A major overhaul in the delegation of financial powers for expenditure and procurement in the three armed forces is in the offing, with the Ministry of Defence on Thursday setting up a committee which has two months to submit its findings. Sources in the ministry said the decision to “review” all delegation of powers follows complaints to the Central Vigilance Commission and the Standing Committee that junior IFAs (Integrated Financial Advisors) attached to the Army, Navy and Air Force had irrational powers to clear revenue and capital expenditure, and that frequent “splitting” of sanctions for procurements was taking place. The MoD order issued on Thursday says the review, by a 10-member committee, would “examine the systemic issues for creating a suitable structure of checks and balances, and put in place a framework of appropriate ministerial oversight. It will deal with macro issues emerging out of concerns expressed by the adminsitrative wing of the MoD, the MoD Finance and External/Internal audit reports”. The order states that all 688 sub-schedules (the basic unit for financial powers issued by the Army, Navy or Air Force) will be “reviewed in-depth”. The four-page terms of reference for the review committee is indicative of what the MoD feels has gone amiss in the rules and guidelines for delegation of powers. The order states, for instance, that a “macro issue” to be tackled by the review committee is that long-term equipment support plans should be formulated on a five-yearly basis for major weapons and platforms to bring down “piecemeal procurement” of the same items at lower echelons. Besides an oversight mechanism and internal audit structure, the introduction of a web-enabled portal with a database of registered vendors should be maintained and shared at all levels. The MoD had advised that the delegation of powers would now be recommended on the “need-based” principle based on data, and not as a fixed percentage. “It will be ensured that a certain percentage of cases keep coming to the ministry so that domain knowledge on procurement is utilized in high value cases,” says the attached note. The issue of splitting of sanctions, the MoD has cautioned, needs to be “tackled” separately by looking into the rationalisation of CFAs. “Audit reports have reported misuse of inherent powers by splitting of sanctions. Multiplicity of CFAs in same office/HQs needs to be specifically looked into, as it leads to loss of centralized knowledge and differential rates in same office HQs. The MoD has also pointed out that a simultaneous review of delegation of administrative powers needed to be undertaken, as there were several “flaws” in the existing orders, issued since 2001. The terms of reference state, “One such flaw is lack of clarity as regards to financial implication, which would be exercised in consultation with the Finance Division. there is a need to review the administrative powers simultaneously.”
