Disjointed functioning – bane of defence procurements
Major General
Mrinal Suman
Every
nation’s defence procurement regime aims at providing effective, affordable and
timely defence systems and equipment to its armed forces. The stated aim of India’s
Defence Procurement procedure is no
different. It is to
– “ensure
expeditious procurement of the approved requirements of the armed forces in
terms of capabilities sought and time frame prescribed, by optimally utilising
the allocated budgetary resources”.
Procurement
of new weaponry and equipment in all nations is a multifaceted, protracted and cross-disciplinary activity, requiring participation
of multiple agencies. Requirement of new weapon systems flows from threat
analysis and required capabilities. Thereafter, a stock-taking exercise is
carried out to identify existing gaps in capability. Finally, perspective plans
are evolved to acquire wherewithal to cover the gaps.
Close coordination between
different agencies is of critical importance in all multi-disciplinary
activities and defence procurement is no exception. That is the reason why most
countries have evolved a system of unified functioning. They have created a
nodal agency to exercise overarching oversight and to ensure that participating
agencies do not work at cross purposes.
In Britain, the Defence Board, under the Permanent Under-Secretary for
Defence is the central authority to provide senior level leadership and
strategic management of defence. It is assisted by two major structures in the acquisition process - Joint
Capabilities Board decides what capabilities the forces need and Defence Equipment and Support (DE&S) delivers the required equipment or systems. It must be recalled here
that DE&S was created in April 2007 by merging two erstwhile entities, the Defence
Procurement Agency and the Defence Logistics Organisation.
German defence acquisitions are managed by the Federal Defence
Administration (FDA), as per the Defence Policy Guidelines issued by
the German
Ministry of Defence on 27 May 2011. FDA is assisted by four organisations.
Directorate General of Armaments is responsible for defence research, planning and
induction of equipment. Federal Office of Defence Technology and Procurement
manages all armament projects (excluding IT) and ensures that the demands of
the armed forces are fully met. Modernisation Directorate provides active
support for all modernisation projects to improve economic efficiency and
effectiveness of the armed forces. Finally, Bundeswehr IT Office handles all IT
related issues.
The French Government has adopted a highly centralised
model. General Directorate for Armament (Direction générale de l’armement), or
DGA in short, is the empowered overarching authority. It oversees the
requirement of modern war systems by the French armed forces, analyses various options, identifies the
most appropriate route, facilitates development and ensures timely induction.
It manages about 80 percent of defence equipment budget.
The US defence acquisition system is
characterised by centralised policies and decentralised execution of
acquisition activities. The Office of the Under Secretary of Defence for
Acquisition, Technology and Logistics is the nodal agency and the overall
authority tasked to oversee the complete defence acquisition process. It is
assisted by Joint Requirements Oversight Council in reviewing programmes and
Functional Capabilities Board in assessing capability gaps and proposals.
Contract support is provided by the Defence Contract Management Agency and
logistic support by Defence Logistics Agency.
The Indian Conundrum
Despite repeated assertions to
the contrary, India’s defence procurement regime has been a total failure. It
has failed to achieve any of the stated objectives. Procurement cases continue
to languish in bureaucratic tangle. Worse, India’s dependence on foreign
systems continues to grow while India’s defence industry remains
underdeveloped. Periodic reviews are announced with much flourish, but there
has been no improvement on ground.
One of the primary reasons for
this failure is a total lack of unity of purpose and functioning amongst the
various government agencies. The extent of lack of
coherence is appalling. Instead of adopting an integrated mission
oriented approach, various organs tend to guard their own turf for narrow
parochial interests. The case of the Tactical Communication System (TCS) is
symptomatic of this malaise. TCS is a mobile wide-area network for battlefield
and is universally considered to be a potent force multiplier. An urgent
proposal for TCS was initiated by the army in 1996.
The proposal was duly accepted as an upgrade of the existing facility. After
wasting five years in processing the case accordingly, the proposal was
converted into a ‘fresh acquisition’, to be procured through a hybrid
categorisation of ‘Buy and Make’ and ‘Make’ routes. Consequently, extensive work
had to be carried out afresh. In a surprise twist, the case was recategorised
as ‘Make (Hi-Tech)’ in 2007 and the whole process had to be started ab initio. Concurrently,
surreptitious efforts were made by the Department of Defence Production and the
Defence Research and Defence Organisation to make it a captive project.
