Defence Industry

Defence Procurements : Time for Radical Reforms
Star Rating Loader Please wait...
Issue Vol 25.3 Jul-Sep2010 | Date : 18 Oct , 2010

Additionally, the role of Defence (Finance) should be limited to vetting of RFP and participation in commercial evaluation proceedings. The current practice of frequent reference to Defence (Finance) is one of the primary reasons for the failure of the procurement regime to deliver. Defence (Finance) functionaries contribute little as they possess no competence in the field of defence economics and are thus incapable of rendering any worthwhile advice. They are, in fact, the biggest impediment in smooth and expeditious progressing of cases.

As shown in Illustration 2 above, the responsibility for determining vendors whose equipment is fully SQR-compliant and considered fit for induction into service should be assigned to the user Service HQ, albeit under the overall guidance of HQ IDS. Once technically acceptable vendors are identified, the most critical and sensitive process of commercial evaluation should be undertaken by MoD, as is being done at present.

3. Formalised Apparatus to Monitor Progress of Procurement Proposals

The Report of the Group of Ministers on National Security had suggested the creation of a separate and dedicated institutional structure for defence procurements to facilitate a higher degree of professionalism and operational efficiency. Unfortunately, none of the said objectives have been achieved as yet. On the contrary, the current system is plagued by a total lack of unity of purpose, resulting in compartmentalised functioning.

It is very instructive to trace the path a case file takes. As all procurement activities are carried out in a sequential order, work on the next stage commences only after the file is received with the previous stage duly completed and approval of the designated authority accorded. Such functioning is highly wasteful in terms of time and resources. Only those activities that depend on the outcome of the preceding activity should await completion of the preceding stage. There are a number of activities that can be undertaken in advance to save time.

Not a single civil or military functionary is selected for past experience, demonstrated flair or technical expertise. They are posted to acquisition appointments in routine.

Presently, there is no apparatus in place to carry out monitoring of cases centrally. Functionaries react only when the case file lands on their table and even thereafter, they process it at their own leisurely pace without any urgency. Most surprisingly, even sponsoring SHQ, who should be overly concerned with the expeditious processing of its case, makes no effort to constitute TEC well before the date of opening of commercial proposals. Months can be saved by TEC carrying out preliminary work of understanding technical aspects mentioned in RFP and evolving format for preparing the compliance table. Similarly, preparation of trial methodology and selection of trial units should be undertaken without awaiting receipt of the case by SHQ with TEC Report duly approved.

Even the preliminaries related to commercial evaluation do not commence unless the Staff Evaluation Report is accepted by MoD. Thereafter, the Acquisition Manager takes the first step of initiating a note suggesting composition of Commercial Evaluation Committee (CNC) and seeking approval of Director General Acquisition. Subsequently, letters are sent to all agencies concerned to earmark their nominees. In case a CNC is constituted well before the completion of technical evaluation, considerable time can be saved by doing a number of activities that are not dependent on the outcome of technical evaluation in advance. CNC can evolve formats for the preparation of compliance and comparative tables to identify the lowest bidder on life-cycle cost basis and can establish bench mark of fair/reasonable price, as mandated by the procedure.

To monitor progress of all procurement cases and to ensure that maximum activities are carried out concurrently to save time, a small cell can be set up under Director General Acquisition. The cell should pre-warn the next agency in the chain to complete all preparatory work and be ready to receive and process the case expeditiously.

4. Acquirement of Expertise

It is a universally accepted fact that a defence procurement regime must possess expertise in over 22 disciplines. India is perhaps the only country in the world that has entrusted the task of handling defence procurements worth billions of dollars to a group of untrained and ill-equipped officials. It has made India’s procurement organisation infamous for its incompetent, amateur and unprofessional character. Comptroller and Auditor General (CAG) also highlighted this deficiency and remarked that the existing system of acquisitions being handled by unspecialised personnel posted for three-year tenures was simply not adequate.

Interestingly, the policy conveys an impression that probity is essential for contracts of over Rs 100 crores only and for contracts of lesser value it can be dispensed with.

Not a single civil or military functionary is selected for past experience, demonstrated flair or technical expertise. They are posted to acquisition appointments in routine. Bureaucrats are tasked to handle negotiations for complex high-tech military systems without any background knowledge. Most of them are first-timers in MoD. Similarly, Defence Finance officials are asked to render advice on foreign exchange and international trade issues. Apparently, their cluelessness contributes little to make the process efficient. Undoubtedly, the services are the biggest culprit in this aspect. Being the ultimate stake holder, they ought to ensure that they select the best qualified persons for procurement related appointments. Structural and procedural reforms can deliver only if functionaries implementing them possess necessary proficiency.

Despite the fact that inadequacy of acquisition functionaries is known to be the primary cause of non-performance and failure of DPP to deliver, there appears to be no appreciation of need to improve their quality. In a praiseworthy and pioneering initiative, a two-day training capsule for acquisition functionaries was conducted by HQ IDS in March 2010. MoD was also invited to send its officers to attend. Quite unabashedly, MoD boycotted the programme – it could not be seen subscribing to a proposal mooted by a subordinate organisation, howsoever constructive it may be. With such petty mindedness and ego hassles, MoD is unlikely to improve its proficiency. Many consider MoD to be beyond redemption.

1 2 3
Rate this Article
Star Rating Loader Please wait...
The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Maj Gen Mrinal Suman

is India’s foremost expert in defence procurement procedures and offsets. He heads Defence Technical Assessment and Advisory Services Group of CII.

More by the same author

Post your Comment

2000characters left