16/11/2019 - Government Policies

IAS Parliament 4 years

KEY POINTS

· A cost-effective procurement process, along with development of indigenous capabilities, products, and technologies would give our armed forces a decisive edge in defending India’s national security, territorial integrity, and sovereignty.

· Valuable lessons can be learnt from the Comptroller and Auditor General of India’s (CAG’s) performance audit of capital acquisition in the Indian Air Force (IAF).

· It highlights systemic issues in the acquisition process and gives recommendations to rectify deficiencies in the procurement process.

· The acquisition process begins with the formulation of user requirements, known as the Air Staff Qualitative Requirements (ASQR). The formulation of ASQR is critical to the defence acquisition process because it determines quality, price, and competition.

· CAG observed a lack of consistency in technical evaluation across procurement cases: In some cases, such as doppler weather radars and attack helicopters, technical bids were rejected when vendors failed to meet all the ASQR parameters.

· But, in the case of medium multi-role combat aircraft (MMRCA) and heavy lift helicopters, bids were technically qualified even when they did not meet critical ASQRs.

· CAG concluded that the price of the 2015 deal was less than that of the 2007 one by 2.86%. The latter included a bank guarantee from the French government to safeguard the national interest in case of default, making the vendor—the French government—liable to provide payment. However, the 2015 deal excluded a bank guarantee.

· CAG’s observations should have been integrated in the defence procurement process. The unwarranted delay, and complex procedures and decision-making process seem to be cost-ineffective.

· More importantly, it could damage national interest and lead to the acquisition of technologically inferior armaments. India must get value for the public money it spends.