It is only now, after a delay of 16 years, that orders have been placed
on two vendors to develop prototype of the system. According to highly
optimistic estimates, it will take another decade before the required quantity
is inducted. The case shows the degree of gross inefficiency of the system and
disjointed functioning of the agencies involved – taking a quarter of century
to provide urgently needed equipment to the army. Selfish turf-interests override
national concerns.
The following five agencies participate in India’s defence
procurement system:-
a)
The Services
Being the users, they are the main stake holders. Yet, they
are to blame for a number of
infirmities. They prepare three types of perspective plans – 15-year Long Term
Integrated Perspective Plan, 5-year Services Capital Acquisition Plan and
Annual Acquisition Plan. As these are prepared in isolation without any
confirmed budgetary support, they tend to be mere wish-lists – a compilation of
equipment proposals initiated by different directorates. Resultantly, these
plans lack pragmatism and sanctity. Worse, they are not adhered to diligently
by the services themselves. Newer proposals are given higher priority over the
ones included in the approved plans.
Once a procurement
proposal initiated by the services is accepted, the services are asked to spell
out minimum performance attributes corresponding to the task/tasks envisaged to
be performed by the equipment sought. Users’ requirements are spelt out in
terms of functional characteristics which are translated into essential
parameters, called Services Qualitative Requirements (SQR).
The services are highly
sensitive about their right to formulate SQR. Despite the fact that they
possess no expertise, they are wary of consulting others. Like spoilt children
seeking the latest toys, the services demand equipment with utopian
capabilities, cost being of no concern to them.
Unfortunately, there is
little dialogue between the three services as well. The army does not consult
the air force while framing SQR for helicopters. Similarly, it does not seek
advice of the navy while demanding deep sea diving equipment. As a result, most
cases get aborted midway due to faulty SQR.
To validate performance characteristics of competing equipment in
actual ground and climatic conditions, users’ trials are carried out under the
aegis of the services. Herein again, the services jealously guard their turf
and refuse to consult other agencies. Quite irrationally, they feel that being
the users, they alone are competent to carry out trials. They fail to
appreciate the fact that testing of equipment with newer and differing
technologies requires expertise which they do not possess.
b) Department of Defence
The Department of Defence (DoD) is the controlling authority for all
acquisition activities. To start with, it issues Defence Planning Guidelines
that form the basis for the formulation of all perspective plans. Defence
Acquisition Council (DAC) constituted under its aegis, acts as the controlling
body. In addition to approving the perspective plans, it delineates the route
for procurement in respect of every proposal initiated by the services.
DAC is riven with factionalism. Every agency follows its own agenda.
Whereas the services demand early procurement of their critical requirements,
Department of Defence Production (DDP) wants to ensure that all orders go to the
public sector entities, irrespective of their capabilities. On the other hand,
Defence Research and Defence Organisation (DRDO) blocks all imports by making
false claims of possessing competence
for indigenous development within the acceptable timelines, whereas its past
track-record is abysmal to say the least.
DAC is best known for its inability to reconcile inter-agency
differences. For example, it has not been able to nominate monitoring agency
for offsets – Acquisition Wing or DDP. Although defence offsets were introduced
in 2006, vacillation continues while millions of dollars worth of offsets
remain unsupervised, unchecked and probably unfulfilled.
DoD can also be faulted for sitting on a pedestal with a deportment of
superiority. It has acquired an attitude of dispenser of favours and displays a
distinct tendency for functioning in isolation. It continues to concentrate all
decision making powers in its own hands and refuses to share authority with
others. Even though Headquarters Integrated Defence Staff has been asked to
examine all procurement proposals, no powers have been delegated to it. Every
case has to be referred to DoD for decisions repeatedly, thereby delaying the
whole process inordinately.
c) DDP
No other
agency has done as much damage to India’s quest for speedy procurements and the
development of indigenous industry as DDP. It exercises control over 9 defence public
sector undertakings and 39 ordnance factories. Despite their inability to produce quality
equipment as per the accepted time schedule, the services are forced to source their
requirements from them. Very often the services are given only one option –
‘take whatever the public sector offers or do without it’.
In all ‘Buy
and Make’ cases, wherein bulk quantity is manufactured in India, recipient of
imported technology is always a public sector entity. Yet, they have failed to
absorb such technologies to upgrade their own expertise. As the recent case of
Tatra vehicles has revealed, most public sector entities have assumed the role
of traders – they assemble imported sub-assemblies and make huge profits by
selling them to the helpless services at inflated prices.
