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.

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.

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.

A purposeful policy document must never lose its focus. Every provision  therein must contribute to the achievement of the set out objectives.  In its enthusiasm to make DPP appear fair,  transparent and above board, MoD has burdened it with pointless and wasteful  encumbrances. They mean little but consume considerable time and effort. Worse,  they divert attention from critical matters to peripheral issues. Four  provisions that need deletion are discussed below:-        

•Under  pressure from Integrity International and to display its adherence to probity,  MoD has included the requirement of Integrity Pact (IP) for all contracts over  Rs 100 crores. It is to be signed between the procurement agency and the  vendors – the procurement agency promising not to ask for bribes and the  vendors undertaking not to offer bribes. There cannot be a more juvenile and  purposeless provision. It defies logic as to how officials who are not deterred  by existing penal and service rules can be expected to remain bound by a mere  undertaking that carries only moral weight. According to vendors, it is for the  procurement agency to lay down business ethics and norms. As far as they are  concerned, they want business.  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.

•DPP also  provides for the nomination of Independent Monitors (IM) to oversee  implementation of IP. In case a vendor submits a complaint with regard to  violation of IP, the procurement agency may forward the same to IM for  comments. IM may peruse documents if required and submit their report to the  Acquisition Wing for taking decision as deemed fit. Though IP is a bilateral  agreement, the Acquisition Wing has most unfairly abrogated the right to be the  final arbiter of all complaints. It needs to be highlighted here that it is for the Acquisition Wing to  determine whether to refer a complaint to IM and also to decide final disposal  of their report. Thus, provision of nomination of IM serves no purpose at all  except provide opportunity to well-connected retired bureaucrats to find  re-employment.    

•Under fall clause of IP, an undertaking is sought  from every bidder that he had not supplied similar item at a price lower than  that offered in the present bid to any Government department. If supplied, then  the details regarding the cost, time of supply and quantities are required to be  included in the commercial offer. The clause warns the bidders that if they are  found to have supplied at a lower price, then the same price would be applicable  to the present case with due allowance for quantities and intervening time  period. Two points need emphasis here. One, the provision amounts to an abject admission of MoD’s failure to  maintain an exhaustive data bank of all purchases made by the services. Hence,  it wants vendors to provide that information. Secondly, it is well nigh  impossible to compare two procurement cases as SQR would invariably differ. Therefore,  inclusion of fall clause is a futile exercise.    

•With a view to have mid-course check, DPP mandates  constitution of a Technical Oversight Committee (TOC) for contracts over Rs 300  crores to ascertain that selection of vendors, trials, compliance to SQR and  trial evaluations were carried out according to the prescribed procedures. TOC consists  of 3 members — a service officer, a DRDO scientist and a Defence Public Sector  Undertaking representative. TOC is a farce. Members are detailed in routine,  possess little knowledge of the procurement process and can spot no infirmity at  all. Although MoD considers it to be a bulwark against any allegations of  irregularity at a later stage, it creates considerable futile work for  Technical Managers, thereby diverting their attention from the essentials.    

Finally
Continuance of status quo is in the  interest of all decision makers. Invariably, all officials involved in  reviewing DPP are the same government functionaries who are responsible for the  ongoing mess.  Supremacy of personal  interests over national interests has been the hallmark of Indian governance. Therefore,  despite incontrovertible effectiveness and practicality of the recommended five  measures, MoD would need to muster great courage to break free of deep-seated  prejudices and past mindset to accept them. Whereas no major difficulty is  envisaged in the amalgamation of categories and attempting concurrent  activities, other measures are likely to prove more challenging. 

Delegation of authority to a subordinate  organisation, commensurate with its potential and resources, is the hallmark of  any rational procedure. MoD must explore all possibilities to delegate more  powers to the services. Likewise, MoD must consider doing away with politically  sensitive issues like the Integrity Pact. Finally, although many senior officers  (both military and civil) believe that their long experience equips them to  shoulder any responsibility, due attention must be paid to the selection  and training of acquisition  functionaries.

Minor tinkering with a few irrelevant provisions will  result in cosmetic changes of peripheral importance. Radical reforms need a  paradigm shift in approach. It is for MoD to display its resolve to reform the  system through bold and innovative initiative. Biennial review of DPP should  not be allowed to degenerate into a meaningless