NATIONAL CONFERENCE INTRICACIES OF PROCUREMENT IN DEFENCE SERVICES PUBLIC PROCUREMENT FRIDAY 10th November 2006
Directorate General of Aeronautical Quality Assurance (DGAQA) DGAQA is a Govt. Quality Assurance organisation for Military Aviation, dealing with AERONAUTICSAIR ARMAMENT MISSILESGROUND SUPPORT EQUIPMENT SUPPORT ROLE IN DEFENCE PROCUREMENT HQ is situated at New Delhi, with 34 Field Establishments co-located at: DPSUs PSUs OFs ADA DRDO Labs Total Technical manpower is 1327 with 350 officers from various Engineering disciplines Value of Aero stores under Quality Assurance coverage during the year 2006-07 will be approx. Rs. 5500 crores
CARDINAL PRINCIPLE IN PUBLIC PROCUREMENT To procure the material/services of the specified quality, at the most competitive prices in a fair, just and transparent manner.
BROAD GUIDELINES IN MAKING PUBLIC PROCUREMENT • SPECIFICATION IN TERMS OF QUALITY/TYPE • AVOID INVENTORY CARRYING COST/PURCHASE IN EXCESS OF REQUIREMENTS. • OFFERS TO BE INVITED AS PER DOCUMENTED PROCEDURE FOLLOWING A FAIR, REASONABLE AND TRANSPARENT POLICY. • SELECTED OFFER MUST MEET REQUIREMENTS ADEQUATELY IN ALL RESPECTS. • PRICE REASONABLENESS CONSISTENT WITH THE QUALITY REQUIREMENTS. • RECORD AT EACH STAGE OF PROCUREMENT HIGHLIGHTING CONSIDERATION THAT WEIGHTED DECISIONS
DEFENCE PROCUREMENT PROCEDURE 2006(DPP-2006) Website : www.mod.nic.in This procedure is meant for capital acquisition. In DPP-2006, a procedure for development of systems based on indigenous R & D categorized as ‘MAKE’ is also put in place for increased participation of Indian Industries. Highlights • Fast Track Procedure • Major decisions on procurement to be taken simultaneously. • Enhanced transparency : Vendor registration through internet for generic requirements of the defence services. • Increased transparency in the conduct of field trials. • Integrity pact. • Offset obligation.
DEFENCE PROCUREMENT MANUAL – 2006 (DPM-2006)Website : www.mod.nic.in This manual covers detailed procedure to be followed in the procurement process of revenue items.
Highlights : DPM- 2006 • GFR-2005 provisions incorporated relating to limited Tender Enquiry, Cash Purchase Limit, Purchases through Proprietary Article Certificate, price variation clause and limit for advance payment. • Apportioning quantity to L2 & L3 when L1 does not have capacity ,as per CVC guidelines. • Re-floating tenders after reformulating Services’ Quality Requirement for competitive bidding, in case of single tender situation after TEC. • Level playing field to indigenous vendor vis-à-vis foreign vendor. • RATE CONTRACT PROVISION FOR COMMON USER ITEMS. • Reduction in repeat order quantity from 100 to 50%.
CVC GUIDELINES Guidelines encourage transparency and the culture of honesty. CVC website : www.cvc.nic.in Highlights • Documented Purchase Manual • Provisioning Guidelines • Estimate Guidelines (market rate, LPP, economic indices, input cost/intrinsic value). • Mode of Tendering/Period to quote/Bid document/Postponement of tender opening. • Purchase policy/Reasonableness of prices/Advance payment/bank Guarantee. • Post Contract management (amendment/monitoring)
INTRICACIES OF PROCUREMENT IN DEFENCE SERVICES TECHNOLOGY ISSUES • Poor response/viability in High technology low volume cases • Limited items available in COTS. • Limited response due to stringent/special technical requirements of defence specification-cost also increases. • Non-availability of indigenous technologyfor defence equipment. SUPPLY ISSUES • Fast changes in technology-obsolescence/storage life. • In open TE Cases, assessing capability of large number of firms at different locations in short time is difficult. • Limited qualified vendors for specialized items for Defence Services. POLICY AND DATA ISSUES • Procurement policy to consider L1. • Life cycle cost data not available. • Reliability Data
REGISTRATION CRITERIAReference document : JSG-015-02 • Design & Development Capability. • Technical Know-how • Infrastructure & Manufacturing facilities : Plant & Machinery-Test facilities. • Quality System/Practices. • Accreditations & Approvals. • Financial Capacity. • Skilled/Technical Manpower Resources. • Past Supplies & performance.