Beyond AgustaWestland: Fixing an Ailing Defence Procurement Policy

The 2016 defence procurement policy could go a long way to prevent acquisition-related scams, writes Suresh Bangara

The question that should be uppermost in the minds of the common man is: why has it taken 20 years or more to procure a helicopter for our beloved VIPs and VVIPs? (Photo: The Quint)

What is fortuitous in the AgustaWestland deal, which is much under discussion in the media, is that the helicopter was meant for use by VVIPs in India. In a society obsessed with the VIP/VVIP culture, it is perhaps poetic justice that has invited so much attention on India and Italy.

The question that should be uppermost in the minds of the common man is: why has it taken 20 years or more to procure a helicopter for our beloved VIPs and VVIPs? If they cannot be looked after, how long will it take to get platforms, equipment, arms and ammunition for the fighting arms of the services?

The answer has been blowing in the wind for decades, starting from independence to the Kargil war and stretching to date. From starting a case for acquisition to signing a contract has taken one to two decades in most cases. Whether it was the main battle tank (MBT) for the army, the advanced jet trainer (AJT) for the air force, light combat aircraft (LCA) and scores of other platforms and equipment – imported or indigenous – met with the same fate.

In his capacity as scientific adviser to the defence minister, A P J Abdul Kalam made an effort in 1996 through a self-reliance implementation committee (SRIC) to increase the indigenous content of procurement for our armed forces. Having been a member of that committee and having participated in never ending processes of the Ministry of Defence (MoD), I now see the light at the end of the tunnel. Let me explain for the benefit of the layman.

Former Air Chief Marshal S P Tyagi arrives at the CBI headquarters in New Delhi on Monday, for alleged alleged corruption in the Rs 3,600-crore AgustaWestland chopper deal. (Photo: PTI)

Known Procurement Obstacles

Budgetary Allocation: First, the inability to convert long-term induction programmes into time-bound acquisition plans along with budgetary support. Although the three services’ headquarters periodically submitted 10-15 year plans, the MoD neither had the expertise to accept or reject such proposals nor was there assurance of budgetary grants for such plans. The Ministry of Finance would often spring a surprise by reducing allocations to MoD just prior to announcement of the budget.

Limited Authority: Second, the defence chiefs neither had financial powers to run the revenue nor the capital budgets allocated to their respective services till a new management strategy was first introduced in the late 1990s. Their powers for capital expenditure remains limited.

Allowing Private Investment: Third, excessive reliance on public sector manufacturing and production agencies and inability to provide level playing field to competent private industries deprived the forces from timely supply of equipment as also of international quality of products.

Inordinate Delay: Fourth, protracted procedures for compiling requests for proposals and field trials resulted in unaffordable opportunity costs to be incurred by the government. Neither the MoD nor the service headquarters were held accountable for inordinate delays which ipso facto led to frequent changes of performance-related quantification.

Too Much Dependence on Imports: Fifth, the inability to meet stringent time schedules of indigenous equipment to match the operational needs of the forces often resulted in import of platforms and systems which in turn created its own dynamics of middlemen, corruption and litigations. Blacklisting foreign suppliers caused further delay in restarting the process ab initio. Consequently, the end-user was forced to continue to use obsolete and obsolescent equipment with no hope of replacement for decades.

Procurement Policy

These obstacles suggest that a clear-cut policy framework is essential for streamlining the whole procurement process. It was the group of ministers after the Kargil war that recommended setting up a procurement structure for time-bound acquisition of platforms and weapons systems. Such a system was created in 2002 but significantly the process of integration of the armed forces with the MoD, recommended by the same GoM, was not implemented.

Such were the complexities of procurement which encompass numerous factors within and without that the defence procurement policy was revised in 2005, 2006, 2008, 2009, 2011 and 2013. Any sane organisation would desist from issuing policies almost every year, which compound issues and confound suppliers. That was perhaps the reason why hardly any worthwhile procurement, including ammunition, took place during that period.

DPP 2016

The latest DPP issued during the recently-concluded Goa DEF EXPO has some notable and far-reaching policy formulations. Extensive consultations with leading industries in India and abroad gave birth to Digital India, Make in India, Start up India, all of which have an impact on the DPP. All three have interlinking policy directions for executing the government’s vision. Consequently, the following weaknesses in the procurement system have been addressed comprehensively:

• The parameters and processes for Make in India have been articulated with emphasis on self-reliance through the facilities of the much-improved indigenous public and private sectors. Incentives and assured production orders with possible export capabilities have been covered.
  
• Off set conditions for foreign suppliers exceeding supply of Rs 2,000 crore have been specified with clarity.
  
• Incentives for MSMEs and the need for the government to bear part costs for design and development has been recognised.
  
• Transparency, probity and public accountability form the back bone of the policy document.
  
• Long Term Integrated Perspective Plan (LTIPP), the five-year Services Capital Acquisition Plan (SCAP) and Annual Acquisition Plan (AAP) for all three services duly integrated by the Integrated Defence Staff under COSC (Chiefs of Staff Committee) have been rationalised.
  
• Fast track mechanisms have been streamlined. Much would depend on execution of the policy.
  
• Strategic partnerships commensurate with current geopolitical realities are under consideration. Transfer of technologies and access to cutting edge technologies are part of discussions currently in progress.
  

Extensive consultations with leading industries in India and abroad gave birth to Digital India, Make in India, Start up India, all of which have an impact on the defence orocurement policy. (Photo: iStock)

The Way Ahead

The three missing links in the government’s well-directed efforts are the integration of the three forces under a CDS, the integration of the MoD with service headquarters to professionalise decision making at MoD and to eliminate corruption at the final settlement of payment to indigenous suppliers at the respective CDA outlets. The latter has been pushing the cost incurred by suppliers which can be totally neutralised, if there is a will. Digital India ought to remove this undesirable interface and facilitate direct payment to suppliers.

There is hope that the VVIP helicopter along with long-pending demands of the services will all be met within the stipulated time frame. The term VVIP should be dispensed with.

(The writer is a former Commander-in-Chief, Southern Naval Command)

Also read:

All You Want to Know About the AgustaWestland VVIP Chopper Scam

AgustaWestland: Has the CBI Been Thorough With Its Investigation?