By Amit Cowshish

On August 22, Ministry of Defence’s (MoD)Defence Acquisition Council (DAC)‘granted’ emergency procurement power to the armed forces to buy, preferably from the Indian sources,any kind of equipment urgently needed by them to deal with the situation in eastern Ladakh which has been tense since the Chinese intrusion in the Galwan Valley in June 2020.

According to the media reports, this financial powercan be exercised any number of times over the next six months up to Rs 300 crore at a time subject to availability of funds. It will mostly benefit the Indian Army (IA) which is at the forefront of the Indian response to the Chinese transgression, but otherwise generally known to be slow in inducting equipment.

The media reports also indicate that the emergent purchases can be made through a simplified and abridged procedure to ensure that the required equipment is inducted within six to twelve months from the time the order is placed. No further details are available.

Headed by the defence minister, with the chief of defence staff, all service chiefs and secretaries, and other high-ranking officials as members, DAC is the MoD’s apex body that decides on all acquisition matters. What prompted its seemingly inexplicable move to grant emergency powers at this juncture is unknown. 

It is surprising that two years down the road since the Galwan incident, the services, especially the IA,are still in the process of acquiring the ‘urgently needed’ equipment, but this is not the real surprising part of the DAC’s decision.

The financial power for capital acquisitions was delegated to the Vice Chiefs of Army and Naval Staff, Deputy Chief of Air Staff, Chief of Integrated Defence Staff to the Chairman Chiefs of Staff Committee (CISC), and Director General Coast Guard way back in 2007. Beginning with just Rs 10 crore, the limit was gradually enhanced by the government to Rs 300 crore in February 2019.

To make it easier for these Competent Financial Authorities (CFAs) -as all those who exercise financial powers are called- to exercise the delegated powers in the normal course, they are not required to come to the MoD for Acceptance of Necessity (AoN) which, plainly speaking, is only an in-principle approval for commencing the tendering process.

For acquisition proposals falling within the delegated powers, the AoN was accorded by the Services Capital Acquisition Plan Categorisation Higher Committee (SCAPCHC). Headed by CISC, and embedded in the HQ Integrated Defence Staff (IDS) till 2020 when this committee was replaced by the Services Procurement Board (SPB), which too is embedded in the HQ IDS.

Considering that this has been a standing arrangement all along, one cannot figure out what is special, or different, about the financial power granted by the DAC to the armed forces on August 22, as it corresponds to the power already delegated to them.

One remote and unverified possibility is that the power exercised by the vice chiefs et al. has now been temporarily sub-delegated by the DAC to the Army Commanders and their equivalent at the Command level, or even further down the hierarchy, assuming that this temporary measure did not require the approval of the Cabinet Committee on Security.

The media reports also suggest that the armed forces can follow a simplified fast track procurement procedure to effect purchases using the powers granted to them by the DAC. This too is befuddling.

A Fast Track Procedure (FTP) for procurement was promulgated by the MoD way back in September 2001 to meet the urgent operational needs of the armed forces. It has always been open to the armed forces to follow this procedure while exercising the financial power delegated to them, after obtaining the AoN from the DAC. It’s unclear, therefore, what is new about the armed forces being permitted by the DAC to follow the already prescribed FTP, unless the procedure has been simplified further unbeknown to anyone outside the South Block.

Potentially, this simplification could be by way of sub-delegation of the DAC’s power to accord AoN for all FTP procurements, especially from the foreign sources, to the SPB or some other authority in the Service Headquarters, bypassing the MoD completely.It will save some processing time, but not so much as to make any real difference in the overall context.

Whatever be the reason underlying the DAC’s decision of August 22, it is an admission of the widely held view that MoD’s involvement in procurement causes avoidable delay and, therefore, there is a case for minimising it. It also indicates that there is room for further simplification of the procurement procedures. These issues must be considered by the MoD immediately, rather than leaving them to be examined when the DAP-2020 is taken up for review at some indeterminate point of time in future.

The author is Former Financial Advisor (Acquisition), Ministry of Defence.

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