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Centralised Authority for Defence Acquisitions:An Urgent Requirement

The primary objective of all defence procurement systems is to provide required defence systems to their armed forces in the specified time frame with least expenditure of national resources. All countries have been grappling with the twin problems of time and cost overruns. Additionally, the defence forces are often blamed for demanding unrealistic and at times improbable performance attributes.

There are three distinct but overlapping stages through which an acquisition process passes:-

(a) Conversion of identified capability gaps into performance profile of required equipment.

(b) Exploring the most suitable and cost-effective option that can deliver the equipment in the stipulated timeframe.

(c) Acquisition, induction and support of the selected equipment.

All countries follow different models to perform the above mentioned functions. However, France was the first country to recognise the need to have a single overarching agency to oversee the complete gamut of acquisition activities. With the objective of making itself self-reliant in defence production, France adopted a centralised system of defence acquisitions in 1961. The French model is unique and is considered to be highly successful. General Directorate for Armament (Direction générale de l’armement), or DGA in short, is the government agency responsible for programme management, development and procurement of weapon systems for the French armed forces. It is an empowered authority under the Ministry of Defence (MoD) and has 12,000 employees at 20 locations in France.

DGA has a three-pronged mission. One, it is responsible for the design, acquisition and evaluation systems that equip the armed forces. Its work covers the entire life of these programmes. Two, it prepares for the future, anticipating threats and risks, preparing the technological and industrial capabilities. Finally, it actively contributes to promoting exports. Additionally, DGA provides overview of the weapon systems to ensure their global coherence; possesses an ability to manage risks to drive complex projects; and has mastered unique ways to survey and test systems.

In addition to overseeing the functioning of government’s industrial entities like shipyards and repair depots, DGA also undertakes testing and assessment of equipment and military technologies through a vast network of test centres that function under it. DGA has also been assigned responsibility to supervise engineering schools like École Polytechnique that function under the aegis of MoD. See Illustration 1.

Illustration 1: French General Directorate for Armament

After experimenting with various models and configurations, other nations are now inching towards the French pattern, albeit with modifications to suit local peculiarities. For example, subsequent to the acceptance of the reforms programme, the British Government merged the Defence Procurement Agency and the Defence Logistics Organisation in April 2007 to create a single colossus Defence Equipment and Support (DE&S). This brought some 25,000 people together in an integrated procurement and support organisation with responsibility for around £15 billion of annual expenditure.

While delivering the 10-year Equipment and Support Plan, DE&S meets the needs of the services by analysing their capability needs, market capability and technology maturity. Thereafter, solutions based on a clear understanding of financial and commercial risk are presented. DE&S manages delivery of these solutions by planning and managing projects, services and assets to ensure that equipment and support is delivered and sustained through life. This includes working with front line users and sponsors to shape the concept of use, forward plans and deployment options for equipment and support. See Illustration 2.

Illustration 2: British Defence Equipment and Support

Every review of the US defence acquisition system results in increased centralisation of policies, procedures and programmes. The Office of the Under Secretary of Defence for Acquisition, Technology and Logistics {USD (AT&L)} is the nodal agency and the overarching authority tasked to oversee the complete defence acquisition process. In the performance of its functions, it is assisted by a number of agencies – Joint Requirements Oversight Council, Functional Capabilities Board, Defence Contract Management Agency, Defence Logistics Agency and Defence Procurement and Acquisition Policy. Defence Acquisition Board and Information Technology Acquisition Board are senior advisory boards for defence acquisitions for Major Defence Acquisition Programmes (MDAP) and Major Automated Information Systems (MAIS) respectively. See Illustration 3 for schematic depiction of the US defence acquisition structures.

Illustration 3: The US Defence Acquisition Structure

Germany has divided its acquisition system into two categories. While Bundeswehr IT Office handles IT related acquisition, Federal Office of Defence Technology and Procurement (BWB) has the central responsibility for the management of all armament projects (excl IT), including management of complex projects; systems engineering and integration; research and technology; technical/economic aspects of in-service support management; and contract and price negotiations. It is also the supervisory body for seven technical centres and two research centres. See Illustration 4.

Illustration 4: German Federal Office of Defence Technology and Procurement

The Indian System

Prior to 2002, India’s defence acquisition system functioned in a highly fragmented and compartmentalised manner. There was no dedicated central apparatus to oversee and coordinate acquisition activities. Officers held multiple responsibilities with divided attention and efforts. Worst, decision making was hierarchal and the environment hindered positive decision making.

Post-Kargil reforms resulted in the creation of dedicated procurement structures. Defence Acquisition Council (DAC) under the Defence Minister has been constituted as an apex authority. In addition to according in-principle approval to 15-years Long Term Integrated Perspective Plan and 5-years Services Capital Acquisition Plan, it categorises all procurement proposals, thereby specifying the route to be taken to acquire required equipment – outright purchase of the total quantity or indigenous development or initial purchase from foreign vendor followed by licenced production in India. There are a total of nine categories – ‘Buy (Indian)’; ‘Buy (Global)’; ‘Make (Strategic-DRDO)’, ‘Make (Indian)’; ‘Make (Low-tech)’; ‘Buy and Make (Global)’; ‘Buy and Make (Indian)’; ‘Ship Building (Nomination-Public Sector)’; and ‘Ship Building(Open Competition)’.

Decisions flowing from DAC are implemented by the following three boards:-

Defence Procurement Board. Functions under the Defence Secretary to oversee all activities related to ‘Buy’ and buy portion of ‘Buy & Make’ decisions.

