The Hindu Business Line : Defence procurement — Importance of `preferred supplier' clause

IN MODERN warfare, `speed' is the key to success in operational ventures. Defence procurement methods need to be optimised to ensure that requisite materials reach where they are required on time. However, tight budgetary controls are known to strangulate procurement procedures, resulting in contractors often being forced to rush supplies to meet operational requirements. Such practices increase the risk of `abuse, waste and fraud'.

In a developed country such as the US, planners have observed that it takes five years to move a weapon from the drawing board to troops' hands. Despite the introduction of procurement reforms giving Defence officials the leverage to procure emerging technology and equipment needed in Afghanistan and Iraq, operationally-critical weapons and gear were not available when needed.

To shorten procurement times by pushing urgent requests around systemic roadblocks, Defence officials plan to create a department called Joint Rapid Action Cell (JRAC). This cell is expected to work directly with field commanders to meet material and logistics requirements certified as `operationally critical'.

In India, nearly all major frontline systems are imported and the problems associated with procurement have political overtures. However, in matters concerning Defence products manufactured in the country, by private firms, we seem to periodically encounter problems of `abuse and waste' due to our inability to differentiate between proven technological `capability' and potential commercial `competition'.

This is bound to happen when budgetary controls are vested with an agency whose discretionary power is guided by an edict emanating from the CVC, stipulating that orders be placed only on the lowest tender. The order is thus awarded to a firm merely on the strength of its potential to override the efforts of another firm which had successfully developed the product and priced the same on its experience.

The Defence Ministry has implemented the procurement methodology (on the lines of the US-proposed JRAC mentioned above) by giving budgetary powers at the command level. This is bound to speed up placement of orders but, due to the CVC ruling, may not have the desired effect of product availability on time.

Procurement procedures will be effective only if a provision allows for the "preferred supplier" option to underplay the lowest tender bid by giving preference to a firm involved in the successful development of a product within accepted time-schedules.

The current procedure is bound to cause delays in supplies and retard technological improvements to the product. While the reforms aim to speed up procurement using budgetary discretion, they also need to address the leeway to exercise technical discretion where a supplier's capabilities have been proved to the satisfaction of the armed forces.

The importance of injecting the concept of "preferred supplier" into our procurement procedures needs to be addressed to make them serve better the interest of national security and export considerations.

(The author, a retired air-commodore, is a Chennai-based freelance writer.)