MoD amends Defence Procurement Policy
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  • The Ministry of Defence made certain amendments in its Defence Procurement Procedure 2008 (DPP 2008), which come in to effect from November 1, 2009. Greater emphasis is placed on encouraging domestic industry to participate in defence production; ensuring transparency and accountability in defence acquisition; and greater liberalisation of offset provisions. Under the revised guidelines, a new category has been introduced – ‘Buy & Make (Indian)’, under which the request for proposals (RFPs) will be issued only to the prospective domestic companies, both in the public and private sectors, who in turn would have to directly negotiate with original equipment manufactures (OEMs) for technology transfer, and other production arrangements. To further encourage the participation of domestic companies in defence production, the MoD intends to share a public version of the Armed Forces Long-Term Perspective Plan as well as involve them in procurement source decision making.

    For enhanced transparency in defence acquisition, the amended guidelines have strengthened the provision of Integrity Pact – a mandatory clause in procurement cases exceeding Rs. 100 crores, aimed at prohibiting corruption in defence deals. The new guidelines have also defined and enlarged the role of Independent Monitors (IMs) by authorising them “to pursue all relevant office records in connection with the complaints sent to them by the buyer.”

    For improvement in formulation of qualitative requirements, the MoD has made request for information (RFI) mandatory in all procurement cases. Besides, all the qualitative requirements (QRs) will be placed before the Defence Acquisition Council/Defence Procurement Board in a tabulated form, linking the capability sought with the functional characteristics and technical parameters.

    Under the revised offset policy, an added provision, “Option Clause”, has been added. The new Clause allows vendors to change offset partner mid-way to discharge offset obligation in the stipulated timeframe. In doing so, the vendors would however not be permitted to change the offset component or its value.1

    • 1. Government of India, Press Information Bureau, “Defence procurement procedure amended to encourage indigenous defence industry; RFI made mandatory for all procurement cases; Offset provisions liberalized; Amendments to come into effect from November 01, 2009”, October 29, 2009.

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