Indian Defence Review

A major show stopper in India’s efforts to become self-reliant in weapons production is the Defence Procurement Procedure (DPP). The current DPP (2013) is a 361-page document which serves to confuse entrepreneurs and appears to complicate the manufacture of weapons in India. Presented here is a “Designer’s View” in the form of six concepts that will hopefully get the concerned authorities to focus on what is important. By applying these six concepts, the 361-page DPP can potentially be reduced to a 54-page document which can be easily understood by all stakeholders and executed in a manner that allows our soldiers (the actual users) to get the best weapons possible at an affordable price.

The three principal arms of the Indian armed forces i.e. the Indian Army, Indian Navy and the Indian Air Force are expected to buy or replace over $200 billion worth of military equipment over the next five to seven years. This unprecedented demand is accompanied by an unprecedented demographic phenomenon which will see over 150 million young people enter the working age group over the next seven to ten years. Previous governments did not do anything substantial to create new jobs in the manufacturing sector and as a result, the present government is likely to face very serious pressures within the economy if the indigenous manufacturing sector is not stimulated aggressively. It is in this context that the Modi-led NDA government’s “Make in India” programme assumes importance especially in the field of defence manufacturing.

Objectives of Applying “Design Thinking” to DPP 2013

Design thinking is essentially “User Centric Design”. Applied to India’s Defence Procurement Procedure, design thinking seeks to achieve the following:

• Keeping the needs of the Indian armed forces at the centre of the procurement process.
• Ensuring transparency in defence procurement through elimination of loopholes and prevention of scams
• Ensuring efficiency and speed in defence procurement
• Encouraging domestic manufacturing through robust policy measures

Six Design Concepts Applicable to DPP 2013

A major show stopper in India’s efforts to become self-reliant in defence production is the Defence Procurement Procedure (DPP). The current DPP (2013) is a 361-page document which serves to confuse entrepreneurs and appears to complicate the manufacture of military hardware in India. Presented here is a “Designer’s View” in the form of six concepts that will hopefully get the concerned authorities to focus on what is important. By applying these six concepts, the 361-page DPP can be reduced to a 54-page document which can be easily understood by all stakeholders and executed in a manner that allows our soldiers (the actual users) to get the best weapons possible at an affordable price.

ABC Analysis Concept

The 49-page “Standard Contract Document” (pages 297-345) of the DPP 2013 is really the heart of the DPP. It comprises 85 per cent of the DPP and recognising this will help concentrate on the crucial aspects of defence procurement which can then be retained in DPP 2015.

Brahmos Analogy – The “Throw Away” Concept

Policy makers will note that India produced an excellent weapons system – the Brahmos Missile at a time when there was no DPP.

This proves that most of the text within DPP 2013 (Pages 1 – 296) is not really necessary and could be replaced by a short six to nine page policy note that provides a broad direction “Make in India” and specifies the conditions under which we will import sophisticated weapons. The Brahmos example is, therefore, very significant in re-thinking DPP 2015.

To Achieve This – Focus on the Flow Chart (Pages 172-177)

To reduce the size of the DPP and make it business friendly and easy to execute, there is a need to focus on pages 172 – 177 of DPP 2013 (The Flow Chart). This six-page flowchart needs to be reduced to two pages by eliminating everything that is not absolutely essential and by clubbing activities that can be combined within a single department to save time in the acquisition process.

Secondly, all standard forms need to be moved out of the DPP into a simplified supplement. The main DPP document should only include the policy/broad simplified procedure and the contract (54-page document). Companies should be able to just fill up the standard forms in a certain order quickly and submit them. Secondly, there should be just one common format for each form. Why have three or four different formats for “Make” and “Buy and Make”?

US Constitution Analogy – The Intentions Concept

The US Constitution that was written in 1787 and ratified in 1778 is a six to nine page document (depending on font size). In their 227 years of running a large country, the American people have made just 27 amendments to their constitution. Even after making these 27 amendments, the US Constitution still remains a very brief and effective document.

Pages 1 to 296 of the DPP 2013, therefore, need to be replaced by a six to nine-page policy document that talks about two things:

• Intention of the Government of India i.e. Make in India
• Broad policy and process guidelines to achieve manufacturing of 80 per cent of the equipment in India within the next decade 

While we say this, the Design Lab is fully aware that the Current US Defence Procurement and Acquisition Policy (DFARS, PGI, and 5000.1&2 and the mother document, the Federal Acquisition Regulation, FAR) runs into thousands of pages.

The point, however, is that the US frame of reference and India’s frame of reference are totally different. If we come up with a brief yet effective policy, maybe the Pentagon will learn from us and from the framers of their own constitution. If we do the above, DPP 2015 will be a 54-page document consisting of:

• A six to nine page policy note which includes a “broad process framework” that encourages “Make in India”.
• A 48-page unified contract for military equipment, software and services.

The “Amendments Limitation” Concept

The framers of the US Constitution were learned intellectuals. Their clarity of thought and wisdom in drafting a brief constitution is recognised by everyone today. There have been approximately 11,000 attempts to amend the US Constitution; only 27 amendments went through in 227 years. The lesson for policy makers working on the DPP 2015 is therefore very clear. If you draft a brief document, how many amendments can you make over the next 50 – 100 years? We, therefore, need to have a very brief DPP document to ensure that amendments to the DPP do not become an annual affair, as it is at present.

