There is a widespread belief that the Qualitative Requirements are gleaned from glossy brochures and that unrealistic parameters for defence equipments are formulated. We wouldlike to dispel this notion and state that, whereas primacy has to be accorded to policy makers in strategic planning, the balance of advantage however needs to shift to the Armed Forces in the matter of the choice of the characteristics of defence systems and equipment based on user preference and tactical and operational doctrines. Modernisation is not merely induction of new types of equipment, but a mix of strategy and security perceptions and optimum use of hardware to achieve stated national objectives. Services should lead the initiative for modernisation.
1.4.01;Dhirendra Singh Committee Report[i]
Report of the high level committee leading to the latest revision of Defence Procurement Procedure (DPP) has been concluded by a ten member eminent panel under the chairmanship of Shri Dhirendra Singh former Home Secretary and is presently under examination with various stakeholders before its recommendations are considered for implementation by the government. Convened in May 2015the committee titled ‘Committee of Experts for Amendment to DPP-2013 including formulation of policy framework’ examined the complex domain of capital acquisitions known more for its failings than achievements in recent times. The committee was tasked with the dual responsibility of ‘evolving a policy frame work for Make in India in Defence’ as well as to ‘recommend improvements to the DPP 2013 in order to simplify and rationalize defence procurement’. In its exhaustive report spanning seven chapters the committee has attempted to put the overall gamut of capital acquisition in perspective and their recommendations will eventually form the basis of the latest version of DPP expected soon. The report lists a total of 43 recommendations of whichthe major ones that have an immediate bearing on the Army have been discussed in subsequent paragraphs.
The most significant observation of the committee lies in a clear acknowledgement of the fact that defence material when compared to civil products have certain highly distinctive features. They are highly technology-intensive, dominated by multinational control regimes, costly to develop and composed of complex systems subject to rigorous trials. Pricing decisions for defence procurements are highly complex with little or no applicability of standard market forces to these contracts. Resultantly, a military capability is not merely a procurement of equipment but is a deployment of a complex man-machine mix; hence, in words of the committee, ‘unwitting’ comparisons between civil and military procurements cannot be made. The need and importance of treating defence procurement and markets in the ‘same template devised for procurement of civil products’ therefore needs to be avoided. This path-breaking distinction will in times to come herald a paradigm shift in the way defence acquisition is viewed in India. It also may rid the Services of the long-standing delays caused by instances such as single vendor situations created due to inability of the current system to fathom and accept this vital distinction between military and civilian procurements.
Further, on lines of a Strategic Defence Review (SDR) recommended by the Bernard Gray acquisition reforms of 2009[ii]in the United Kingdom (UK) the committee has recommended a national consensus to be developed to generate military power in India.
A number of committees on acquisition reforms, primarily the Kelkar committee in the past ,have talked about establishment of an enhanced procurement organization modeled on Direction Générale de l’Armement (DGA) of France. On the same lines, Dhirendra Singh committee has reiterated the recommendation of a proactive defence procurement executive, with specialist wings and personnel working outside the staff-oriented environment of confines of the Government establishment in order to spearhead the procurement process at the same time working seamlessly with the Ministry of Defence and Services Headquarters.
Adopting a forward thinking and positive stance, the committee also stresses that ‘Hand holding and nurturing’would be the DNA of such procurement executive rather than a ‘hands off’ approach where meetings with industry personnel are looked upon with suspicion and discouraged.
This recommendation in itself may well be the beginning of a state of art acquisition organisation in India on the lines of DGA of France or the Australian Defence Materiel Organisation (DMO).
