CVC Issues New Directives On Defence Purchases

Indian Government News, As the country moves towards the threshold of floating international tenders for mega armament acquisitions worth billions of dollars, watchdog Central Vigilance Commission (CVC) has issued new directives on defence purchases. 
 
Under the directives, CVC has asked the Defence Ministry to avoid single-vendor situations in any deal except in very exceptional cicumstances, and inclusion of Standard Contract terms in Request for Proposals. 
 
The Commission has also told the defence ministry not to deviate or dilute qualitative requirements after the request for proposals has been made. 
 
The CVC directive comes as the Defence Ministry is about to float international tenders for purchase of 126 multi-role combat aircraft, a deal which industry sources say could be biggest ever deal by India, running up to or more than USD 15 billion. 
 
It is not the only mega defence deal coming up. In another big-ticket deal worth more than USD 700 million, the Army is to sign an agreement for purchase of 197 helicopters to replace its ageing fleet of Chetaks and Cheetahs. 
 
Two firms, Bell Helicopter of the US and European consortium EADS, the owner of Eurocopter, have been short-listed and evaluated. 
 
Another big ticket deal would be for the purchase of new 155mm guns upgraded to 52 calibres. India is opting to buy 400 of these upgraded guns whose induction is almost 12 years behind schedule. 
 
The army has already conducted three test trials and an unprecedented fourth one is currently on between the Swedish Bofors guns and Israeli Soltam guns. 
 
Pointing out repeated failures and losses incurred by the defence ministry in not conforming to its laid out purchase norms, CVC has made it mandatory that in all new deals, the ministry ensures advances are paid to suppliers against bank guarantees confirmed by select Indian banks. 
 
CVC has directed that performance bonds and warranty bonds are also taken after similar confirmation. The defence ministry, according to the Comptroller and Auditor General, has lost crores of rupees in transactions with Russian suppliers by not taking bank guarantees and performance bonds. 
 
The Commission has also made it mandatory that all offers be solicited from original equipment manufacturers and prohibited the engagement of any agent or payment of agency commission by the seller. 
 
It has also told the government to include in the defence procurement manual transparent requests for proposals both from indigenous and foreign procurements with clear pre-qualification, short-listing and contract award criteria. 
 
Further, CVC has also said that there should be clear timeframes for each stage of contract processing to cut delays and bring in accountability. 
 
Both the CVC and Comptroller and Auditor General have been unsparing in their criticism of the defence ministry getting into single vendor situations. 
 
They have sharply criticised the previous NDA government for entering into single-vendor deals like those for purchasing the SU-30MKI, T-90s and advanced trainers.