Bhamre Committee barked up the wrong tree, staff inadequacies is the prime reason for delays
Maj. Gen. Mrinal Suman (retd)
According to the media reports, an internal report submitted in November 2017 by minister of state for defence, Subhash Bhamre, has faulted the functioning of the defence procurement regime for inordinate delays in the finalisation of deals. His following observations are revealing:
- During the preceding three financial years, only 8 to 10 per cent of 144 deals fructified within the stipulated timelines.
- In many cases, the delays were a massive 2.6 to 15.4 times the laid down guidelines.
- Average time taken to clear Request for Proposals (RFP) was 120 weeks, six times more than the norms. In one case, it took mindboggling 422 weeks.
- The Contract Negotiation Committee (CNC) stage sees delays ‘about 10 times more than that allowed’ because of the inability of the defence ministry to benchmark costs with global standards ‘especially where an item is being procured for the first time or involved transfer of technology’.
Fifteen years have passed since the establishment of the current structures, organisations and procedures for defence procurements in the ministry of defence (MoD). As is well known, the current dispensation has been an utter failure. The Bhamre Committee has identified a number of reasons for failure to adhere to the timelines. Unfortunately, he has missed two critical infirmities that afflict the procurement regime, and that has been the failing of all reviews undertaken so far.
One can have the best of organisations and ideal procedures in place but ultimately any organisation or procedure is as good as the people who work it. Whereas most of the countries in the world have realised the importance of the competence of acquisition staff, no attention has so far been paid to it in India. All reforms have been directed towards structures and procedures. Criticality of human resource aspect has been totally ignored, rendering the system totally incapable of delivering.
Staffing Inadequacies and Lack of Professionalism
Defence acquisitions are a highly specialised and complex activity needing extraordinary professional skills and unique attributes. There are over 22 disciplines in which mastery is required by a defence acquisition organisation, e.g. earned value management concepts, systems planning, research methodology, estimating techniques (parametric, analogies and improvement curves), business modelling (basic probability concepts, subjective probability assessment and basic simulation concepts), testing regime, logistic implications, sensitivity analysis and risk management.
In most of the advanced countries, staff dealing with defence acquisitions is handpicked and put through specially structured training courses. Unfortunately, this aspect has been given no importance in India. Officers on routine postings are being asked to handle procurements worth billions of dollars. Though they all are intelligent, diligent and sincere officials, they are neither selected for any demonstrated flair/talent nor for any specific expertise. Worse, they are not even given any special training to equip them to handle procurements. Most unfairly, they are left to fend for themselves and learn on the job.
Indifferent quality of acquisition staff is the single most important reason for delays in procurements. Decision making emanates from competence and self-confidence. Officials who perform acquisition functions are drawn from the civil services, the defence forces and the defence finance. Most are ill-equipped for the task and are found wanting when required to take considered decisions. They resort to delaying tactics through well-mastered bureaucratic ploys. Their lack of knowledge manifests itself in their vacillation.
The services are the biggest defaulters. Although they are the most affected party, little attention is paid to the selection of the acquisition staff. Any officer can be posted to these appointments. The services have laid down minimum qualitative requirements for a host of lesser appointments but none whatsoever for the functionaries dealing with acquisitions that affect the war potential. As a result, the services are responsible for faulty preparation of performance parameters, tardy field trials and flawed staff evaluations.
Bureaucrats’ span of control encompasses almost all procurement activities. They accord approval to procurement proposals, issue RFP, accept technical evaluation that shortlists vendors to be called for field trials, approve staff evaluation, open commercial bids and negotiate contracts with the lowest bidder. They handle functions that require intimate knowledge of military’s functioning, defence equipment, latest technologies and negotiation techniques.
For such an onerous responsibility, it is natural to expect highly experienced experts to be occupying the key chairs. But MoD is different. Any bureaucrat can foot the bill, even if he cannot differentiate between a mortar and a howitzer or a rocket and a missile. Sadly, their selection is done in a routine manner under the Central Staffing Scheme. India has had defence secretaries whose earlier service had been limited to rural development, panchayati raj, fisheries and animal husbandry.
It is a well acknowledged fact that India’s commercial evaluation process is appallingly dismal. Deliberations of CNC have a profound effect both on the final cost and the contractual provisions. It is too crucial an activity to be handled in an ad-hoc, unscientific and amateurish manner. Members possess no knowledge of international trade, foreign exchange trends and cost benefit analysis. Adoption of ‘life cycle cost’ to determine the lowest bidder has added to the complexities of the process. CNC is also required to determine fair and reasonable price before opening commercial bids of technically successful vendors. In the absence of necessary technical and financial expertise, CNC has little faith in the accuracy of its own benchmarking of fair price.
