View: Changing the archaic norms of determining contract award


On September 29, 2021, a powerful and indispensable statement was made by the Chief of the Army. He did not mince words when he stressed the need to change archaic defense procurement standards if the country is to progress towards modernizing its defense forces.

In search of the best technology, one certainly cannot follow the system of the lowest bidder (L1), which generates the lowest technology provider among the successfully evaluated equipment. This predominant concept excludes the best technology which could only marginally lose out in the price war. In addition, no equipment supplier faced with an L1 scenario would dare to venture with the “best” equipment. The current system therefore encourages mediocrity and has its implication on investments in R&D and progress towards modernization. This raises the fundamental question, do we want equipment that ONLY meets our stated criteria, or are the criteria only a guiding instrument for the supply of the equipment and its testing. .

Leaving the full range of obtaining acceptable equipment within the framework of the General Staff Qualitative Requirements (GSQR) is a mistake, especially when the scoping itself is plagued by:

a) Bring together a criterion that essentially focuses on obtaining a multi-supplier situation. This implies the lowest acceptable of what is available,

b) Industry inputs which may not have the equipment in most cases and depend on technology partners and therefore have inadequate knowledge and play it safe or over-kill the main framing of inadequate GSQRs or failure tests

c) Dependence on publications which generates an incomplete image

d) Interpretation and perceptions of requirements, especially those that come into play in long-term cases

e) Technological changes which far transcend the pace of purchasing.

The current provisions of the DAP, namely the Enhanced Performance Parameters (EPP), which were enshrined in DPP-2016 and maintained in DAP-2020, to address this issue, did not thrill anyone. The exact scope of the EPP is defined in the call for tenders, the supplier declares this in their technical offer and, being tested successfully, will be given a credit score of up to 10%, for the evaluation of L1, with each individual attribute not exceeding 3%. This 3% weighting of the cost is too small for the vendor to be able to incorporate niche technology into the equipment. Another criterion, essential parameters-B, indicates that parameters not originally available in the equipment commissioned for testing, can be developed and would be tested before delivery after contract award. The military is concerned that the equipment does not meet the criteria after years of trying to deal with the case. Both are in fact “no-movers”.

The recently introduced Chapter VIII of DAP-2020, relating to the procurement of ICT systems and systems products, points the way to future procurement. With the Combined Cost and Quality Based Selection Method (CQCCBS), with a 60% technology weighting, contract award is made easier for high-end technology providers. . The application of a similar concept of CQCCBS in other areas of critical equipment procurement, to ensure that the best is available to the armed forces, with a balance between technology and costs, is required. It is time for the L1T1 concept to be undertaken quickly. The problem is the price indexing of technology, which can lead to allegations of bias in our portrayal that has undermined defense procurement.

The question arises over the term, “Technology Price Indexing (PIT)” why an issue appearing so simple (L1T1) has not been implemented. The problem is that the issue is both complex and invites representations in the procurement process. To explain the complexity,

a) For each of the major equipment, a system analysis design would be developed with corresponding attributes and weights. In a system product system like a reservoir, there are a multitude of primary attributes each having multiple sub-attributes which can be further vested. One would determine the attributes, would prioritize them, and would give proportional weights which are relative and cannot in a simple geometric progression. To give a simple illustration; what is more important in a tank, firepower, protection or mobility; by how much is more important to the other. And all of them are interconnected. In firepower, what is most important and especially what are the relative weights for each of the instruments of destruction, main gun, secondary gun, missile, and there may be more. Which is relatively important and the weights in each of the above instruments for range, accuracy, penetration, rate of fire, barrel life and many more. Remember that the attributes of artillery are also related to the attributes of fire control systems and aiming systems which would in themselves have a major analysis of selection and weights. The permutation and combinations with the associated links in a complex platform are mind-boggling. Calculation helps, but the calculation has to be programmed with inputs and the decision for inputs is complex as human interpretations and perceptions in addition to various environmental necessities, as in the Indian case, creep through the matrix.

b) The problem does not end there. The attributes and weights, as evolved for the System Analysis Design Matrix (SAD), will become more devolved in relative cost, to bring the cost and technology component to a common basis for determining the attribution of the cost. contract. This is the technology price index (PIT). The problem lies in the relative costs granted and their implications for the choice of equipment. SAD and PIT are subject to interpretation and perceptions and, therefore, can be interpreted by ulterior motives as discriminatory. Mitigation measures will have to evolve and the process will have to be upstream and transparent, while managing environmental pressures and opinions.

Despite the issues and complexities, we need to move forward with the L1T1 contract award method like CQCCBS. For this, a separate expertise should be generated in the form of teams for each type of major equipment that should be; technical experts in each subsystem, operational exhibitors of the equipment, financial team, calculation experts in the field of DSS and quality control. Adding industry representation directly through key stakeholders or industry associations from SIDM, FICCI, CII will ensure transparency of the process and mitigate alleged biases. The views of the environment and stakeholders can be sought by such a team through comprehensive questionnaires based on calculations. There are courses abroad, specific to military equipment in this field, to which officers destined for longer tenure can be assigned. It would also be a good idea to involve retired agents who have undergone the process in the FICV & TCS projects in which the evaluation of the expression of interest has been based on such a method.

The entire defense equipment capital budget procurement system needs an overhaul to meet current and future needs. In this, the system should encourage domestic industry to strive and provide the best equipment available to the armed forces. The L1T1 process, with appropriate safeguards, is one among others required, to move forward together in future modernization needs. Industry is a partner in capacity building and must be trusted and able to deliver the best.

The author is a Combat Arms Officer, retired as a Weapons and Equipment Addl DG of the Indian Army. He currently leads the Aerospace & Defense practice at Primus Partners.


About Author

Comments are closed.