Defence Production Board. Secretary Defence Production heads it and it handles all activities related to indigenous manufacture in cases flowing from ‘Buy & Make’, ‘Buy & Make (Indian)’ and ‘Make (High Tech)’ decisions.

Defence R&D Board. It is headed by Secretary, Defence R&D and is responsible to progress, monitor and report on all ‘Make (Strategic)’ projects requiring sophisticated technology of strategic, complex and security sensitive nature.

The Acquisition Wing has been created as an executive authority, primarily to implement ‘Buy’ and ‘Buy and Make’ decisions. To start with, it was required to report only to the Defence Procurement Board. However, with the introduction of additional categories, a great deal of multiple tasking has crept in, thereby diluting the channel of command/reporting. Now, the Acquisition Wing has to take directions and submit reports to the Defence Production Board as well. In both ‘Make (Indian)’ and ‘Buy and Make (Indian)’ cases, the Acquisition Wing has to function under the oversight of the Secretary Defence Production.

A look at Illustration 5 will show multiplicity of agencies involved in defence acquisitions. Lack of single point authority with decision making powers results in dilution of accountability. That is the reason why no functionary has ever been held responsible for failing to deliver and the armed force continue to suffer critical equipment deficiencies.

Illustration 5: Major Agencies of Indian Defence Acquisition System

Additionally, the Government of India functions on the basis of consensus and no diktats are ever issued. It implies that all stake holders have to be taken on board with their concerns duly addressed before taking any decision. Such an arrangement not only results in undue delays but also distorts policy objectives and blurs delineation of authority/responsibility.

Proposed Reorganisation

With a view to cause minimum organisational turbulence, it is suggested that the existing structures be reorganised within MoD to create a centralised authority. The Department of Defence Production should be restructured and rechristened as the Department of Defence Modernisation (DDM) to act as the nodal agency for all facets of defence acquisitions. A Minister of State in MoD could be designated as Minister of State (Modernisation) and assigned the task of overseeing the complete acquisition process.

The current structure and functioning of the Defence Acquisition Council (DAC) as the overarching policy making body should carry on. It should debate capability gaps and accord approval to evolved 15-years Long Term Integrated Perspective Plan and 5-years Services Capital Acquisition Plan, as hitherto fore. While the Service Headquarters (SHQ) should remain the prime initiator of all proposals, Headquarters Integrated Defence Staff (HQ IDS) should continue to oversee proposals and evolve integrated plans. However, categorisation of proposals should be outside the charter of responsibility of DAC.

A Defence Modernisation Board (DMB) should be constituted in DDM under the chairmanship of the Minister of State (Modernisation). Plans and proposals approved by DAC should flow to this Board for implementation. To start with, DMB will have to convert capability requirements into performance parameters of equipment sought by the services. Thereafter, a detailed scan of technology available in India and abroad will be required to translate performance parameters into viable and verifiable qualitative requirements. Subsequently, various alternatives to acquire the necessary equipment in the specified time frame will have to be studied to identify the most suitable and cost-effective route. Being the empowered executive agency, DMB’s charter of responsibility will be all encompassing right up to in-service support.

Once the acquisition route is approved by DMB, it will be the responsibility of DDM to initiate the necessary process. Technical evaluation and field trials should continue to be held under the aegis of respective SHQ, thereby facilitating appraisal of the equipment by agencies that are independent of the acquisition authority, an ideal arrangement indeed. See Illustration 6 for schematic flow chart of the proposed functioning.

Illustration 6: Proposed Defence Acquisition Structures

As stated earlier, the proposed DDM is recommended to be designated as the nodal authority to oversee the complete gamut of acquisition activities. Its charter of responsibility will include preparation of qualitative requirements of required equipment; identification and adoption of the route/routes selected to procure equipment in the specified timeframe; overseeing purchase/development process; monitoring implementation of offset obligations; development of indigenous defence industry including absorption of technology; and promotion of exports. Suggested organisational structure of DDM has been shown in Illustration 7.

Illustration 7: Suggested Structure of the Department of Defence Modernisation

In order to deliver, functionaries manning DDM must be selected with due care for their technical/professional competence, demonstrated flair and impeccable integrity. They should be trained and equipped to discharge their functions proficiently. To ensure continuity, they should be given extended tenures with full protection of their career prospects. Needless to say, DDM has to be an integrated set-up comprising of the best talent available amongst the bureaucracy and the services. Appointments should be qualification-specific and not service-specific, in other words best man should be selected for every job.

Conclusion

Authority and accountability go hand in hand. One without the other is untenable. Defence acquisitions are a multifaceted process involving a large number of disciplines. Need for an overarching authority to administer, coordinate, oversee, direct and control multifarious acquisition activities has been well realised by all countries. Emergence of USD (AT&L) as the nodal authority in the US, BWB in Germany and DE&S in Britain are manifestations of the belated endorsement of the need for a central acquisition authority.

India cannot afford to neglect the requirement any longer. The Government must muster enough courage to undertake necessary reforms. Organisational parochialism and turf-guarding must not be allowed to stall progress – national interests must reign supreme. DDM should be an empowered umbrella organisation with duly spelt out responsibility, commensurate authority and overall accountability to ensure that the Indian armed forces get the equipment that they need in the given timelines and with optimal economic efficiency.

In addition to the acquisition tasks, DDM should aim at building a modern defence industrial base to reduce dependence on foreign equipment and to promote defence exports. A vibrant and thriving defence industry will act as a catalyst to the upgradation of technologies and skills in Indian engineering, manufacturing and production sector. No country can achieve long-term national security unless it is supported by a well-developed, dynamic and responsive defence industry.