Defence acquisition: Not yet in the fast lane - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Monday 31 December 2018

Defence acquisition: Not yet in the fast lane

By Ajai Shukla
Business Standard, 1st Jan 2019

With the current National Democratic Alliance (NDA) government’s five-year-long custodianship of national defence drawing to a close, the acquisition policy landscape is littered with grand initiatives that failed to reach a conclusion. When he was defence minister, Manohar Parrikar repeatedly promised a simplified defence procurement procedure (DPP) that would expedite weaponry purchases. Eventually issued after more than a year’s delay, DPP-2016 turned out nine pages longer than its already gargantuan, 421-page predecessor, DPP-2013, and aimed no higher than reducing procurement time from 137 weeks to 126 weeks. Last March, Defence Minister Nirmala Sitharaman released a draft “Defence Production Policy 2018” (DPrP 2018) that set wildly optimistic targets, such as catapulting India into the world’s top five defence producers and creating 3 million jobs in defence industry by 2025. By that year, India is to increasing defence exports ten-fold to $5 billion, while becoming self-sufficient in building fighter aircraft, helicopters, warships, armoured vehicles, missiles and other systems. This draft DPrP 2018 was attended by such urgency that stakeholders were given just one week to submit their responses. Nothing has been heard of it since then. 

Then, in April, the Ministry of Defence (MoD) issued a draft offsets policy that proposed allowing vendors to discharge offsets by creating defence manufacturing infrastructure (such as testing laboratories, ranges and skill centres), through sponsoring projects that generate high-technology, and through transferring critical technologies that do not exist in India. It proposed special incentives for investments in Ms Sitharaman’s hobbyhorse – two defence industry corridors she is pushing in Tamil Nadu and Uttar Pradesh. This draft policy too has sunk without a trace. In February, Ms Sitharaman set up the 13-member Raksha Mantri’s Advisory Committee on Ministry of Defence Capital Projects (RMCOMP) to review critical weapons procurements and identify why they were facing delays. It was to submit an “initial status report” by March 31, but the committee has never once convened. 

Given this depressing consistency, it should not be surprising that the initiative to establish an effective Defence Procurement Organization (DPO) too has made little headway. This failure is especially significant since it not just affects the military’s effectiveness but could also be a political vulnerability for the Bharatiya Janata Party (BJP). Accusing the Congress-led United Progressive Alliance (UPA) of slothfulness in procuring weapons for the military, the BJP’s 2014 election manifesto had promised to: “Modernize armed forces, and increase the R&D (research & development) in defence, to develop indigenous defence technologies and fast track defence purchases.”

Even so, it took the NDA government almost two years to kick off procurement reform. After the Dhirendra Singh Committee in 2015 articulated the need for setting up a DPO outside the MoD structure, Mr Parrikar referred the question to another committee. Constituted in April 2016 under a respected former defence acquisitions chief, Vivek Rae, that committee quickly ran into disagreement. While the MoD had directed the committee to envision a brand-new DPO, Mr Rae believed it would be better to refashion and strengthen the existing defence acquisition structure. Given this fundamental disagreement, Mr Rae resigned in September 2016 and Pritam Singh, who the MoD described as a “management expert”, became chairman. In March 2017, the MoD told Parliament the committee had “recommended the creation of a central, autonomous, empowered professional organization to build up indigenous defence capability as a strategic imperative for long term self-reliance.” Since then, there has been silence. The report is said to be circulating from one MoD desk to another on a slow journey to oblivion.

However, whether for this government or the next, there is no avoiding DPO reform, for which four important aspects must be kept in mind. First, the new DPO must holistically focus on defence acquisition, not just procurement. While procurement involves the straight purchase of existing defence equipment from global or domestic “original equipment manufacturers” (OEMs), acquisition includes meeting the military’s need through channels such as indigenous development. The Defence R&D Organisation (DRDO) is currently pursuing 52 mission-mode projects (MMPs) involving an outlay of over Rs 37,000 crore. But these rarely feature in the formal defence acquisition process since the DRDO funds those projects and the lines of authority run through DRDO Bhawan. Because the military gets a free ride on MMPs, they are not stakeholders and do not seriously consider MMPs as acquisition options. To overcome this, the military must take financial stakes in MMPs and participate in their oversight. The reformed DPO must be empowered to meet a service requirement through direct purchase, manufacture under technology transfer, or through a MMP nearing fruition. The chasm between the DRDO’s efforts and those of the acquisition managers must be bridged. 

Second, DPO reform must be wary of setting up a brand new structure and midwifing a new acquisition cadre to man a monolithic new organisation. Each acquisition is a separate undertaking, with different requirements that must be met through purpose-built Integrated Programme Teams (IPTs), headed by programme managers who remain in position for the duration of the acquisition. Each IPT – depending on whether it is acquiring a submarine, tank or communication grid system – should include the specialists needed for that specific task. The specialist requirement will vary not just from project to project, but also at different times within the same project. The IPT, therefore, must be constituted and re-constituted continually, in order to optimise the use of manpower – which can be drawn from diverse sources – to contribute to IPTs when required. Such flexible IPT structures should eliminate the rationale for a rigid and centralized DPO. 

In fact, IPTs are already a part of the “Make” procedure under the DPP and have been used in the Indian system for major programmes like the Tejas fighter and the Arihant-class nuclear submarines. But these have not been constituted optimally. Full in-house capability, and rigid project management structures are a luxury that India cannot afford, as this adds significantly to the cost of acquisition.

