Replacement of the Defence Procurement Procedure with a more efficient and effective fast-track procedure for the procurement of military hardware has now become an imperative necessity

As the new year dawned, the nation was delivered a shocker with the following terse statement emanating from the Ministry of Defence (MoD), “The Government of India has terminated with immediate effect the agreement that was signed with AgustaWestland International Limited (AWIL) on February 8, 2010, for the supply of 12 VVIP helicopters on grounds of breach of the Pre-contract Integrity Pact and the Agreement by AWIL.” The MoD rejected a request from AWIL for arbitration, based on the opinion of the Attorney General of India that “integrity-related issues are not subject to arbitration”.

However, AWIL continued to press for arbitration and appointed a former judge of Kerala High Court as an arbitrator from its side. Finally, based on fresh opinion of the Attorney General, the MoD has relented and has now nominated a sitting judge as its arbitrator. Ostensibly, this has been done “to safeguard the interest of the Government of India”. Exactly which part of national interest is sought to be safeguarded by acceptance of the proposal for arbitration, has neither been stated nor is clear at this stage, especially on account of the opacity in the handling of the episode by the MoD. Although the final word on the contract is yet to be uttered, there is little doubt that VVIPs in India will not have the privilege to savour the comfort of travelling in what is admittedly one of the most advanced and safest flying machines in the world in the rotary-wing regime.

Scrutiny by the Comptroller and Auditor General of India revealed that the provisions of the Defence Procurement Procedure (DPP) were breached at every stage, both in letter and spirit, despite the fact that both the Prime Minister’s Office and the Ministry of Defence were intimately involved at every step in the processing of the tender, its finalisation and award of final contract to AgustaWestland. However, mired in allegations of bribery and other wrongdoings, the partially executed contract that has been in limbo for the last nearly two years, appears to have finally run aground. Apart from the erosion of national prestige and credibility, this sordid episode has served to rather tragically and unfairly demolish the impeccable reputation of a former Chief of the Air Staff, over four decades of selfless and dedicated service to the nation rendered by him notwithstanding.

During the cold war era, India was perceived by the West to be in the Soviet camp and as such, the nation was tethered to one source i.e. the Soviet Union for the procurement of military hardware. However, with the demise of the Soviet Union, fresh avenues for the procurement of military hardware became available to the nation. With a view to derive maximum benefit from the new situation, in 2005, the MoD formalised a new procedure based on the “open tender” system for the procurement of defence hardware calling it the Defence Procurement Procedure. The objectives mandated for the exercise was to provide for wider choice of weapon systems, best value for money through selection from multiple vendors, fairness to bidders, complete transparency in the processing of the tender and total accountability. While the philosophy enshrined in the DPP that has been revised and refined every year since its initial promulgation is noble, the disconcerting fact is that in the last nine years of its existence, not a single contract initiated by the Indian armed forces for acquisition of weapon systems or aircraft, have been successfully executed. The tender for 197 helicopters has been cancelled twice after having reached close to finalisation and attempts by the Indian Army to acquire howitzers have been frustrated five times. The mega deal for 126 medium multi-role combat aircraft initiated by the Indian Air Force in 2001 and for which the tender was floated in 2007, does not appear to be anywhere near finalisation. Similarly, tenders for attack/heavy-lift helicopters and the aerial tankers are moving at a painfully slow pace.

On the other hand, in the last five years, a number of major procurements of military aircraft that include the C-130J Super Hercules, the C-17 Globemaster III, Boeing Business Jets and Mi-17 V5 transacted directly with the governments concerned and not through open tender, have gone through speedily and without a hitch. The interminable delay in the procurement of military hardware through the DPP will undoubtedly have debilitating impact on national security.

It should therefore be abundantly clear that while the logic behind the implementation of the DPP may be incontrovertible, in practice, it has totally failed to meet the demands of national security. Replacement of the DPP with a more efficient and effective fast-track procedure for the procurement of military hardware has now become an imperative necessity.