Negotiate rather than blacklist: proposal for Defence purchases

Fifteen companies, including six foreign firms, are currently blacklisted by the MoD while 23 other companies are under scrutiny for allegations of corruption.

Written by Sushant Singh | New Delhi | Updated: July 23, 2015 10:07 am
Manohar Parrikar, Defence Ministry, DPP, india defence deals, Defence Procurement Procedure, Make in India campaign, Rafale deal, parrikar Rafale deal, india france Rafale, narendra modi govt, Indian express Defence Minister Manohar Parrikar

In the new Defence Procurement Procedure (DPP) to be announced next month, the Ministry of Defence (MoD) is likely to propose alternative mechanisms instead of blacklisting defence manufacturers over complaints of corruption.

One of the options being considered is a negotiated resolution with the accused company. These models can be found in the UK and the US which use “deferred prosecution agreements” (DPA) whereby investigating authorities can negotiate with companies accused of wrongdoing to pay heavy penal fines and reparations. In return, criminal prosecution of the company in that case is suspended. However, criminal prosecution of individuals guilty of breaching the law — say, by giving or taking bribes — continues.

This is one of the recommendations made by the expert committee constituted by Defence Minister Manohar Parrikar to revise the DPP.

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This is a clear departure from the policy pursued by the ministry under UPA’s Defence Minister A K Antony who insisted that a defence deal must be put on hold if there was an allegation of corruption and the firm concerned automatically blacklisted.

Fifteen companies, including six foreign firms, are currently blacklisted by the MoD while 23 other companies are under scrutiny for allegations of corruption.

The DPP was first drafted in 1992, comprehensively reviewed in 2002, and subsequently revised in 2003, 2005, 2006, 2008, 2011 and 2013.

The committee is likely to hand over its final report, which is more than 200 pages long, to the MoD on Thursday. It had submitted its interim report to the ministry last week. The initial mandate of 45 days of the 10-member committee, headed by Dhirendra Singh, former Home Secretary and Special Secretary (Defence), was subsequently extended to July 31.

The other highlights of the committee report include realistic framing of Qualitative Requirements (QR) by the defence services. The committee has recommended that the service QR for any item must have two parts: essential and desirable. The equipment would then need to meet the essential requirements while matching as many desirable ones as it can. This would prevent the situation like that of the recent cancellation of the tender for a rifle for the army because a weapon matching the Army’s QR does not exist anywhere.

The other major emphasis is on promoting “Make in India” in the defence sector. It has suggested a model where along with the lowest or L-1 bid, the government should also consider the I-1 bid while selecting a buyer. The I-1 bid refers to the most Indigenous proposal, i.e., with the highest content of a defence product being made in India.

The committee has also recommended increasing indigenous content threshold for “buy Indian” and “buy & make Indian” categories to 40 per cent and 60 per cent.

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