility.

The staff carrying out acquisition functions is drawn from the three services, the civil bureaucracy and the defence finance. They are neither selected for any particular expertise nor are given any special training to handle defence procurements. They even lack necessary education to comprehend competing technologies and technicalities of complex procurement procedures. Most unfairly, they are expected to ‘learn on the job’ by trial and error method.

Most functionaries are posted for tenures varying from one to three years and hence can provide little continuity. By the time they start understanding nuances of acquisition complexities, they move out. Their personal experience remains shallow and of little value to the organisation. Therefore, they are unable to make any significant contribution to organisational learning.

Mindset of Indian Bureaucracy

One of the biggest impediments to learning from experience is individualism, sense of self preservation and obduracy of Indian bureaucracy. Most functionaries are averse to sharing their experience with others as they view their knowledge to be their strength and strive hard to guard it. Thus, individual knowledge does not get converted into organisational knowledge.

Conversely, bureaucrats are averse to learning from other’s experience in the mistaken belief that their basic intellect, initial training and subsequent exposure equip them to shoulder any responsibility. That is why all senior functionaries (both military and civil) loathe training and prefer to hone their skills through their own experience on the job. They tend to develop a sense of infallibility due to the power exercised by them. Such an attitude inhibits knowledge sharing as every individual prefers to be the sole repository of all knowledge.

Worse, in a highly competitive world of bureaucratic quagmire, every functionary plays safe. Passing the buck and self justification are considered essential requirements for advancement in career. Thus, the current environment is highly non-conducive to an objective appraisal of a case to draw constructive lessons as facts are not presented in an honest manner. Every functionary wants to ensure that his role remains unquestioned. Even an innocuous remark is taken as serious criticism. Subjectivity prevents identification of areas that warrant improvement.

Need to Institutionalise Learning from Experience

Learning is a continuous process through experience. What individuals learn must be harnessed into organisational knowledge bank. This bank of knowledge should then be sifted, analysed, synthesised and converted into actionable guidance in a systematic way by duly trained personnel.

Creation of ‘Lessons Learnt Cell’

To draw lessons for future application, a separate ‘Lessons Learnt Cell’ (LLC) should be created under Director General Acquisition (DGA). It should consist of a small group of hand-picked personnel with deep knowledge of various facets of defence acquisitions. Even civilian experts can be co-opted. Members should possess an eye for detail and ability to scan complex cases to identify key areas for further study. They should have breadth of vision to understand functioning of different agencies for holistic treatment of cases and draw relevant lessons. LLC should also be tasked to create a data bank and be a repository of organisational memory.

On the conclusion of an acquisition case (either when a contract is signed or case aborted prematurely), the concerned Division of the Acquisition Wing should notify LLC providing answers to the following querries:-

Functioning of LLC

• Was it a planned procurement i.e. included in the Services Capital Acquisition Plan and the Annual Acquisition Plan?
• Were services qualitative requirements formulated realistically and in concrete and verifiable terms?
• Was technical evaluation carried out as per the laid down procedure?
• Was the trial methodology evolved in an objective and diligent manner to validate performance parameters in an open and transparent manner?
• Did staff evaluation take all aspects in consideration while selecting equipment acceptable for induction into the service?
• Was price negotiation carried out in a structured manner after determining fair price with the help of scientific tools?
• Has the contract drafting been done to ensure full protection of Indian interests?
• In the case of successful cases, what factors stand out for their positive contribution?
• In the case of aborted cases, what factors caused infirmities?
• What are the unique features of the case that warrant attention?

Perusal of main case files should result in the identification of areas for further study. A broad plan should then be evolved to spot peculiarities of the case and their effect on the success or failure of the case. Additional documents can be sought from the Division concerned to obtain supplementary inputs.

