In a bid to prevent corruption in relatively smaller defence deals, the government has brought contracts of the value of Rs 20 crore under the ‘integrity pact’— a biding document that enables heavy penalties for bribing.
The amendment has been made in the existing Defence Procurement Procedure (DPP) which so far made the pact mandatory for contracts over Rs 100 crore. Now, the companies providing equipment worth Rs 20 crore will have to sign the pact with the government, declaring that neither side will be involved in bribing.
If found to be practising wrongdoings, the companies will lose their security deposits or bank guarantees, which have been enhanced under the new amendment. “An integrity pact would be signed between the government department and the bidders for all procurement schemes over 20 crore…The pact would be a binding agreement between the two in which the government promises that it will not accept bribes during the procurement and bidders pledge that they will not offer bribes,” said a government order.
The ministry’s step comes in the backdrop of the government’s ongoing effort to amend the DPP 2013.
Defence Minister Manohar Parrikar has repeatedly voiced his intention to formalise defence agents and adopt a different approach towards the blacklisting policy. As per the amended clause of DPP 2013, the ministry has introduced variable bank guarantees for contracts. While the bank guarantee is Rs 5 lakh for contracts between Rs 20-100 crore, it is Rs 1 crore for contracts above Rs 100 crore and less than Rs 300 crore. The guarantee is Rs 5 crore for contracts between Rs 300-5,000 crore and Rs 10 crore for contracts above Rs 5,000 crore.