Achieving “Best Value” Contracts – Burj Khalifa’s “Collegium” Concept

Purchase of most equipment by the Ministry of Defence is under the Lowest Bidder (L1) regime wherein the contract is awarded to the bidder who provides a product which meets all the mandatory requirements set forth in the Services Qualitative Requirement (SQR) and the Request for Proposal (RFP) at the lowest cost.

Provisions also exist for buying from qualified L2 or L3 bidders under special circumstances but this requires approval from the Cabinet Committee of Security (CCS), which is neither easy nor convenient and creates huge problems for the party in power over corruption allegations. The other option (T1 Regime), where the government would be required to go for Quality Based Selection (QBS), that guarantees high quality in weapons procurement, is often unaffordable for the government. The third option (Best Value Contract) is perhaps the most optimum solution and is actually being used for procuring weapons and equipment for the following:

• India’s Special Forces
• Indian Space Research Organisation (ISRO)

This method has worked extremely well and needs to be implemented for all procurement for the Indian Armed Forces.

Implementing “Best Value” – Learning from Burj Khalifa “Collegium” Experience

To make ‘Best Value Contracts’ the new normal in Indian defence procurement, the Ministry of Defence could learn from the Burj Khalifa’s Collegium experience. To ensure that Dubai got the best design for the world’s tallest tower, the project owner, state-backed Emaar Properties, brought in the world’s experts in super tall buildings (1) The Chicago office of Skidmore, Owings & Merrill (SOM), (2) Kohn Pedersen Fox and (3) Pelli Clarke Pelli for an invited competition in 2002, to build an iconic structure that would set the Super-tall record not just for the Middle East but for the world.

The Designs produced by the various competing firms was reviewed by a collegium of experts and SOM’s winning design that was selected by the collegium went into an EPC bidding round to produce a world class structure at the lowest possible cost. The Design Lab proposes to implement this “Collegium” concept in all India’s Defence Contracts but under a different format which we will now discuss.

Implementing the “Collegium Concept” in Indian Defence Procurement

The “Best Value Contract” method involves assigning weightages to the various aspects of a piece of military equipment and its price structure. The main issue here is that if anyone challenges the basis of assigning weightages, the entire contract can be under a cloud. To overcome this and to ensure that our armed forces get the best affordable weapons, the Design Lab suggests that the government of India appoints a collegium of eminent persons to assign weightages to the various aspects of a weapons system. Before the collegium votes to assign the weightages, its members will be briefed by the Military Technical and commercial experts. This will provide enough information to these senior people to cast their votes.

• The Defence Collegium of eminent persons would consist of the following:
• Members of the Parliamentary Standing Committee on Defence drawn from all major political parties
• Well known serving and retired military technical experts
• Retired Judges

The weightage assigned by the collegium, in each case, will be used in the evaluation and award of all contracts by the Ministry of Defence in future. This method is better than any operations research or other method to assign weightages as it will include members of the opposition in parliament, who will be party to every defence contract and therefore cannot be questioned. This collegium system will ensure quality and affordability of the equipment procured by the government.

Make in India – The Defence Economic Zones Concept

The government of India needs to start projects that could potentially employ at least half of the 150 million that are expected to enter the job market by 2018. The Ministry of Defence is expected to place orders worth $200 billion or so within the next five to seven years. If we do not act now by initiating large manufacturing projects in the private sector, we will have to import a large part of the above mentioned military ordinance as the PSU sector (nine defence PSUs, 37 Ordinance Factories and the DRDO) has neither the competence nor the capacity to produce sophisticated weapons as demonstrated over the last 45 years.

In November 2014, a proposal to fast track domestic defence equipment manufacturing was submitted to the government of India. The proposal called for the setting up of six Defence Economic Zones (DEZs) across India in two phases of three DEZs each. Each DEZ will be a 3,000-5,000 acre self-contained defence manufacturing facility with large defence contractors as anchor partners and over 2,500 vendor companies located on each DEZ together with six IIT-sponsored engineering departments offering full time courses in defence related disciplines. Each DEZ is likely to create over 3,00,000 high technology jobs in the defence sector. The DEZs will also have their own extensive logistics facilities to move manufactured equipment to testing ranges and to export markets in case of finished products. The DPP committee should consider inclusion of a page on DEZs and a government of India policy on DEZs in DPP 2015.

Concluding Comments

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We live in an era of extremely rapid change and challenges to our security. India has to respond to any kind of security threat be it from neighbouring nations or from terrorist organisations from around the world such as Al Queda and ISIS. Today, when global geopolitical structures such as the Berlin wall could collapse in a few minutes, and when phenomena such as the sudden rise of ISIS can threaten peace and security in South Asia, can we talk about the requirement of a precedent before we can be convinced to take action?

India has signed Strategic Partnership agreements with 20 countries. However, Ambassador K. Shankar Bajpai has said that when the chips are down, none of these strategic partnerships will work. It is, therefore, extremely important that the Phase I of the DEZ project be fast tracked on an immediate basis. Not doing so could have catastrophic results. This Government has won a historic mandate to bring in change. The people of India expect and demand change in the way things are done. Providing a DPP that works efficiently, creates millions of new jobs and secures our borders is a sacred duty. We cannot afford to fail.