Tuesday, 14 June 2011

Ministry Of Defense Reviews Procurement Policies

The defence ministry has invited suggestions from the Armed Forces and various departments and agencies that fall under it for amending the defence procurement policy (DPP) that governs defence purchases.
Beginning this week, representatives of the Armed Forces are likely to meet ministry officials to put forth their suggestions, said a person familiar with the development, requesting anonymity.

While the Indian Air Force (IAF) and the navy have already submitted their proposals, the army is expected to do so in the next few days, this person said.

IAF has suggested that stipulated indigenous content in case of the so-called “buy (Indian)“ mode of procurement should be raised to 50% from 30% currently. Projects that come under the so-called “make“ category should have a minimum 60% indigenous content on cost basis, at the production stage.

Mint has reviewed a copy of the proposals suggested by IAF.

“The goal of achieving self-reliance in defence equipment needs to be kept in mind,“ said the note, explaining the rationale behind the recommendation.

If a purchase is classified “buy (Indian)“, only Indian vendors are allowed to bid for the tender, while a “buy (global)“ allows both foreign and Indian vendors to compete. Acquisitions covered under the “make“ category are meant to include high technology complex systems to be designed, developed and produced ingeniously. At present, this category does not have any minimum stipulation for indigenous content.

IAF wants the defence ministry to increase the validity of the commercial offer sought in request for proposal (RFP) before bids are opened. The currently stipulated period is 18 months.

“There are numerous cases, where requirement of extension of validity for commercial proposal or submission of a fresh While the air force and the navy have already submitted their proposals, the army is expected to do so in the next few days commercial proposal by a certain period is felt necessary, as the procurement process does not reach the stage when the commercial proposal could be opened by CNC (contract negotiation committee),“ says the note.
“There is no provision in DPP to seek extension of validity or fresh commercial proposal in such a situation.“

IAF also recommends that vendors submit price quotes valid for the period from the 19th to the 30th month at the time of replying to RFP itself.

IAF has proposed changes in the way field evaluation trials are carried out. Suggestions include making it compulsory for vendors to provide a complete list of “optional equipment“ while responding to RFP. The ministry should ensure vendors are not allowed to submit any additional data pertaining to the trials after the trials are over, it says. It has also made suggestions to speed up the process.

To remove ambiguities about costs and supply of spare parts, IAF has suggested that vendors be required to submit an illustrated spare parts catalogue in the standard contract document itself. This catalogue, IAF says, should have the base price and pricing mechanism for subsequent purchase of spares in the life cycle of the equipment.

“Not all the changes that the forces suggest are incorporated,“ said retired colonel and defence analyst Rajiv Chib of PricewaterhouseCoopers India. “But their suggestions do have a significant bearing, as the forces use the equipment that the government procures.“

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