The role of the proposed LLC must be made clear to the complete acquisition environment unambiguously – it is neither intended to be a post-audit body nor an oversight agency. It is expected to function like a study-cum-analysis group with mandate to suggest measures for the improvement of acquisition regime by drawing lessons from past acquisition cases. Its role should never be investigative in nature to pin responsibility for likely acts of omission and commission.

Drawing of Lessons Learnt and their Dissemination

This is certainly going to be the most critical aspect of the whole exercise. The sole aim is to validate existing policy directions, acquisition structures, procurement processes and their viability to draw lessons for further improvement. Therefore, the language has to be polite and suggestive, and not critical. No aspersions should ever be cast lest functionaries start hiding true information and be less forthcoming with facts. As a matter of fact, no individual should ever be named or held accountable.

Lessons Learnt should be grouped under three broad heads as follows:-

LLC should forward all Lessons Learnt to DGA, who may seek additional information or clarifications before according his acceptance. Thereafter, Lessons Learnt reports should be disseminated as follows:-

• Policy Issues. These should be forwarded to all members of the Defence Acquisition Council (DAC). DAC, headed by the Defence Minister, is the overarching policy making body. It may constitute a small sub-group to study Lessons Learnt report and recommend policy changes, if necessitated. On receipt of sub-group’s report, DAC may debate various aspects at length and take suitable decisions.
• Procedural Issues. Reports on Lessons Learnt with respect to procedural issues should be sent to all members of Defence Procurement Board (DPB), headed by the Defence Secretary. DPB is the promulgating authority for the defence procurement procedure. Changes suggested can be examined by an expert cell and decisions taken accordingly.
• Functional Issues. Acquisition Wing is the executive arm that implements all decisions taken by DAC and DPB. Being the head of the Acquisition Wing, DGA has to consider all Lessons Learnt as regards their functionality on ground. He may seek help of a few knowledgeable functionaries and take corrective measures to make ground level implementation smooth, fast and efficient. A process of consultations should simultaneously be initiated with other agencies involved in the procurement administration.

To ensure that all reports on Lessons Learnt and follow up action taken do not get buried in files, LLC should also be mandated to store them in a suitable electronic format for easy retrieval and reference. When adequate information gets accumulated, patterns of common infirmities would emerge, thereby facilitating meaningful reforms.

Conclusion

India is expected to spend close to 100 billion dollars on capital procurements in the next ten years. It has generally been accepted the world over that an efficient acquisition organisation can not only expedite procurements but also affect a saving of up to 15 percent of the capital expenditure in initial purchase price and associated life-cycle costs. When translated into actual figures, saving for India may amount to a whopping 15 billion dollars. Therefore, it is time India puts its act together and initiates measures to learn from past mistakes to prevent their recurrence.

India is expected to spend close to 100 billion dollars on capital procurements in the next ten years. It has generally been accepted the world over that an efficient acquisition organisation can not only expedite procurements but also affect a saving of up to 15 percent of the capital expenditure in initial purchase price and associated life-cycle costs.

LLC is proposed to be created under DGA for the twin purposes of drawing lessons from past mistakes and to create a data bank. All acquisition functionaries gain experience while performing their duties. Presently, their experience is totally wasted as they move on to other jobs on normal turn-over.

Therefore, it is essential to convert individual experience into organisational experience through a well-structured process of building institutional memory through analytical study of all acquisition cases. Such studies should facilitate identification of common mistakes and the contributory factors. It is only then that necessary lessons can be drawn to initiate reforms.

Finally, both individuals and organisations commit mistakes. It is an inevitable part of evolution. It is commonly said that mistakes are a great educator when one is honest enough to admit them and willing to learn from them. Honest admission is thus the key – not to find scapegoats but for corrective action to prevent their occurrence.

The process of learning from mistakes has to be institutionalised. Indian defence procurement regime can ill-afford to continue repeating the same mistakes in the misplaced hope that they would get eventually sorted out of their own. It will be prudent to remember American writer Frank Herbert’s counsel – ‘insanity is repeating the same mistakes and expecting different results’.