Opinion Scandals,payoffs and blamegames

The technical specifications for any kind of weapon systems to be acquired are within the wherewithal of the various service headquarters of the armed forces,in line with their operational requirements and long-term strategic plans and extends from 10 to 20 years. The aim is to acquire state-of-the-art systems,keeping in view the long-term perspective. The formal process of acquisition is complex,where the defence ministry (MoD) and service headquarters play the primary role and are supported by secondary players in a long line of checks and balances. The whole process is informed by numerous contractual negotiations on price and support services. This is very finely balanced as there are often no comparators for doing a trend analysis of pricing of a new product and the possibility of single vendors is a reality. As far as possible,there is an attempt to move away from a single vendor situation unless a product is a proprietary article (where design and technical know-how is owned by the producer),as multiple vendors open up the field to greater competition and choice.

There are no easy answers to these processes. What,however,needs to be understood is that it is a process of shared accountability among the service headquarters,the MoD and the larger paraphernalia of the finance ministry,going right up to the Cabinet Committee on Security (CCS). Collective responsibility entails owning the good with the not-so-good. Capital procurement processes play out over the long term and the people involved keep changing at all levels. So when the witch-hunt that the spectre of a scam sets off begins,people involved in the initial process have possibly moved on or retired. The reason defence procurement is sluggish is because of this spectre coming back to haunt people who have been involved at various stages. The perception is that it is probably better to remain inactive and bide one’s time rather than be proactive and get hauled out of retirement to be splashed all over the front pages.

The process of procurement for a high-value contract (Rs 100 crore and above) goes through several levels of due diligence. It commences with the drawing up of technical specifications by the service headquarters and joint review of these specifications by the MoD,with inputs from the dedicated defence finance and technical manager set-up embedded within the ministry. When a proposal is moved,there is an Approval of Necessity (AON) accorded by the additional secretary of the MoD before the process is put in motion. Once the specifications and numbers are frozen and a budget put in place,after diligence has been exercised by both the service headquarters and the ministry,the proposal is approved by the defence minister and goes to the finance ministry for vetting. On clearance by finance ministry,it is placed before the CCS and approval is accorded by the CCS before the proposal moves into the actual operational aspects of the two-bid process. There is a technical bid first,with only those vendors qualifying for a technical bid being invited for commercial negotiations. The entire process — from opening the bids,the price negotiation committee proceedings that identify the most suitable vendor and negotiate a competitive price,right up to the acceptance trials — is jointly done by the service headquarters and the MoD. So the entire process of procurement is jointly owned. There are several levels of internal and external checks and balances and hence there needs to be a collective ownership by all who have played a role. Unfortunately,instead of operating as an integrated defence headquarters,the moment there is a hint of scandal and a pay-off,all involved feign ignorance and the blamegame merry-go-round goes into full tilt.

The MoD website has the manuals that detail the procurement process. They are complex and completely prescriptive with their attention to detail. There are different manuals for revenue and capital procurement. They are exhaustive and certainly not easy reads. So unless one has a specific and abiding interest in these processes,it is unlikely one is going to wade through this to figure out the transparency and accountability of the process .

The MoD’s acquisition process clearly states that no middlemen or agents will be entertained and business will be done only with the Original Equipment Manufacturers (OEMs),who also have to be registered with the MoD before they can be considered as suitable vendors. Very clear,but how realistic? Any procurement,as borne out time and again,involves flowbacks and brokers and we are naïve if we believe it can be stemmed. Especially in the high-value arms procurement business,if middlemen are a reality,then instead of denying their existence,wishing them away and entering into integrity pacts,isn’t there a need to acknowledge that this reality exists?

As usual,names and information are being bandied about. One is not sure how much of this is speculative and how much borne out by facts. The ministry has gone into a knee-jerk mode of “we need to indigenise” and “all the guilty will be punished” in an effort to manage the negative press. But indigenisation has always been a clear objective of the DPP as borne out by the foreword. That we have failed to act on it and are happy doing things as we have always done is reflected in the fact that indigenisation is a far cry even today.

With the service headquarters and the MoD blaming each other,and the ministry cancelling contracts and blacklisting every major international vendor on the basis of some scam or the other,there is a direct and long-lasting impact on defence preparedness. Each such incident sets back operational capability by 20 or 30 years. Considering that we have the dubious distinction of being the largest procurer of arms in the world,is blacklisting a solution to the problem? And somewhere in the ensuing noise,the actual quality and suitability of the equipment falls by the way side. A case in point is the Bofors gun as was borne out in Kargil.

The writer,a 1987 batch Indian Audit and Accounts Service officer,was on secondment to the ministry of defence from 2002 to 2007. She left government service in 2008 and now works in the development sector