Being a
part of the Ministry of Defence, DDP gets to know of the impending acquisition
proposals well in advance. It promptly conveys this inside information to one
of its public sector entities to enable it to sign necessary MOU with foreign
vendors. Such a preemptive move forestalls competition from private companies and
presents a fait accompli to the decision makers.
DDP is
commonly accused of charting its own selfish path by perpetuating an unhealthy
monopoly of grossly inefficient public sector enterprises by wresting preferential
treatment for them. Entry of far more efficient private sector is blocked
through subtle and unobtrusive policy tweaks. Indisputably, DDP has contributed
directly to the current state of affairs – neither the public sector has
acquired capability of producing high-tech equipment nor does it allow the
private sector to enter defence production. Consequently, India’s defence
industry continues to languish.
d) Defence Finance
As defence procurements have huge
financial outlays, every proposal is rightly subjected to close fiscal scrutiny
by the Defence Finance functionaries at all stages up to the signing of the
contract. They actively participate in commercial evaluation and negotiation of
contract.
Undoubtedly, their role of ensuring
financial propriety is of utmost importance. Unfortunately, instead of being
facilitators and advisers, they have become the biggest impediment to speedy
conclusion of cases. It is incongruous that most of them have never studied a
word of finance/economics (many are MA in English Literature or Sanskrit) and
know little about the defence weaponry, yet they masquerade as defence economic
advisors and exercise overriding control.
They do not consider themselves to be
an integral part of the overall effort. They enjoy unbridled authority without
corresponding accountability. They never accept any responsibility, claiming
that they are mere advisers and have no role in decision making. As they have
no stake in ensuring speedy fructification of procurement cases, they keep
raising infructuous and at times ridiculous observations. The fact that the Defence Finance officials take
orders from the Ministry of Finance worsens the situation.
e) DRDO
The saga of DRDO is one of missed opportunities and wasted funds. DRDO
holds a dubious record of never developing any equipment in the promised
time-frame and conforming to the specified parameters. Theirs has been a
history of false claims, tall promises, unexplained delays and sub-optimal
products. In cases where
they do manage to achieve some success, the time taken is so long that the
equipment is obsolete even before its induction. Thus, the services are forced
to live with critical voids.
Although the primary task of DRDO is to develop
indigenous defence technologies and support the services in their modernisation
plans, it is more interested in safeguarding its own interests. Driven by the
selfish motive of expanding its domain and getting additional budget, it stalls
import of even urgently required equipment by falsely claiming competence to
produce the required equipment indigenously. Worse, DRDO wastes considerable
resources by undertaking needless and unrelated projects.
The Way Forward
Group of Ministers on National
Security, in their report submitted to the Prime Minister on 26 February 2001, had
faulted the then existing system for defence procurements and opined that it
suffered from lack of integrated planning and implementation. Therefore, it suggested
the creation of a separate, dedicated and integrated institutional structure to
undertake the complete gamut of procurement functions to inject a higher degree
of synergy, synchronisation, co-ordination and professionalism.
Although the Acquisition Wing was
created as an integrated setup with members drawn from the bureaucracy, the services
and the defence finance, it is a sham. Expectedly, it has failed to deliver as
a cohesive body. Bureaucrats continue to call all shots and are unwilling to
treat service officers as equals. Very cleverly, through the façade of
‘integrated setup’, bureaucrats have managed to obtain the services of the
defence officers to do their secretarial spadework. They have been reduced to
the status of note-preparers for the bureaucrats to give decisions. Defence
officers have been given no powers at all.
Lack of unified functioning is costing the country dear. For example,
once a Service Headquarters (SHQ) forwards SQR of equipment sought to DoD, they
are considered inviolable. DoD does not consider it necessary to have a
dialogue with the sponsoring SHQ as regards the cost-benefit analysis of the
proposal. At times, minor dilution of some lesser SQR can result in huge financial
gains. Unfortunately, due to segmented and compartmentalised functioning of DoD
and the services, the nation suffers.
Reforms in structures and procedures become
meaningless unless the impeding dynamics of domain
interests and narrow attitudes are ruthlessly eliminated. It has generally been accepted the world over
that an efficient and unified acquisition work force can not only reduce acquisition time by up to 30 percent but also affect a saving of up to 15 percent of the capital
expenditure. For a country that plans to spend up to 120 billion dollars in the
short term, it will be a colossal saving.
