In the case of procurement of defence platforms and equipment, either under capital or revenue route, the “gold standard of open tender” should be adopted to the extent possible, Defence Minister Rajnath Singh said on April 12, stressing the need to maximise the value of money spent on security needs.
“A competitive bid-based procurement process, which is open to all, is the best possible way to realise the full value of the public money being spent. There would be some rare cases when it may not be possible to go for an open tender process. Such instances should come under exceptions and exceptions should not become the rule,” he said addressing the International Conference on Defence Finance and Economics.
It is pertinent to note that some of the biggest deals signed recently have been through Inter-Governmental Agreements which include 36 Rafale fighter jets, S-400 long-range air defence systems and four stealth frigates.
Mr. Singh observed that it is difficult to apply the economic concept of full value of money in defence expenditure, as in this sector, there is no visible revenue stream and no easily identifiable beneficiaries while stressing on the need to devise innovative methods to maximise the value of money spent on the security needs of the country, terming a robust defence finance system as the backbone of a strong military.
Transparent system
Mr. Singh underscored the importance of comprehensive Blue Books, codifying the rules and procedures of procurement of defence equipment and systems for a fair and transparent system and referred to the Defence Acquisition Procedure 2020 for capital acquisition; Defence Procurement Manual for revenue procurement and Delegation of Financial Powers to Defence Services. “These manuals play a very important role in ensuring that the process of defence procurement is rule-bound and follows the principles of financial propriety. Since these manuals are critical, they need to be carefully crafted by defence finance and procurement experts in consultation with all stakeholders. This needs to be a continuous exercise, so that these documents are dynamically updated, incorporating new rules and procedures as and when required,” he stated.
The Minister noted that the separation of functions of defence finance from the core defence organisations has multiple advantages. “The chances of leakages, corruption, wastages are reduced,” he said.
