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‘Sellers’ also ‘buyers’,Chandra panel for reforms

In its interactions,the committee is said to have found that the user’s interest was often compromised due to this “bias” built into the process.

The Naresh Chandra task force on security has called for a thorough revamp of the current defence procurement system,pointing out a clear “conflict of interest” in which potential “sellers” have been made part of all relevant committees involved in the acquisition process.

According to reliable sources,the committee has taken exception to the fact that those responsible for defence public sector units sit on key procurement committees and influence the discussions that end up determining the decision of the buyer — the Armed Forces.

The reference made is to representatives of the Department of Defence Production and other agencies like Defence Research and Development Organisation who seek to win preference for in-house PSUs and agencies. In its interactions,the committee is said to have found that the user’s interest was often compromised due to this “bias” built into the process.

It’s learnt that the committee has suggested that the procurement system must not be completely confined to the Defence Ministry and that a larger joint panel be considered where representatives from other departments are also involved. This,sources said,is also important to ensure that larger political and strategic considerations can also be factored in before the procurement decision is made.

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As of now,the Defence Acquisition Committee,headed by the Defence Minister,is the principal body for clearing all acquisitions. In fact,this committee is involved in all stages of the procurement process,starting with clearing the long term perspective plan and giving an “acceptance of necessity” to every new case to set the ball rolling for the acquisition.

Apart from the Ministers of State,Defence Secretary and the three service chiefs,this committee includes the Defence Production Secretary and the DRDO head. Once the DAC takes a decision,the implementation rests with the Defence Procurement Board headed by the Defence Secretary which again includes secretaries of Defence Production and DRDO. Purchases above Rs 1,000 crore have to be sent for CCS (Cabinet Committee on Security) approval.

The Naresh Chandra Committee,based on its interactions with the Armed Forces,has found that this situation adversely affects the interests of the buyer and user. Moreover,the domestic private sector is neither involved nor consulted in this entire process,which ends up distorting the level playing field.


While the government is still studying the committee’s report,sources said some of the recommendations on the defence acquisition front are quite radical and lay emphasis on opening up this field to the private sector through a fairer process.

Besides,the committee has called for reviewing the practice of blacklisting companies if they come under investigation for any alleged case of corruption. The panel has favored a system of graded penalties and observed that blacklisting should be used sparingly and only as the last option.

First published on: 28-06-2012 at 00:37 IST
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