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Transparency in defence procurement

The Central Government has made a serious effort to streamline the procedures for the acquisition of weapons, equipment, and material by the armed forces. In fine-tuning the Defence Procurement Procedure-2006 and updating the Defence Procurement Manual-2006, it has tried to plug loopholes traditionally exploited by unscrupulous vendors — as well as by those in high places of authority. The bribery scandals set off by contracts for the Bofors howitzers, the HDW submarines, and the Kargil coffins underscored the need to ensure the integrity of defence deals. DPP-2006 has introduced several features meant to curtail the role of intermediaries. The generic requirements of all the services will be posted on the Defence Ministry's website and a database maintained of the prospective vendors. Arms dealers with access to insider information might no longer have an unfair advantage. An attempt has been made to lessen the scope for manipulation in the selection of a particular weapon system or type of equipment. The models presented by different dealers will be tested simultaneously and debriefings held at joint sittings at each stage of the trials. With an element of transparency thus introduced, the hope is that equipment suppliers will refrain from lobbying ceaselessly. DPP-2006 provides for the suppliers signing pre-contract integrity pacts with the government under which contracts will become void if there is evidence that officials were bribed. While all this is an improvement on the procurement system in place, it needs to be recalled that the `no middleman, no commission' commandment is not new. It was formally introduced in the 1980s — and notoriously dishonoured in practice. Therefore, everything depends on how the government of the day implements the reform.

The new regime addresses long-pending demands of Indian industry for a level playing field in terms of costs and payments. Excise duties and local taxes will be excluded while evaluating the bids of indigenous manufacturers. The practice has been for Indian suppliers to receive payments after the delivery of the goods at the depot and for foreign contractors to be paid as soon as the equipment was shipped. From now on, payment conditions will be the same for both. Given the unpredictability of defence deals, which are contingent on the policies of other governments, the importance of developing the domestic capacity for research, development, and production of military equipment cannot be overemphasised. While recognising that the private sector is now capable of playing a larger role, the military establishment appears to have pinned its hopes mainly on companies active in the field of information technology. Technological advances have radically transformed the methods by which data on enemy movements are gathered, processed, and transmitted to the formations in the field. The framers of DPP-2006 evidently hope that India's advanced capabilities in the IT sector will give it an edge.

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