Of Matters Military. Mrinal Suman
Expert Committee Recommends Safety-Net for Acquisition Functionaries
5. Defence Purchases: It is Time India Asserts Itself
6. Technical Managers are Lesser Equals in the Acquisition Set-up
7. Expediting Defence Procurements
Evolution of India’s DefenceProcurement Regime
India’s Defence Procurement ProcedureUnderwent Radical Transformation after theKargil War
A defence acquisition system is a management process by which a nation provides effective, affordable and timely defence systems and equipment to its armed forces. Core contours of every defence acquisition system are shaped by the nature of tasks envisaged for the armed forces during the planned period, level of prevailing excellence in defence technology, state of indigenous industry, dependence on imports, need for synergy of equipment with allies and availability of funds. Consequently, every country has to evolve its own distinct system that suits its national strategic aims and is in consonance with the prevailing geo-strategic environment. However, the primary objective of all acquisition systems remains the same – to ensure delivery of the defence equipment sought by the services in the required time frame and with the best value for money. Hence, every nation strives to perfect its system to achieve optimum returns.
Procurement of new weaponry and equipment in all countries is a long, complex, arduous and time-consuming process. Multiple agencies have to perform vital functions, both concurrently and sequentially. A large number of inter-dependent variables have to be factored in to provide required equipment to the armed forces in an expeditious and cost effective manner. The average time taken for major acquisitions may extend up to 6 years. The problem gets compounded for India where the majority of critical equipment is procured from the foreign sources. Additionally, field trials have to be carried out in varying terrain and diverse climatic conditions.
All major Indian defence deals have been regularly coming under public scrutiny for the lack of transparency and inordinate delays. The Ministry of Defence (MoD) has been getting flak for not putting a proper system in place to ensure that the armed forces get the required equipment expeditiously. Various other issues also get raised to highlight the inadequacies of the procedures in vogue.
Prior to 1990, procurement of defence equipment was carried out as per the normal rules governing all government purchases. No separate procedure for the procurement of defence equipment was evolved. One of the major reasons for that was the fact that most of the imports during that era were from the erstwhile Soviet bloc and were always on ‘government to government’ basis. Peculiarities and complexities of defence equipment were first appreciated when an environment of open competition and procurement of equipment from diversified sources got introduced after the breakup of the Soviet Union. Public interest in defence deals also got intensified, with the result that all major deals elicited critical comments.
As the complete acquisition process involves a series of major functions by different organs of the government, it has always been felt that detailed guidelines should be in place to facilitate decision-making and eliminate ad-hocism. A detailed and well-structured procedure helps to ensure expeditious procurement and provides a template to the environment against which all procurement activities by different functionaries can be judged.
The Public Accounts Committee (PAC) also expressed similar concerns in its 187 th Report (1989). It recommended to the government that detailed guidelines be framed for defence procurements.
Defence Procurement Procedure 1992
Consequent to the recommendations of PAC, Defence Procurement Procedure – 1992 (DPP-1992) came into being in February 1992 when MoD issued detailed guidelines to that effect. Certain modifications to it were carried out over a period of time with the experienced gained. DPP-1992 laid down instructions for the steps to be followed for the complete gamut of the procurement process. It was a very praiseworthy and in a way, a path-breaking effort which achieved its stated aim to a great extent. However, as it always happens with the first attempts, it suffered from some major deficiencies, which affected its implementation.
First of all, there was no dedicated organisation structured specifically to handle the delicate and complex task of defence procurements. All officials held multiple responsibilities thus, dividing their attention and resulting in a lack of focus. They worked in watertight compartments with blinkered mindsets. No holistic view was taken. In the absence of clear-cut responsibilities, there was a complete lack of accountability. Consequently, decision-making became a casualty. Moreover, no single agency was designated as the nodal entity or the central monitoring authority.
Secondly, the procedure itself was not complete in all respects. It primarily dealt with outright purchases. It did not cover the cases involving transfer of technology. That proved to be a major shortcoming as most of the major procurements invariably have transfer of technology option. And most importantly, DPP-1992 did not cater for emergent requirements of the armed forces.
Thirdly, Acceptance of Necessity (AoN) had got mixed up with the acquisition process resulting in confusion and delays. Many times the procurement process preceded AoN, causing embarrassment all around. Most importantly, Defence Research and Development Organisation (DRDO) was necessarily given the first opportunity to develop every required equipment. Procurement action from other sources could not be initiated till DRDO gave the green signal. This resulted in prolonged delays.
Finally, there was no inbuilt mechanism of checks, balances and mid-course appraisals. Mistakes committed came to light either at the final stages of the process or during the post contract reviews. Very little could be done at that point to rectify the infirmity. The government had a difficult choice to make – either accept the flawed process or abort the case to reprocess it ab-initio with resultant delays and cost over-runs.
Recommendations of the Group of Ministers and New Acquisition Set-up
In the aftermath of the Kargil War, India attempted to streamline the entire acquisition system. The Group of Ministers on National Security, in their report submitted to the Prime Minister on 26 February 2001, observed that the then existing system for procurements had led to ‘sub-optimal utilization of funds, long delays in acquisition and slow progress in the modernization of the armed forces’. The Group opined that the prevailing methodology suffered from lack of integrated planning and implementation. It suggested the creation of a separate and dedicated institutional structure to undertake the complete gamut of procurement functions to inject a higher degree of professionalism and reduce delays.
Consequent to the acceptance of the Report of the Group of Ministers, a new set-up was established in MoD in October 2001. Broad guidelines for the formulation of a new procurement procedure were also issued. Need to achieve self-reliance was emphasized as well. The new acquisition set-up is shown at the Illustration.
Illustration: Defence Acquisition Structures
As can be seen, a Defence Acquisition Council (DAC) was constituted under the Defence Minister. This overarching body gives approval in principle to 15 Years Long Term Prospective Plan of the defence services at the beginning of a Five Year Plan period. It also approves all capital acquisitions and identifies them as ‘Buy’, ‘Buy and Make’ and ‘Make’ cases. In other words, it decides whether equipment is to be bought outright, or is to be bought along with technology transfer for subsequent manufacture within the country; or is to be indigenously developed through homegrown research and development route.
Defence Procurement Board, Defence Production Board and Defence Development Board have