Sep 12, 2010

Defence Procurement: Transparency versus Urgency of Acquisitions

            Procurement of various kinds of defence equipment/platforms including arms is made by the Government from various indigenous as foreign sources to meet the requirements of Armed Forces. This is a continuous process based on the technological changes, threat perception and available resources and is undertaken in accordance with the defence procurement procedures. The import option is exercised when it is necessary to procure the items within a definite timeframe on operational grounds to bridge the capability gaps and normally when such equipment cannot be sourced indigenously within a specified timeframe. Government has taken various policy initiatives to promote indigenization of defence production with the ultimate goal of self-reliance in the defence sector.

The Defence Procurement Procedure provides for “Make” category for Indigenous Research, Design, Development and Production of systems. These include high technology complex systems. Further, a new category ‘Buy & Make (Indian)’ has been included as an amendment to Defence Procurement Procedure (DPP) 2008 with effect from November 01, 2009 in order to encourage participation by Indian Industry. [MOD India Press Release].

The objective of DPP is  to ensure expeditious procurement of approved requirements of the Armed Forces in terms of capability sought within the time-frames prescribed by optimally utilizing allocate budgetary resources. While achieving this objective, these procedures demonstrate the highest degree of probity and public accountability, transparency in operations, free competition and impartiality.

The provisions incorporated in DPP for checking irregularities and to ensure transparency include; (i) An  ‘Integrity Pact’ between the Government department and the bidder for  all  contracts above Rs. 100 crores; (ii) Dealing directly  with Original Equipment Manufacturers (OEM) or Authorized vendors of Government Sponsored Export Agencies (applicable in case of countries where domestic laws do not permit  direct export by OEMs); (iii) Major decisions in the acquisition process being taken in a ‘Collegiate’ manner; (iv) Enhanced transparency in the conduct of field trials; (v) Pre-bid meetings with the vendors; (vi) Prohibiting the use of undue influence by the seller for obtaining any contract with the Government; (vii) Prohibiting the engagement of any individual or firm to recommend to the Government the award of a contact to the seller, and the payment of any amount in respect of any such recommendation. 

Modernisation of Armed Forces

The details of allocation and utilization of funds for capital budget during the last three years are as follows:-

(Rs. In crores)

Budgetary Allocations earmarked for Modernization of Armed Forces, services and the utilization thereof are as under:

(Rs. In crores)  

           [Source MOD India Press Release].

India’s Foreign Military Sales Route of Acquisitions

            The Ministry of Defence indicated that some of the requirements of the Armed Forces have been met by procurements through the Foreign Military Sales (FMS) procedure of US Government. Major FMS procurements are:-

(i)                 C-130J 30 aircraft.

(ii)               Self Protection Suite for VVIP Boeing Business Jets.

(iii)             Indian Naval Ship Jalashwa.

(iv)              UH 3H Helicopters

(v)                Weapon Locating Radars (WLR). [MOD India Report].

            Contracts for procurement of P-81 aircraft and Dornier aircraft for maritime patrol/reconnaissance/surveillance have also been signed. In addition the Ministry of Defence proposes to issue a Letter of Request to the Government of USA under their Foreign Military Sales route for procurement of 3rd Generation Anti-Tank Guided Missile (ATGM) along with transfer of technology. This is likely to pave the way for induction of Javelin the man-portable, fire-and-forget ATGM on a direct government-to-government sales basis.  The Army as per the Times of India has a shortfall of around 44,000 ATGMs of different types. "Though Army has an authorised holding of 81,206 ATGMs, not even half that number is present in its inventory,'' a source was reported by the Newspaper. The Army has placed an order for Nag ATGM, with a 4-km strike range, for 443 missiles and 13 Namicas (Nag missile tracked carriers) in addition to 4,100 "advanced'' Milan-2T missiles, with "tandem warheads'', as well as 15,000 Konkurs-M missiles. [ Based on Ministry of Defence press Release and Times of India report by Rajat Pandit 17 August 2010].

Foreign Military Sales or government to government contracts between India and the US are growing thereby indicating that the Ministry of Defence is adopting this route to make up shortfall in overall deficiency of equipment and preparedness profile of the services particularly the Army which would be requiring a heavy dose of artillery guns as well despite the light guns contract which is likely to be signed shortly for supply by once again the US.  With a large shortfall of ATGM s in the Army and despite the Bharat Dynamics Ltd which is licensed manufacturing Milan and Konkurs missiles, it is apparent that the deficiency is so high that the government has been forced to purchase Javelin missiles.

The Indian Air Force will however be inducting six aircraft for special forces for $1 billion without military-grade secure equipment  as India has not signed Communications Inter-Operability and Security Memorandum of Agreement (CISMOA) with the USA.  “We are aware that some of the equipment we desire may not be available. But it is up to us to use the platform the way we want to with modifications once we have it,” a senior air force officer told The Telegraph.  “The military GPS system is encrypted and thus not available without a communications agreement,” an US defence official was quoted. He claimed that “US military equipment is designed utilising the best systems available, such as military-grade GPS, which is more accurate and less likely to be spoofed (intercepted) than civilian GPS”. [The Daily Telegraph report 03 August 2010].

            Foreign Military Sales route used by India for some time has also raised concerns of lack of spares and equipment for the radars for instance which were purchased in the 1990’s and which are now not in workable order given lack of spares. Hopefully this will be resolved soon though given the stringent laws in the United States a large scale expansion of this list is not likely for this is not seen by many as the right approach for India’s defence acquisitions at home as well.

SEP 2010