Wednesday, June 1, 2011

IDSA ISSUE BRIEF :A Critical Review of Defence Procurement Procedure 2011
Laxman K Behera

he Defence Procurement Procedure-2011 (DPP-2011) which came into force on January 1, 2011, incorporates important changes aimed at simplifying procedures, speeding up procurement and enhancing benefits for the Indian defence industry. New guidelines for shipbuilding by private shipyards on competitive basis have been included. New categories have been added to the product list for offsets, namely, Civil Aerospace, Internal Security and Training. Other changes have been incorporated with respect to the validity of Request for Proposal (RFP), post accord of Acceptance of Necessity (AON), Exchange Rate Variation (ERV), the constitution of a Technical Oversight Committee (TOC), Transfer of Technology (ToT) for Maintenance Infrastructure, Trial Evaluations, Performance and Warranty Bond, and Fast Track Procedure. Notwithstanding these changes, DPP-2011 has failed to usher in reforms in some critical areas. Despite recommendations by the Group of Ministers and the Comptroller and Auditor General of India, the new document, like its previous versions, has not focussed on strengthening the acquisition structure and enhancing the quantity and quality of acquisition functionaries. DPP-2011 does not focus enough attention on bringing about parity in the categorisation process, adopting a more dynamic offset policy, enhancing foreign direct investment in defence, and eliminating the practice of discrimination between the public and the private sectors. In the absence of reforms in these areas, DPP-2011 may not be able to achieve its stated objectives of expeditious procurement and greater involvement of domestic industry in defence production.