Quality of Acquisition Staff: A Key Factor in Defence Procurements

Maj Gen Mrinal Suman

Introduction

Despite the recent reforms in India ’s defence procurement structures and promulgation of the new defence procurement procedure, no major improvement is discernible on ground. Ministry of Defence (MoD) is aware of the existing deficiencies and is constantly reviewing the whole mechanism. The stress so far has been on the establishment of a dedicated procurement organisation and streamlining of procedures. However, any mechanism is as good as the people who operate it. Surprisingly, little thought has been paid to the selection and training of the functionaries entrusted with the procurement of military equipment worth hundreds of crores of rupees. The quality of personnel continues to be the weakest link in the whole procurement system and this aspect needs immediate attention. The acquisition staff should be professional, well qualified and adequately trained. A look at the acquisition systems of other countries shows how negligent India has been of this crucial requirement.

With a view to improve the quality of its acquisition personnel, the United States constituted a committee of experts in 1990. Based on its wide-ranging recommendations, a Defence Acquisition Workforce Improvement Act (DAWIA) was passed which approved the constitution of a Defence Acquisition Corps (DAC). DAC is a cadre of highly qualified individuals who have earned recognition as experts in the field of acquisition. Education, training and experience standards for each acquisition position have been laid down.

A Defense Acquisition University has also been established to provide training to both military and non-military personnel. Training is also imparted to private sector businesspersons active in government acquisition. Customised courses are conducted to fulfill different job requirements. Training is imparted in mission needs, performance goals, prioritising resource allocation, systems planning, research methodology, development schedules, engineering, documentation, business modeling, testing regime, logistic implications, cost estimating, negotiations, contracts and financial management. Officials are also attached with selected defence producers for a nine-month training programme to obtain first hand experience.

The British have accepted that the defence acquisition personnel need wide ranging management and acquisition skills. They proposes to establish an Acquisition Training Cell in the Ministry of Defence to meet all training requirements. A postgraduate accredited diploma course for middle management is also planned. It will be open to service officers, civilian staff and the industry. Training will be imparted in acquisition processes, management skills and some elective subjects as per an individual’s assignment.   

Defence Materials Organisation of Australia is seeking proposals from universities and other training institutions for strategic partnership for the development of professionalism and other required skills for its staff. A Select Advisory Group of Canadian Defence Ministry has recommended a revamp of the acquisition system due to inadequacies in management and leadership. It opined that a large number of senior functionaries were ill equipped for the job due to lack of exposure and experience.

The head of La Delegation Generale pour I’Armament (The French Procurement Agency) set up a specially constituted task force in March 2000 to review its functioning including human resources and staffing system. 

Even a newly born nation like Serbia and Montenegro has appreciated the importance of selection and training of acquisition staff. Special training is imparted to selected officers of high integrity, so as to prepare them for their assignment. It is generally believed that the country save up to 30 million euros in a year by proper selection of personnel and their subsequent training.

In India , the staff carrying out acquisition related functions is drawn from the Ministry of Defence (MoD) and the services.  All civil servants and service officers feel that they can carry out any job assigned to them. They believe that their initial training and subsequent exposure equips them to shoulder any responsibility. They are all well meaning and competent people. But for most of them it is just another routine assignment with little difference. Their approach continues to be entrenched in bureaucratic mediocrity and procedural quagmire. They are neither selected for any displayed talent nor are given any special training to handle defence procurements. Additionally, they lack necessary education to comprehend competing technologies and technicalities of complex procurement procedures.

Peculiarities of Defence Procurements  

India , has failed to appreciate that procurement of defence equipment is a highly specialised activity needing extraordinary professional skills and unique attributes. It is an intricate and multifaceted process. It is not a routine governmental activity that can be performed by all with desired results. Some of the major peculiarities are as follows: -

•     Funds involved are very large and the quality of equipment selected has a profound influence on national defence potential.

• There is no open tendering. Invitations are sent to a few selected vendors. A fine balance has to be maintained between need for generating competition and security requirements.

• Most of the sophisticated equipment has to be imported as the indigenous defence industry is still in a nascent stage.

• There are a limited number of producers in the world market and still fewer are ready to part with their top of the line products. The problem gets compounded where technology transfer is sought as an essential part of the package.