Coming to the weakest link in the whole chain, no procurement proposal can fructify unless defence finance functionaries concur with it at every stage from acceptance of necessity to closing the deal. Despite the fact that they are mandated to ensure financial propriety, they are ill-equipped for the task. They are neither qualified nor trained for defence economic advisory functions. Most of them are unable to grasp intricacies of international trade including application of Discounted Cash Flow and Exchange Rate Variation techniques. Despite the fact that they masquerade as financial advisors and wield enormous powers, they contribute little of substance to the whole procurement process. In fact, their role is to impose delay at every stage. To mask their ignorance and inadequacy, they resort to the time-tested expedient of raising irrelevant issues and infructuous observations, thereby impeding progress.
Bureaucratic Haughtiness and Arrogance
No system can deliver unless due importance is given to healthy human relations. MoD suffers from disjointed and compartmentalised functioning. There is no cohesion amongst various entities. In fact, the service considers the bureaucracy to be the biggest impediment. They rue the fact that all powers are concentrated in the hands of the bureaucracy whereas responsibility for national defence rests with the services.
The whole procurement regime is characterised by bureaucratic stranglehold. Very limited powers have been delegated to the services. Bureaucrats have made the whole system totally captive to their dictates. Being the key stakeholders, the services have to appease MoD officials and placate their ego to get the acquisition proposals progressed. It is sad to see senior service officers doing rounds of offices carrying loads of files to answer infructuous queries.
Some service officers openly state that fighting bureaucratic quagmire is by far the most demanding activity that they are required to undertake in the interest of their service. Worse, the favourite pastime of most bureaucrats is to keep establishing parity with the service officers on the basis of their pay scales to demand equivalent status. One insecure defence finance official refused to accept calls from service officers below the rank of brigadier.
The bureaucrat who bends double in front of his minister and who displays immaculate manners (bordering on servility) while dealing with foreign dignitaries to wangle Green Card or scholarship for his progeny, turns into an arrogant dispenser of favours to the industry. He forgets all manners, courtesies and decorousness. Socio-psychologists believe that such a behaviour is a manifestation of acute inferiority complex and a feeling of severe inadequacy.
Whereas in developed countries, entrepreneurs are considered as indispensable partners in national endeavour for technological excellence and are treated with due courtesies and respect, Indian bureaucracy looks at businessmen as self-seekers of wealth. Worse, being awarders of high value contracts, officials deal with them with disdain. Foreign vendors consider MoD bureaucrats to be the most dissuasive factor and resent their haughtiness. They complain that even their communications remain unacknowledged. That is the reason that despite all incentives, India received a paltry sum of Rs 1.17 crore as FDI in defence since May 2014.
Staff inadequacies of MoD also get exposed from the fact that it has not been able to evolve a sensible and implementable procurement procedure. If a major policy document needs revision after every two years, there is something fundamentally wrong with the proficiency of the people drafting it. They need to be held accountable for their incompetence. A period of 15 years is long enough to put a system on an even keel and provide continuity. Frequent reviews create an environment of uncertainty and unpredictability, thereby deterring the entrepreneurs.
As regards the need for reforms, MoD has been barking up the wrong tree. Whereas mediocrity of the staff is the fundamental reason for the failure of the acquisition regime, the thrust so far has been only on organisational and procedural reviews. No reforms can yield results unless and until the implementing functionaries are equipped to translate planned intentions into tangible actions on ground. Their lack of competence manifests itself in their reluctance to take decisions, thereby stalling progress. Even the Comptroller and Auditor General, in its report has observed that the existing system of acquisitions being handled by unspecialised personnel posted for three-year tenures was simply not adequate.
It is time that India pays attention to the quality of its defence acquisition staff and takes concrete steps to impart professionalism to the regime. Short-listing of functionaries for acquisition appointments must be through a stringent selection process. Parameters to be considered should include formal education, related experience, previous exposure in similar jobs, demonstrated competence, aptitude and personal integrity. All appointees should compulsorily be made to undergo orientation training. To provide continuity, they should be given a tenure of minimum three years, extendable to five years.
Interestingly, the Dhirendra Singh Committee has noted that the acquisition process should be matched with the resources available to properly implement them, particularly in the domains of funding and human capital. It has recommended that all officers working the acquisition systems must be put through appropriate training as soon as they assume their appointment.
It has generally been accepted the world over that an efficient acquisition workforce can not only expedite procurements but also affect a saving of up to 15 per cent of the capital expenditure in initial purchase price and associated life-cycle costs. It is a huge saving by all accounts.
Competence gives confidence to take decisions. Competent officials do not need to flaunt their supremacy to hide ignorance. They behave in a mature, rational and perceptive manner. They establish healthy inter-personal relationships and carry the whole set-up with them. MoD needs such functionaries. Reforms are meaningless, as has been seen over the last 15 years, unless the quality of the acquisition staff is improved.