Regrettably, the performance of CNC in almost all cases has been found wanting. Fixation of fair and reasonable price is done in a highly amateurish, arbitrary and casual manner with the result that India invariably ends up paying more. For example, in the case of purchase of three AWACS from Israel, it was reported in the Israeli press that India had paid 1.1 billion dollars whereas the same aircraft had earlier been sold to China for 358 million dollars. High price paid for coffins also came under criticism.
Also read: India’s Defence Economics
Similarly, contracts are negotiated in a highly cavalier manner. Inability to negotiate contracts astutely has been the biggest weakness of the entire defence procurement regime. Failure to negotiate fool-proof agreements with clearly defined provisions has caused immense damage to Indian interests. Foreign vendors exploit ambiguities and small print in the contract documents, especially with respect to price fixation, delivery schedules, warranties, after sales support and penalties for default. Russia unilaterally revised price and delivery schedule of Gorshkov aircraft carrier. There are numerous such cases. There is hardly a case in which a foreign vendor abides by the letter and spirit of the contract. Yet, they get away with impunity. Despite suffering colossal losses, India has not considered it necessary to hold concerned officials responsible for imprecise and flawed contracts.
The Way Forward
Accountability audit should be carried out in two ways. One, every acquisition proposal that either gets aborted or inordinately delayed must be subjected to detailed scrutiny to identify reasons for the same. Director General Acquisition could constitute a committee for the purpose. Two, in case of successfully signed contracts, all contentious issues that crop up during post-contract implementation stage should be investigated by MoD to fix responsibility for lapses and oversight.
Accountability Audit Matrix
Study of an acquisition case (either when a contract is signed or case aborted prematurely) should cover the following aspects:
Defence procurement is a serious business. It costs the national exchequer dearly and affects national defence preparedness. Therefore, no laxity, apathy and transgression should be disregarded.
- Formulation of realistic SQR in verifiable terms.
- Evolution of objective trial methodology to validate performance parameters and provide required inputs to general staff to determine acceptability of equipment.
- Fixation of fair price scientifically and determination of lowest bidder on the basis of LCC.
- Drafting of contract diligently to protect Indian interests.
Additionally, the committee should also look at positive and negative imperatives that affect the case. A detailed appraisal of each case would highlight all acts of omission and commission. The aim of accountability audit should neither be to find scapegoats for systemic inadequacies nor carry out witch hunt to settle scores. It should seek to penalise non-performance lest dithering officials continue to consider it judicious to play safe and let matters drift on specious grounds. Similarly, no act of commission that fails to pass the test of good faith should be condoned. Misdemeanors should never go unpunished.
Defence procurement is a serious business. It costs the national exchequer dearly and affects national defence preparedness. Therefore, no laxity, apathy and transgression should be disregarded. Every official must be made responsible for his acts of commission and omission. It is only then that a message will get conveyed to the environment that authority carries certain obligations and failure to fulfill those obligations would invite severe punitive response.
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