• Major weapon producers in the world are, in fact, systems integrators only. Various sub-assemblies are produced in different countries. This complicates the issues while negotiating life cycle support for the equipment, as the export policies of all of them have to be factored in.

• Countries have different norms for issuance of licence for export. Many impose riders on the usage of equipment. Yet, there are countries whose domestic laws preclude assured subsequent sustenance of the equipment bought.

• There are strong political and corporate lobbies at work to push their products. Defence procurements are intrinsically linked to a nation’s foreign policy and diplomatic interests.

• As there is an element of secrecy in the procurement process, all decisions come under scrutiny subsequently. Therefore, it becomes essential to follow the procedure diligently. Deviations, if any, have to be accounted for. All decisions have to be and must be seen to be above board and in the country’s interest.

• Selection of the most suitable equipment is a complex and time-consuming process as a large number of functionaries are involved.  

Need for Specialised Acquisition Staff

A nation’s military prowess and continued defence potential depends upon expeditious procurement of military hardware, which entails heavy expenditure of scarce national resources. This critical task must be assigned to the people who possess the necessary acquisition proficiency and attributes.  The entire procurement process consists of highly specialised activities. The following activities reveal their complexity, criticality and significance: -

·         Preparation of Services Qualitative Requirements (SQR)

SQR are structured operational parameters framed by the services for the equipment sought. Over-ambitious, impractical and imprecise SQR create confusion and cause delays. Infirmities in the preparation of SQR can result in the abandonment of the case at an advanced stage. It is essential that the persons associated with their formulation be conversant with own mission requirements, products available in the world market, level of indigenous technology and its likely development in the acceptable time frame.

·         Formulation Of Requests for Proposals (RFP)

RFP is a tender document issued to selected vendors, inviting them to submit their technical and commercial proposals. It lays down inviolable terms and conditions for evaluation and commercial negotiations. It also forms the basis of the subsequent contract document. There is a great deal of sanctity attached to this document as a sovereign government issues it. A poorly drafted RFP with unspecific clauses can lead to multiple interpretations and result in gross financial liabilities to the Government. Therefore, experts in corporate affairs, international law, foreign trade and legal complexities must be associated with its formulation.

·         Technical Evaluation

It is a paper evaluation of technical proposals submitted by the vendors. It is carried out under the aegis of the Services Headquarters (SHQ). The aim is to identify vendors whose proposals satisfy the parameters and who should be called for field trials for validating their claims. It is a sensitive task as different vendors offer dissimilar technologies. It is for the Technical Evaluation Committee to understand the technologies, ascertain their degree of stabilisation and evaluate their suitability for own operational environment. Obviously, members have to be technically sound and knowledgeable.

·         Field Trials

These are carried out by the services. This is by far the most critical activity of the entire procurement process as its basic aim is to validate the performance claims made by the producers and to ascertain the suitability of equipment for induction into service. The trial teams have to be appropriately equipped and trained to evaluate equipment with diverse technologies and determine their inter se merit. They should have the necessary expertise and vision to be able to interpolate exploitation of equipment in diverse combat milieu.

·         Commercial Negotiations

Once the lowest bidder is determined, he is invited for commercial negotiations. Invariably, a battery of corporate lawyers, financial experts and executives trained in negotiation techniques represent the vendor. They are quick to gauge the depth of buyer’s comprehension of various facets of the proposal and urgency for the equipment. Staff carrying out negotiations needs special training and skills to do hard bargaining to clinch the most beneficial deal.

·         Drafting of Contract

It is a legal and binding document for both the parties. Every sentence has to be worded with utmost care. Strangely, India has no standard format of a contract for imports. Every vendor is asked to submit a draft contract, which is accepted by MoD after scrutiny. As is to be expected, the contract is invariably loaded in the vendor’s favour. At times, the fine print contains many unacceptable terms, which come to light at a later stage. MoD has no integral legal advice available to it. It has no expertise in international trade, foreign exchange transactions and international arbitration norms.    

