Army Procurement procedures,Middlemen and Bribe Can not be avoided

It is not a simple job of going to a manufaturer and and ordering the goods one needs .

The Defence department has well defined procedures in place.

‘It has been the constant endeavour of the Ministry of Defence, Government of India to introduce increased levels of transparency and accountability in the Defence Acquisition process. In this effort, the first step was the Defence Procurement Procedure – 2005, which has now been reviewed and revised along with the Fast Track Procedure – 2001 and the Procedure for Indigenous Warship Building. In addition, most importantly, a procedure for the development of systems based on indigenous research and design, categorized as ‘MAKE’, has now been formulated. This bridges a critical gap that existed hitherto, and would provide the requisite framework for increased participation of Indian industry in the defence sector.

Some of the important features of Defence Procurement Procedure – 2006 include:

  • all major decisions pertaining to the procurement process to be taken simultaneously for reducing the timeframe for acquisitions;
  • enhanced transparency by placing the generic requirements of the Services on Ministry of Defence website and generating vendor registration through Internet;
  • increased transparency in the conduct of field trials;
  • ‘Integrity Pact’ made compulsory for all contracts above Rs. 100 crores;
  • an ‘Offset‘ obligation for all contracts above Rs. 300 crores.

The Defence Procurement Procedure – 2006 provides comprehensive policy guidelines for all Capital acquisitions for the Armed Forces. The Defence Procurement Procedure 2006 is available at the Ministry of Defence Website

Directorate of Quality Assurance (Armaments) – DQA (A)

This discipline is responsible for the quality assurance and the related activities with respect to difference types of Armaments and connected areas.

  • Weapons
  • Small Arms
  • Ammunition and Military Explosives
  • Metallurgy
  • Instruments and Optical and Opto-Electronics

Directorate of Quality Assurance (Vehicles) – DQA (V)

It is responsible for the quality assurance of all kinds of vehicles needed by the Army. The vehicles include the common usage vehicles, Armoured and fighting vehicles, other heavy and specialist as also various kinds of trailers and transportation.

As a first step, the organisation is to be registered with The Sales Tax,SSI/NSIC as the case may be, submit Income Tax returns Proof and bank Details to be able to enroll as a vendor.

Apart from this, you have a host of other paper work associated depending on the nature of the product.

Then comes Technical bid.

For a tender one has to know what exactly the customer wants and what are the leeway  available as all products may not meet with specific requirements.

You need inside information for all this as also for other necessary paperwork.(especially for Payment, you need inside contacts)

This is very difficult for even an experienced man who knows commercial operations.

No doubt the Foreign Companies will know nothing of these and they will be totally at a loss.

So, they appoint a an Agent in India and a Liaison man to take care of all these.

The Agent/liaison man is paid a service charge of 1.5% – 2% on the total value(expenses are separate and they are on actuals)

To promote a Product these people get inside information and this facilitates less hassle and quick paper movement.

In the process,palms are greased and the decision maker is also taken into account and the amount is negotiated and finalised.

We may not approve of this , but this is a fact.

Even for a product which is a Monopoly this procedure is adopted.

Case in point is BEML promoting Tatra.

One would imagine that since BEML is a Nodal Agency for the Ministry of Defence and the Tatra is built as per the specification of the Defence requirements and none else can supply this, BEML has easy sailing in getting the order and most importantly payments.

Nothing can be farther from Truth.

In fact they have to be extra careful and resourceful as they would find it difficult to pay the bribe as it would be difficult to accommodate  in A Governmental Organisation.

But they will do this as they have to dispose of production and they have targets to meet.

So the procedure as explained above may not be Right but this is what happens.

On Tatra this must have happened.

So long as the Product is good quality wise, it is ok.

This whole exercise is distasteful but these are facts of Life and none can change it as things stand now.



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