Third, a refurbished DPO must focus exclusively on equipment acquisition, while freeing up other senior MoD officials from time-consuming involvement in procurement. Current procurement structures pull in all the service chiefs and the secretaries of defence, defence production and defence R&D. The defence secretary, who ought to focus on long-term strategy, force planning and structuring, defence diplomacy and other strategic tasks, spends 60 per cent of his time on procurement. The answer is to upgrade the defence acquisition wing, which is currently under the department of defence, into a full-fledged department under a secretary-level official. This does not necessarily require the creation of an additional secretary’s post. Instead, the department of ex-servicemen’s welfare (ESW), which has elicited a high level of dissatisfaction amongst veterans, could be placed under the defence secretary who – relieved of his acquisition responsibilities – would have the mind space to give it new direction. The post of “secretary (acquisitions)” could be adjusted against that of “secretary ESW”.

The final, and perhaps trickiest, issue is the proposal to man the new DPO with a cadre of specialist acquisitions managers. On the one hand, the Indian Administration Service will resist any proposal for senior acquisition posts to go to another cadre. On the other hand, bright officers will resist prolonged tenures in acquisition, which is widely regarded as a high-risk assignment with little to recommend it in terms of power, influence or contact building. This is a “human resource” problem that the US system has grappled with unsuccessfully for half a century. An answer is not readily forthcoming.


  1. so disappointing to see the absolute neglect of this ministry by this govt, despite the tall promise of transforming! the biggest blunder was that MoD became musical chair for ministers to come in spend sometime and run away. the lack of involvement of minister in policy and reforms and heavily relying on officials did them no favour. now time is up and they need to show something hence came defence corridors. everyone knows it will take 5 more years to materialise. just like previous govt they make lofty promise and timeline is such that they themselves will not be in power.
    the only ways is to nationalise all the defence companies and continue nominating and for the rest have G2G. there should never be any tenders again.

  2. A basic issue has been that the defense portfolio requires a heavy-weight minister who has the leadership ability to reconcile the military brass, the bureaucracy and DRDO; who has an understanding of government culture; the intellect to master strategic affairs; and who is given a tenure long enough to develop his or her own understanding of defense matters as well as style of functioning. Unfortunately this government has changed defense ministers frequently (4 ministers in as many years) including part timers like Jaitley and lightweights like Sitharaman, all of whom have little to their name other than their sycophancy toward the PM. It is little surprise that matters are stuck in the details of policy and bureaucratic procedure, and we have lost sight of the big picture and the gumption to get things done.

  3. I agree there is no avoiding DPO reform,as illustrated in the article.
    The DPO needs to be manned by entirely by new type of people with a fresh culture and mindset
    We start with the clear understanding that.
    Expertise needed to perform roles for acquisition (which includes purchase and procurement) , are very different to those required from an IAS officer.
    The skills of an administrative generalist is not required here, rather the DPO needs to be staffed by a high proportion of Project Management, Commercial and Financial professionals as well as engineers and other technical specialists. Private sector skills are needed because the task is far more complex and beyond the expertise of our bureaucracy.
    Therefore I disagree with Broadsword, a new entity is required with its own management from the private sector over which the defence secretary retains only strategic control, but which has substantial freedom to operate.
    No officer from the IAS may take up any position in the new DPO.
    We must understand that specialist skills required here, have a much higher market value than can be recognised within our public sector pay framework, to get the best, we must pay and incentivise these new professionals accordingly - beside recruits to this new DPO coming from the private sector, we must retain staff from the Armed forces to supplement the DPO with military skills, knowledge and experience tasked with a joint delivery of Defence Acquisition - (without the Babus interfering).
    Naturally for staff recruited directly from the private sector, we must ensure they are appropriately security cleared, and that classified and other sensitive information is correctly handled.
    The current setup headed by the bureaucracy has failed to provide our Armed Forces with the equipment and capabilities they need to operate.
    Successive service chiefs have not been cognisant with their responsibility, they have failed to speak up.

  4. Please look at the report :

    The whole system is such that no one wants to own up any responsibility . The current DPP is good enough if time frames suggested for each step are adhered to (

    If some one does stick his neck out like in case of Rafale everyone screams scam 😁.
    So forget paper process, empower people
    . Remove politics.let so called (arm chair ) experts ( including you ) stop writing rubbish instead of doing a home work first.
    Things will improve.

    The one improvement needs to be done is inter service co ordination. Arms like rifles , anti air craft guns , Attack helicopters have multiple arms issuing RFQ e.g we made AK630 in India for navy. Air Force and army need to adopt it at least for static positions not issue 2 different RFI.

  5. Are any of these laws going to change when every weapons purchase becomes political hot potato. For that to happen you need a mature leadership. In 56 inch chest we don't have that. He is only interested in short term, the next assembly elections. This is not a good time for him:

    -He was the butt of jokes from POTUS.

    -He seems to have accepted that the SAR-JE-KAL strike and BJP bluster doesn't work with Pakistan. But he didn't seem to care how many extra soldiers have died because of his actions. Someone should have told him pakistanis actually like fighting.

    -He is ignored whilst other nations proposed & work on solutions for Afghanistan.

    -He is openly belittled by RSS and his party men.

    and this is just the beginning. It seems everything 56 inch has become 56 mm.



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