The Way Ahead

It is time that India pays attention to the quality of its defence acquisition staff and takes concrete steps to improve it. Changes in structures and procedures make limited difference. No reforms can yield the desired results unless and until the implementing functionaries are equipped to translate good intentions into tangible actions on ground. Some of the important steps that can be taken immediately without any bureaucratic upheaval are discussed below.

Identification of Appointments

To begin with, there is a need to define Acquisition Staff. There are a large number of officials and subordinate staff involved in the entire procurement process. Not all can or should be nominated as Acquisition Staff. MoD and the services have to identify the appointments that are critical to the smooth processing of acquisition cases. It is necessary that this be done with due care. As a broad guideline, only those appointments, which influence decision making, should be termed as Acquisition Staff Appointments (ASA). These appointments are required to be notified and updated periodically.

Selection

Selection of suitable personnel for posting to ASA is perhaps the most difficult and critical task. MoD and SHQ have to lay down essential and desirable criteria for each post under their respective domains. Criteria should include aspects like formal education, related experience, previous exposure in similar jobs, demonstrated competence and aptitude.  Personal integrity has to be of unimpeachable standard. Selected officers should have an unblemished record and should be eligible for next promotion. It should preferably not be a last leg posting. In other words, to improve quality, it is essential to induct talent and inject professionalism.

Tenure

To provide continuity, all ASA appointees should have a minimum tenure for three years and extendable to five years. Their career interests should be protected. Initially, the selected officers should be kept on probation for a period of three months. Thereafter, their suitability could be determined for permanent posting. The officers should also have the option to seek reversion if they so desire.

Orientation Training

All ASA appointees should compulsorily be made to undergo orientation training for six weeks at a nominated institute at New Delhi . Initial three weeks could be utilised for acquainting them with the procurement structures, revised procedure and methodology, while the last three weeks should be for specialised training related to their specific jobs. Help should be taken from experts in the civil sector and the universities to structure the courses to ensure their usefulness. All courses should end with an assimilation test to validate selection. Officers found wanting could be reverted back to their previous jobs without any adverse remarks. Attendance on orientation courses has to be enforced without exception. There is a tendency amongst senior officers to view such training as redundant, in the mistaken belief that they already know what is worth knowing.   

Training of Trial Teams

Though all members of the trial team are important, they do not necessarily have to be nominated as Acquisition Staff. However, whenever a trial team is constituted, its key personnel should be called for training with respect to the conduct of trials and preparation of trial report. This could be carried out in the related training establishment of the sponsoring service.

Conclusion

Whereas most of the countries in the world have realised the importance of the quality of acquisition staff, no attention has so far been paid to it in India . All reforms have been directed towards structures and procedures. Criticality of human resource aspect has been totally ignored. Functionaries are posted to key acquisition appointments in routine. They are neither selected for any demonstrated capability nor for any displayed flair. They lack education to comprehend technologies involved. They have no prior experience in military hardware evaluation. Additionally, no training is imparted to them to prepare them for their acquisition assignments.

Parameters are prepared by service officers with little knowledge of stabilized technologies. Tender documents are prepared by SHQ and issued by MoD in a most amateurish and casual manner. They contain ambiguities which later lead to multiple interpretations. Trials are carried out by units who consider it an additional chore and fail to comprehend their significance. Finally, negotiations are carried out by the people who have little comprehension of the equipment or its various functions. They have no knowledge of international trade, foreign exchange trends and cost benefit analysis.   

In other words, procurement of military equipment worth thousands of crores of rupees is being carried out by the staff who are ill-equipped for the task and who are found wanting when considered decisions are to be made. Their lack of knowledge manifests itself in their reluctance to take decisions and a propensity to involve maximum number of people.

It has generally been accepted the world over that an efficient acquisition work force can not only expedite procurements but also affect a saving of up to 15 percent of the capital expenditure in initial purchase price and associated life-cycle costs. When translated into actual figures, it amounts to a saving of over Rupees 5000 crore for India as per the capital expenditure budget of Rupees 33,500 crore for 2004-05. It is no small amount. It is time India carries out major reforms to improve the quality of its acquisition staff. India needs professional, well-qualified, highly motivated and adequately trained acquisition functionaries.

This article first appeared in the Indian Defence Review Volume 20-1, Jan- Mar 05 and has been reproduced here with the permission of the editor.