‘Conditions apply’ won’t help, open defence deals is the solution

New defence minister hints at plans to legalise agents, transparency is the need of hour

prahlad

Prahlad Rao | December 31, 2014



To rev up defence procurement in a big way, defence minister Manohar Parrikar has hinted at limited approval to dealing with banned firms and assured changes in the Defence Procurement Policy (DPP) to legalise representatives from foreign defence firms by mid-February.

“Changes will be made to the DPP, representatives will be allowed but commission, or percentage of profit for the deals will not be allowed. The representatives’ remuneration shall be declared by the company,” Parrikar revealed on Tuesday night.

This kind of open policy was issued over a decade ago. The guidelines for registering defence agents required them to list their contractual, banking and financial details with the ministry of defence. But the outcome has been disappointing as no agent has come forward to register with the government.

And this is where the problem begins. It is well-known in defence circles that the agents like to keep low profile with limited visibility in the corridors of power. This is to ensure that they are not exploited by all and sundry to push their files through the procurement channel.

But the agents are harassed by all kinds of officials for payment and corruption. It starts before the bid and continues even after the contract is signed.

Middlemen and defence agents were banned for years after the scandal broke out in the 1980s involving alleged kickbacks paid to politicians and officials in the purchase of Bofors guns during the Congress government.

Many recommendations to legalise middlemen and making negotiations transparent have been made by committees and also by the central vigilance commissioner. Parikkar has said that banned firms can be conditionally allowed “based on merit and necessity”. Here again the government seeks to inject discretion as the firms will be at the mercy to officials if they want to participate in any negotiations.

An immediate solution to this multi-billion dollar problem is to have an open and transparent policy. It should include clear guidelines on bidding and procurement. Secondly, designate officials for each defence deal and monitor their assets. Since it is public money, let people know the whole process of defence purchases. Do not operate in secrecy.

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