Post extensive stakeholder interaction, the committee has suggested several structural and procedural recommendations to the DPP which have immense potential of simplifying the existing acquisition process as also reducing the acquisition time lines. In keeping with international best practices, where significant time and resources are devoted towards streamlining an acquisition business case before the Request for Proposal (RFP) is floated, the committee too has suggested certain ‘pre RFP’recommendations. These include making theTechnology Perspective Capability Roadmap (TPCR) more specific as also fielding the five year Services Capital Acquisition Plan (SCAP)and ‘Make’ projects in publicdomain in order to provide a more accurate direction to the private industryof the perspective requirements of the Services.The Request for Information (RFI) function now has been recommended to be a ‘structured interaction’with the Indian industry rather than a one way document. The committee has stated that, since defence acquisitions do not follow dynamics of commercial markets,the ‘capability’ sought by the Services shouldnot be negotiated in favour of ‘best price’ therefore, everysingle vendor situation, even a tab-initio Services Qualitative Requirements (SQR) stage, should not always be construed unacceptable. Based on this logic, the committee has recommended that minor deviations from SQRs at technical or field evaluation stages, need to be accepted to avoid setting the acquisition clock back by many years. Similarly, even in a single vendor situation, post technical evaluation by Technical Evaluation Committee (TEC), retraction of RFP may be resorted to ONLY as an exception rather than a rule in case a re-tendering is unlikely to increase the vendor base. The committee has also recommended doing away with the mandatory ‘approval’ of the TEC undertaken by Service Headquarters (SHQ) from DG Acquisition including for those delegated under the powers of the SHQ which was a major delay factor. The committee has however recommended a reduction to the validity of the Acceptance of Necessity (AoN) to six months from the existing one year while suggesting a further eight week extension on discretion of the competent financial authority (CFA).The area of field evaluation trials has been identified as one of the most critical delay factors in the acquisition chain however the committee is of the view that major initiative to optimise the field trial process maybe in terms of a ‘joint single trial’ should actually come from the Services themselves and acquisition set up should facilitate such initiatives. The approval of ‘Staff Evaluation Report’ may be done in Service Headquarters atVice Chief level, on the same lines as recommended for TEC report.Constitution of commercial negotiation committee (CNC) similarly, has been recommended to be delinked with the acceptance of technical oversight committee (TOC) report. The CNC can now be constituted on acceptance of the ‘Staff Evaluation Report’, with the caveat that opening of commercial bids and negotiations with the vendor would not be done till acceptance of TOC report by the concerned CFA. The committee is also of the opinion that in case of a multi-vendor situation, at CNC stage, both price negotiations with the L1 vendor as well as benchmark price should not be a requirement. Regrettably, in case of commercial bid evaluation criteria, the committee has, while accepting models such as life cycle costing (LCC), performance-based logistics (PBL), total cost of acquisition(TCA) and L1T1, accorded primacy to the existing L1 system. This may deprive the Services of the advantages offered by the state of art evaluation criteria such as Quality cum cost based systems (QCBS) and ‘Cost Performance Trade Off’ systems in vogue in more advanced Armies world over.
The committee has recommended creation of a ‘single window system’ for clearance of project proposals to meet the regulatory and compliance requirements of aspiring vendorsfor Buy (Indian)and Buy and Make (Indian) cases. This single window clearance mechanism will be augmented by a ‘facilitation desk’recommended to be established by Department of Defence Production (DDP) for resolving operational issues between prospective vendors and diverse agencies and Ministries. However, the experience of DDP in setting up a similar facilitation mechanism in the form of Defence Offsets Facilitation Agency (DOFA)known in its present avatar as the Defence Offsets Management Wing(DOMW) has not been very encouraging and ability of DDP to play the facilitator as envisaged by the committee may need deliberate effort. Similarly, the committee,in order to create a trained and educated acquisition workforce, has recommended a plethora of institutions to train different categories of workforce comprising Service officers, bureaucrats and finance managers. This aspect needs to be re-visited as it would be a better proposition to train the entire acquisition workforce at all levels by one single agency in order to achieve a congruence of their varied worldview and foster affiliation leading to cross-functionality in their roles at an appropriate stage. Perpetuating a silo-based training structure in acquisition cannot hope to achieve a unity in execution and delivery. Lastly, the committee compares the existing acquisition structure to a ‘relay race’ where the various components of acquisition structureare expected to function in a graduated manner. This aspect may warrant a re-look, as world over the acquisition structures are based on matrix organisation, driven by a Capability Development Executive duly supported by a Program Management vertical.
Any reform process poised for implementation in present times cannot ignore world class best acquisition practices and enabling technologies tailored to Indian conditions. To that end, the Dhirendra Singh committee report fulfils the criteria and can be treated with a cautious optimism till the recommendations are implemented. The committee however deserves credit for taking into account a ‘systems view’ of acquisition and ensuring that its deliberations transcend ‘beyond DPP’ to successfully address the ‘processes’ as well as the ‘underlying structures’ governing the organizational behavior of Indian acquisition ecosystem. The recommendations of this report may not radically enhance the capability sought by the Services in the near future, given the huge gap between recommendations and implementation of acquisition reforms in India, however, if implemented in right earnest, would bring Indian capital acquisition system at par with advanced Armies of the world.
The author is Senior Fellow at CLAWS. Views expressed here are personal
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